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2019 (12) TMI 259 - AT - Income TaxTDS u/s 194H on incentive paid to stockists - commission versus discount - Held that:- the assessee has stated that the stockists themselves are buying the goods and it cannot be said that they are rendering any services in the course of such buying of goods which will render any payment to them as commission. - The assessee also did not prove with the books of accounts the nature of payment. - Matter restored before AO for verification. Addition towards opening stock generated during trial run production - the said opening stock was not found in the closing stock of the immediately preceding assessment year. - Held that:- the assessee has not placed any evidence relating to the stock transfer of trial run production to the trading account, with stock register. In the subsequent year, the AO has called for the details of sales made out of trial run production but the assessee could not furnish the evidence before the AO. When the assessee claims that both expenditure on the trial run production and the stocks were transferred to the trading account, it is incumbent upon the assessee to establish the transfer of stocks. However, the assessee did not establish the sales or transfer of stock relating to trial run production to the stock account with the stock and sales registers. - Matter restored before AO for re-consideration. Commission paid to the Director - Held that:- Payment of commission is the business decision of the company and the assessing officer has no role in it. Therefore, there is no reason to make the disallowance of payment of commission - Decided in favor of assessee. Claim of weighted deduction u/s.35(2AB) - The assessee has furnished Form No.3CK to the Department of Scientific and Industrial Research(DSIR) but till date the approval of expenditure in form 3CL was not received by the department. - The AO allowed the actual expenditure and disallowed the weighted deduction claimed by the assessee for want of Form 3CL. - Held that:- quantification of expenditure required to be verified and certified by DSIR to prevent the misuse of the benefit. For this purpose, assessee has to submit the audit report along with Form 3CK and then only after satisfying the correctness, genuineness of expenditure and the quantification of expenditure the Government of India (DSIR) would issue form 3CL. On receipt of the Form 3CL the assessee would be entitled to weighted deduction. The AO is not permitted to grant the weighted deduction, when Rule prescribes to grant deduction on receipt Form 3CL. - Decided against the assessee. Disallowance of hire charges for hiring chartered flight - Held that:- Though the assessee stated that the chartered flight was engaged in connection with AGM, the assessee did not show the business expediency for engaging the chartered flight since it was a planned event. In the absence of the terms and conditions of employment and the business expediency, we are unable to accept the contentions of Ld.AR that the expenditure was wholly and exclusively laid out for the purpose of business. Apart from the above, the chartered flight was engaged from Kolkata to Hyderabad and Hyderabad to Delhi and the assessee failed to furnish the reasons for making visit to Delhi. - Additions confirmed. Disallowance of amount paid for copyright infringement in out of court settlement with the Microsoft - Held that:- In the instant case, the assessee paid for copyright of Microsoft using the software without proper authorization. Therefore, the Microsoft had initiated the legal action, which was settled out of court. Since the copy right was used for the purpose of business, though there was an infringement, which was settled out of court, we are of the opinion that the expenditure is required to be allowed. Depreciation on wind mill - date of commencement - wind mill stated to be commissioned on 31.03.2011 and run for 25 minutes. - Held that:- As per the power generation report, the grid was available 100% on all these days. Once, the wind mill is commissioned properly, there is no reason for non functioning of the plant after commissioning. The assessee also did not explain the reasons for non functioning of the wind mill on 31.03.2011 after 17:15 hrs. The wind mill was operated from 16:50 hrs to 17:50 hrs and did not function from 17:50 hrs onwards till 03.04.2011. - Further, the issue with regard to installation and commissioning of WEG plant required to be examined in detail before allowing the depreciation and the additional depreciation for the year under consideration. - Matter restored before the AO. Depreciation on computer software - Held that:- Assessee has purchased the computer operating system, which is part and parcel of the computer. Without the operating system, the computer cannot be operated and the purpose would not be served. It is a settled issue that the computer software is not intangible asset and forms part of the computer. - assessee is entitled for depreciation @60%
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