2022 (11) TMI 1113 - AT - Income Tax
Addition in respect of royalty payment - assessee company has made royalty payme on the basis of agreement which permits the assessee exclusive right to manufacture and sale of products in India using a licensed technology - AO disallowed 25% of royalty payment on the ground that said royalty has been paid towards technical information provided by the foreign company in respect of manufacturing methods of products and license granted to the assessee to manufacture and sell the products is in nature of capital expenditure, which gives enduring benefit to the assessee - HELD THAT:- We are of the considered view that there is no error in reasons given by the ld. CIT(A) to delete addition made towards disallowance of royalty payment and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject ground taken by the Revenue for both assessment years.
Excess depreciation claimed on UPS - @ 60% OR 15% - AO has disallowed excess depreciation claimed on UPS @ 60% on the ground that the UPS and printers are in the nature of office equipment which are eligible for depreciation @ 15% and cannot be treated as computer and computer software to claim higher depreciation of 60% - HELD THAT:- We find that the issue of depreciation on UPS and printer as part of computer and computer software is decided in the case of M/s. Brakes India Limited vs DCIT [2017 (4) TMI 511 - MADRAS HIGH COURT] where it has been held that UPS and printer are integral part of computer and computer software and are eligible for higher depreciation of 60%, but not normal depreciation of 15% as applicable to office equipment. CIT(A) by following the decision of Hon’ble Madras High Court in the above case has rightly deleted additions made towards excess depreciation claimed on UPS and thus, we are inclined to uphold the findings of the Ld. CIT(A) and reject ground taken by the Revenue for the assessment year 2011-12.
Disallowance of expenditure in relation to exempt income u/s. 14A r.w.r. 8D - HELD THAT:- Hon’ble Jurisdictional High Court of Madras in the case of M/s. Redington India Ltd. [2017 (1) TMI 318 - MADRAS HIGH COURT] has considered an identical issue and held that when there is no exempt income in relevant assessment year, there cannot be a disallowance of expenditure u/s. 14A in relation to any assumed income. In this case, the counsel for the assessee stated that for both the assessment years, the assessee has not earned any exempt income and the same has been accepted by the ld. DR present for the Revenue.There is no error in the reasons given by the Ld. CIT(A) to delete additions made towards disallowance of expenditure u/s. 14A r.w.r. 8D because in both assessment years the assessee did not earned any dividend income which was exempt income u/s. 10(34) of the Act and thus, we are inclined to uphold the findings of the CIT(A) and reject the ground taken by the Revenue for both the assessment years.
Appeals filed by the Revenue are dismissed.