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2023 (2) TMI 253 - AT - Income TaxAllowable business expenses - Addition on account of sponsorship expenses incurred by the assessee company - addition made as expenses were not wholly and exclusively incurred for the purpose of business - HELD THAT:- Mr. Harshvardhan Barech went abroad for study which was sponsored by the assesse as authorized by the board of directors in its meeting held on 26.07.2011 and also an agreement signed with that person for getting his commitment to serve the assessee company after he comes back from his study. We note that the person Shri Harshvardhan Barech has honoured the commitment by serving the company after coming back from US. We also note that in AY 2012-13 and 2015-16 the appeal of the assessee were allowed by the Ld. CIT(A) on the similar issue and revenue has not preferred any appeal challenging the said appellate and thus issue has attained finality as the department has not challenged the order before the higher authority. In our opinion, once the order has attained finality in the earlier and succeeding assessment years then the revenue has no locus standi to agitate on the same issue and on same facts. This is in line with the ratio laid down in the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] wherein it has been held that where there is no change in facts and circumstances and revenue has accepted decision in one year , then the revenue cannot be allowed to agitate the same in the other years. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Consequently ground no. 1 is allowed. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- We observe that the Ld. CIT(A) has principally agreed that only those investments are required to be considered for making disallowance under Rule 8D(2)(iii) which yielded exempt income during the year. However due to non-availability of the details of those investments the disallowance was upheld by ld CIT(A). In our opinion the Ld. CIT(A) has given correct findings that only those investments are required to be taken into accounts for calculating disallowance under Rule 8D(2)(iii). Accordingly we restore this issue to the file of AO to calculate the disallowance only by taking those investments which yielded exempt income during the year. The case of the assessee finds support from the decision of REI Agro Ltd. [2013 (9) TMI 156 - ITAT KOLKATA] and the decision of Ashika Global Securities Ltd. [2018 (7) TMI 1425 - CALCUTTA HIGH COURT]. Accordingly the ground no. 2 raised by the assessee is allowed for statistical purposes. Addition of prior period expenses on repairs to building - HELD THAT:- We note that the assessee has incurred expenses in the preceding financial year under the head capital work-in-progress which was completed during the year. During the year the same were charged to repairs of building and claimed accordingly. The AO rejected the claim of the assesse by adding the same to the income of the assessee. In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee by holding the amount pertains to prior period and cannot be allowed. CIT(A) has affirmed the disallowance. However we find force the alternative plea raised before us that depreciation has to be allowed on the applicable rate of depreciation. Accordingly we have allowed the alternative plea of the assessee by directing the AO to allow the depreciation on this account by capitalizing the said amount under the head building. Accordingly ground no. 2 is allowed. TDS u/s 194C - repairs to building on which the assessee failed to deduct tax - HELD THAT:- Assessee has purchased building materials, the details whereof has been placed before us and is available in the PB. We find that the assessee has purchased materials only comprised bricks, stones,sand and grite etc. from Mehmood Hassan on which the provisions of TDS are not applicable as provided u/s 194C of the Act as this is just a purchase of material and not a contract for supply of materials. The case of the assessee finds support from the case of CIT vs. Deputy Chief Accounts officer, Markfed [2008 (2) TMI 260 - PUNJAB AND HARYANA HIGH COURT] wherein it has been held that if a manufacturer purchases material on its own and manufactures a product as per the requirement of a specific customers, it is a case of sale and not a contract for carrying out any work. In this case before us also the assessee has carried out repairs itself by purchasing material from outside. In the present case also the case is only for the purchase for materials and not a work contract. We are not in agreement with the conclusion drawn by the Ld. CIT(A). Accordingly we reverse the order of Ld. CIT(A) and direct the AO to delete the addition. Accordingly ground no. 4 is allowed.
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