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2023 (11) TMI 45 - HC - Income TaxDisallowance u/s 14A r.w.r.8D - whether only investments made to earn exempt income should be taken into account excluding other investments while calculating the disallowance? - HELD THAT:- As in Cargo Motors (P.) Ltd. case [2022 (10) TMI 571 - DELHI HIGH COURT] ruled that the disallowance calculated under Rule 8D of 1962 Rules should factor in only investments made by an assessee to earn exempt income. Therefore, the said proposed question of law need not be considered by us. Disallowances of expenses u/s 37(1) - HELD THAT:- As decided in assessee own case [2017 (7) TMI 172 - ITAT DELHI].The opinion of the AO that though there was no income to the assessee from these businesses, still it was incurring expenses for them, is unfounded. On a specific query, the ld. DR failed to draw our attention towards any specific expenditure incurred by the assessee qua these businesses withdrawn by the holding company. The AO made disallowance simply by means of a mathematical exercise carried out by him. If he found the expenditure incurred by the assessee to be on higher side, it was incumbent upon him to specifically point out as to which expenses were not incurred for the purposes of business. No such exercises worth the name has been carried out. In our considered opinion, the Ld. CIT(A) was fully justified in deleting this addition made by the AO on ad hoc basis. This ground is therefore, not allowed Rationale adopted by the Tribunal in the earlier AYs, which was accepted by the coordinate bench of this court [2017 (7) TMI 172 - ITAT DELHI]. The deletion of disallowance was rightly ordered by the Tribunal. The said expenditure was claimable by the respondent/assessee under Section 37(1) of the 1961 Act. Depreciation on software - @25% OR 60% - HELD THAT:- As decided in own case [2017 (7) TMI 172 - ITAT DELHI]. Once it is found that the software used by the assessee were of standard nature to be used in computer hardware and not meant for any independent usage, such software qualify for depreciation @ 60%. We consider Appendix I to the Income-tax Rules containing rates of depreciation available for the purposes of income-tax, it becomes manifest that the computer software which are necessary and integral for the working of hardware are eligible for depreciation @ 60%, as was claimed by the assessee. Nature of expenses - software charges/software expenditure - HELD THAT:- Treatment of this disallowance ordered by the AO will depend on whether software expenditure is treated as money expended on revenue or on capital account. The coordinate bench of this court in in Times Internet Ltd. [2017 (9) TMI 1355 - DELHI HIGH COURT] has concluded that the such expenditure is in the nature of revenue expenditure.
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