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2016 (11) TMI 1029 - ITAT MUMBAIDisallowance u/s 14A - Held that:- The assessee’s case is covered by sub-sections (2) & (3) of section 14A as the assessee is claiming that no expenditure has been incurred by it in relation to the exempt income. We have seen that as per the balance sheet , investment reflected in as on 31.03.2010 was of ₹ 29,98,21,124/-. Further, as per the balance sheet for AY 2009-10, the total investment of the assessee as on 31.03.2010 was ₹ 29,98,21,124/- and the assessee was having reserve and surplus amount of ₹ 1,48,60,50,942/-. The assessee has secured loan of ₹ 3,70,00,000/-. The assessee-company has own sufficient fund. We have noticed that before making disallowance the AO not made any enquiry about the nature of investment as if it was strategic or the investment were made in earlier years and the manner in which exempt income was derived and credited to the account of assessee. Similarly no such exercise was made by Ld. CIT(A). The power of ld CIT(A) is co-terminus with AO. The disallowance made by AO and sustained by ld CIT(A) is not in accordance with the procedure prescribed u/s 14A r.w.s. Rule 8D. There is no finding that assessee has sufficient fund available with him or not. Hence, we deem it appropriate to restore this ground of appeal to the file of AO to pass order afresh. Disallowance of Software Usages Charges - revenue v/s capital expenditure - Held that:- For ascertaining as to whether the expenditure of computer software gives enduring benefit to assessee, the duration of time for which assessee required right to use the software become relevant having regard to the fact that software becomes obsolete with technological innovation and advancement within a short span of time, it would be said that where the life of computer software is shorter (less than 2 years) it may be treated as revenue expenditure. In Thomas Cook (India) ltd Vs DCIT (2006 (1) TMI 176 - ITAT BOMBAY-I ) the coordinate bench of Tribunal held that expenses incurred on up-gradation of software do not result into acquisition of any asset nor acquisition of enduring benefits as software become obsolete very quickly.
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