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2018 (6) TMI 881 - AT - Income TaxDisallowance of share issue expenditure u/s 35D - Held that:- Assessee was unable to bring any evidence to demonstrate that funds from increased share capital was used for extension of its existing industrial undertaking or spent in connection with the setting up of a new industrial unit - since the disallowance was made due to inability of the assessee to substantiate its claim, we do not find any reason to interfere with the orders of the lower authorities - Decided against the assessee. Interest on fixed deposit can be claimed as business income eligible for deduction u/s 80HHE - Held that:- Assessee claimed that the fixed deposits were kept for the purpose of meeting margin requirement for opening LOC and obtaining bank guarantees - assessee could not substantiate this claim before the lower authorities despite opportunities given to it - thus CIT(A) relied on the judgment in the case of Dollar Apparels vs. ITO [2007 (2) TMI 120 - HIGH COURT, MADRAS] and confirmed the disallowance - since assessee was unable to support the claim with proper evidence, we do not find any reason to interfere with the orders of the lower authorities - Decided against the assessee. Disallowance of prior period expenditure - Held that:- It is not disputed that the expenditure did not relate to the impugned assessment year - hence, in our opinion, the claim was rightly disallowed - we therefore find no reason to interfere with the orders of the lower authorities - Decided against the assessee. Lease rent deposits which were written off were and disallowed as expenditure - Held that:- following the decision of Delhi Bench of the Tribunal in the case of Fab India Overseas P. Ltd vs. CIT [2013 (9) TMI 301 - ITAT DELHI] where it is held that security deposits which were written off were given for a lease which never went through. The Tribunal had held that there was no binding agreement between assessee and the lessor, since the lease deed was not registered and held that security deposit written-off was a business loss. However, in the case before us, there is nothing on record to show that rental deposits written off by the assessee pertained to any lease which had not materialized - hence we do not find any reason to interfere with the orders of the lower authorities - Decided against the assessee. Disallowance of software expenditure - Held that:- Assessee could not furnish any evidence to show the nature of the software expenses. Assessee was unable to demonstrate whether it was paid as software licence fee or paid for outright acquisition of a software - lower authorities were justified in not allowing the claim as revenue outgo. However, we find that ld. Assessing Officer had allowed depreciation @ 25% only. Once purchase of software is considered as a capital expenditure, it has to be given the same rate of depreciation as applicable for computer. Assessee is therefore, in our opinion entitled to depreciation on the software expenditure at the rate applicable for computer for the impugned assessment year. Disallowance of expenditure as incurred for improvement of leasehold property - Held that:- assessee failed to support its claim that the expenditure was incurred for erecting a temporary structure in the leasehold property. Since the disallowance was made due to inability of the assessee to produce evidence regarding nature of expenditure incurred, we do not find any reason to interfere with the orders of the lower authorities. Ground No.4 of the assessee stands dismissed. Disallowance being gratuity payments to LIC - Held that:- It is not disputed that the payments to LIC were not a provision but made under the gratuity scheme. We are therefore of the opinion that assessee was eligible to claim such deduction. Non-exclusion of items deducted from export turnover, from total turnover while working out the eligible deduction u/s.10A - Held that:- By virtue of the judgments of Hon’ble Karnataka High Court in the case Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] exclusions made from export turnover have to be considered for reduction from total turnover also while working out deduction available u/s.10A of the Act. Accordingly, we direct the ld. Assessing Officer to rework the deduction available to the assessee u/s.10A Denial of its claim for deduction u/s. 10A for its STPI units - Held that:- Deduction u/s.10A of the Act has to be considered on stand alone basis without setting off of loss another unit. Accordingly, we direct the ld. Assessing Officer to allow the claim made by the assessee u/s.10A of the Act without setting off such loss.
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