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2018 (7) TMI 373 - AT - Income TaxNature of expenses - capital or revenue expenditure - license expenses towards WAN and local hardware - annual fee - Held that:- Assessee incurred license expenses towards WAN and local hardware, annual fee which has been treated by AO to be capital expenditure. Assessee has to incur these expenses annually on which tax has been deducted. Assessee claimed license expenses of ₹ 49,62,461/-in Profit and Loss account for the year under consideration out of total invoice amount of ₹ 83,51,907/-. CIT (A) that the license expenses incurred by assessee do not create any asset but only provides means for running the business with a view to earn profits. No infirmity in the addition being deleted as assessee has capitalised the value of the structures on which depreciation has been allowed. - Decided in against revenue Addition u/s 40(a)(ia) - payments on account of reimbursement made to holding company, on which no TDS was to be deducted - Held that:- Considering totality of facts as well as the contradiction in the nature of payment, we are of the considered opinion that it would be justifiable to set aside this issue to Ld. AO. Assessee is directed to furnish all receipts in respect of which it was alleged that these are reimbursement. AO is directed to verify the details filed by assessee and to allow assessee’s claim as per law. Set aside this issue to Ld. AO. Assessee is directed to file reconciliation of income vis-a-vis the TDS claimed. Ld. AO shall verify the relevant details filed by assessee and allow the claim as per law. Addition on account of property tax - AO made addition in the hands of assessee, as assessee was not the owner of property for which the taxes were paid - Held that:- It is an admitted position that assessee incurred these expenses towards the property taken on lease as per the agreement entered into by assessee and lessor. In our considered opinion, payment of local taxes was agreed by assessee as per agreement and therefore was binding. Thus, it was an expenditure incurred by assessee to discharge an obligation under the agreement for purposes of business, which is an allowable expenditure. Addition being 50% claimed towards guesthouse expenses - Held that:- Admittedly Assessing Officer estimated disallowance of 50% of total expenditure being personal in nature, without there being any material evidence on record to establish element of personal use by Directors. However, it also appears from record that assessee has not provided any bills and vouchers in order to verify the guesthouse expenses. We are, therefore, inclined to set aside this issue back to file of Ld. AO. Assessee shall file all requisite details in respect of bills and vouchers/agreements, as the case may be with the Assessing Officer in respect of guest house expenses incurred by assessee. Assessing officer shall then verify the details filed and allow the claim as per law.
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