TMI Blog2009 (9) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Hon ble Special Bench of ITAT, New Delhi in the case of Amway India Enterprises v. Dy. CIT [2008] 111 ITD 112, has laid down the guidelines for determining the nature of the software expenditure, under what circumstances the same can be treated as a revenue expenditure or capital in nature and, hence, this issue may be restored to the file of the Assessing Officer for fresh adjudication as the said decision was not available before both the authorities - i.e., the Assessing Officer as well as the ld. CIT(A). We, therefore, restore the issue in respect of the allowability of the software expenditure in all the assessment years to the file of the Assessing Officer for fresh adjudication with the direction that he should decide this issue afresh in the light of the guidelines as well as the principles laid down by the Hon ble Special Bench in the case of Amway India Enterprises ( supra ). We, therefore, set aside the order of the ld. CIT(A) on this issue. 5. The assessee has also taken the alternate Ground in respect of the rate of depreciation, which according to the assessee, if it is to be held as a capital expenditure, then the depreciation at the rate of 60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of Bombay has reversed the decision of the Tribunal in the case of Techno Shares Stocks Ltd. ( supra ) which is held as under : "35. The argument of the assessee that the expression licences in section 32(1)( ii ) of the Act must be construed widely and at the same time conceding that the expression licences in section 32(1)( ii ) of the Act would not cover personal licences is mutually contradictory. Either the expression licences has to be construed widely as it is understood in common parlance or construed restrictively in the light of associate words used in the section. There is no other way of interpreting the said expression. As noted earlier, the expression licences in section 32(1)( ii ) of the Act cannot be construed widely, because, the expression any other business or commercial rights of similar nature in section 32(1)( ii ) of the Act makes it abundantly clear that the Legislature intended to give narrower or restricted meaning to the expressions used in the section. Therefore, while rejecting the contention of the assessee, we have no hesitation in holding that the expression licences in section 32(1)( ii ) of the Act must be construed restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with the assessee as unexplained investment under section 69 of the Act. The assessee has challenged the said addition before the ld. CIT(A) but without success. The ld. counsel did not argue on the merit of the addition under section 69 but the only alternate plea has been argued, on the alternate ground, for giving directions to the Assessing Officer to allow the deduction in the year when the shares will be handed over to the respective shareholders. The ld. counsel for the assessee submitted that the Assessing Officer may be given the direction, which is an alternate plea taken by the assessee to allow the deduction, in the year of handing over the shares to the legitimate claimant of the shares. We have also heard the ld. D.R. on this issue. We are unable to concede the alternate plea of the ld. counsel. It is well-settled principles now that being an appellate authority, we cannot travel beyond the assessment year save which is before us. If in future, the assessee hand over the shares to the legitimate claimant then he has other remedies in the Act and he can resort to the same. For the reasons given above, we dismiss Ground Nos. 3.0 and 3.01 in the assessment year 2003-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 as in said assessment year, the dividend was taxable. It is argued that the nature of the dividend per se remains the same and as the dividend is exempt under section 10( 33 )/( 34 ) of the Act, no addition can be made. Ld. counsel further argued that in view of section 115-O, the dividend has already been taxed in the hands of the Company and, hence, the same receipt cannot be taxed again. He also submitted that he is not pressing relevant ground in assessment year 2003-04. The ld. counsel has relied on the following precedents: ( i ) K. Simrathmull v. CIT [1967] 64 ITR 166 (Mad.). ( ii ) CIT v. Sir Kameshwar Singh [1935] 3 ITR 305 (PC). 14. Per contra, the ld. D.R. submitted that the assessee is not the real owner of the shares, but he is doing the trading in the shares and the unclaimed dividend are belonging to the real share owners, which cannot be treated as an dividend in the hands of the assessee. In respect of the alternate plea of the ld. counsel regarding section 115-O, the ld. D.R. argued that the tax brought on distributed profits was the incidence on the company and it has nothing to do with exemption granted to a dividend in the hands of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion, the precedent relied on by the ld. counsel do not support the case of the assessee so far as section 10( 33 ) is concerned. Admittedly, the assessee is not the shareholder, but is the share broker and hence, the receipt of the dividend in his hand will enhance his commission or profit and hence, the Assessing Officer has rightly brought to tax the same. 16. Now we deal with the alternate plea of the ld. counsel as the dividend is already taxed under section 115-O and hence, there cannot be double tax on the same receipt. Section 115-O was brought on the Statute Book with effect from 1-6-1997 by the Finance Act, 1997 which reads as under : "115-O. Tax on distributed profits of domestic companies. (1) Notwithstanding anything contained in any other provision of this Act and subject to the provisions of this section, in addition to the income-tax chargeable in respect of the total income of a domestic company for any assessment year, any amount declared, distributed or paid by such company by way of dividends (whether interim or otherwise) on or after the 1st day of June, 1997, whether out of current or accumulated profits shall be charged to additional income-tax (herea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hareholder." Moreover, while explaining the provisions of the Finance Bill in memorandum of objects, more particularly, the purpose of introducing section 115-O, it was stated as under : "The Bill also proposes to introduce new provisions for levying a moderate tax on distributed profits. Under the new provisions, the amounts declared, distributed or paid on or after 1st June, 1997, by a domestic company by way of dividends shall be charged to additional income-tax at a flat rate of ten per cent in addition to the normal income-tax chargeable on the income of the company. The principal officer of the company and the company shall be liable to pay income-tax to the credit of the Central Government within fourteen days from the declaration of dividends. If the principal officer and the company fail to so pay the income-tax to the credit of the Central Government, he or it shall be liable to pay simple interest at the rate of two per cent. For every month or part thereof on the amount of tax payable and such principal officer and the company shall also be deemed to the assessee in default in respect of the amount of tax payable. It is further proposed that no deduction under any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2002-03. In the light of our above discussion, we are of the opinion that for the assessment years 2000-01 to 2002-03 and 2004-05, the dividend income cannot be taxed in the hands of assessee though same cannot be treated in strict sense as dividend in the hands of the assessee as it is not the shareholder. We, therefore, decide this issue in favour of the assessee, save for the assessment year 2003-04 and, accordingly, respective grounds are allowed. 19. Now we take up the revenue s appeal being ITA No. 6660/Mum./2007. The revenue has taken the following Grounds of appeal : "1. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in concluding that the payments made by M/s. SSKI Securities (P.) Ltd. to assessee company are not coming under the mischief of deemed dividend under section 2( 22 )( e ) of the Income-tax Act? 2. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in holding that the payment received from M/s. SSKI Securities (P.) Ltd. was on account of routine business relationship or in the normal course of business, when the Assessing Officer had found that the ledger account does not include ..... X X X X Extracts X X X X X X X X Extracts X X X X
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