TMI Blog2011 (4) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... h was not available at the time of passing of the order by the authorities below - set aside the order of CIT(A) and restore the issue to the file of AO for passing a fresh order after necessary examination in the light of decision of the special bench. Legal and professional fees - Held that:- The expenditure had been incurred to explore options for providing value added services to the customers through the internet incurred for more efficient conduct of the existing business, thus to be held as revenue in nature Disallowance u/s 14A - Held that:- As assessee in this case has received dividend only from one company some indirect expenses on collection of dividend and accounting of income etc have to be incurred even though this may be only nominal - Decided against the assessee Contribution of employees provident fund - deduction under section 36(1)(va) disallowed - Held that:- CIT(A) has however held that the payments had been made within due dates but he has not given details of actual date of payment, thus unable to arrive at any conclusion. The matter requires verification. - ITA No. 6919/M/2004 - - - Dated:- 20-4-2011 - D. Manmohan, Rajendra Singh, JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenditure was of the nature of technical services. The AO noted that the assessee had not deducted tax at source. He therefore disallowed the expenditure under section 40(a)(i). In appeal the assessee submitted that it was rendering broking services to several foreign institutional investors who operated outside India. The assessee provided the institutional clients the research reports on Indian capital market and these reports were got printed outside as the clients were located outside. The income on account of these payments did not accrue or arise in India. It was also submitted that the parties which had printed the report had not rendered any technical services. CIT(A) was satisfied by the explanation given by the assessee. It was observed by him that the foreign parties who had printed the reports had no business connection in India and they had no permanent establishment in India and therefore income was not taxable in India. It was also held by him that printing of research reports did not amount to rendering technical services. CIT(A) accordingly deleted the addition made aggrieved by which the revenue is in appeal before the tribunal. 3.1 We have heard both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in appeal before the tribunal. 4.1 Before us the Learned DR submitted that the issue was required to be examined in the light of decision of the special bench of tribunal in case of Amway India Enterprises (111 ITD 112). The Learned AR for the assessee on the other hand submitted that the expenditure on software had to be treated as revenue expenditure. He placed reliance on the judgment of Hon'ble High Court of Madras in case of Sundaram Claytom Ltd. (321 ITR 69) and on the judgment of Hon'ble High Court of Punjab and Haryana in case of CIT vs Varinder Agro Chemicals Ltd. (309 ITR 272). It was also submitted that in case the issue was restored to the AO for fresh examination the AO may be directed to consider these judgments also. 4.2 We have perused the records and considered the matter carefully. The dispute is regarding allowability of expenditure incurred on acquisition of software as revenue expenditure. We find the same issue has been examined in details by the special bench of the tribunal in case of Amway India Enterprises (supra) in which special bench after considering several judgments of the High Court and Supreme Court has laid down certain guidelines in un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net. The expenditure did not result in acquisition of any new assets or in any new source of income. We agree with the finding of the CIT(A) that the expenditure had been incurred for more efficient conduct of the existing business. Therefore we see no infirmity in allowing the claim as revenue expenditure. The same is therefore upheld. 6. The fifth dispute is regarding disallowance of expenses relating to exempt income under section 14A of the Income-tax Act. The AO noted that the assessee during the year had received dividend income of Rs.42,57,450/- which was exempt from tax. He therefore attributed 5% of dividend income as expenditure incurred relating to the dividend income amounting to Rs.2,12,872/- which was disallowed. In appeal the assessee submitted that it had acquired 94651 preference shares of KCL for consideration of Rs.11,07,00,000/- during the financial year ending 31.3.97 and dividend income had been received from the said shares. The said shares had been acquired out of share capital and reserve amounting to Rs.90,99,61,000/-. Therefore no borrowed funds were utilized for acquiring the shares and there was no interest expenditure involved. Since the dividend had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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