TMI Blog2012 (7) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... fit for same reasons because it is equal or similar to cost of car – Against assessee Disallowance made u/s 14A of the Act - disallowance made merely on the basis of estimation of administrative expenses earned to tax free income - contention of the appellant that earning of dividend income does not require any specific/special administrative efforts, as even where company presumes to have not invested in single penny of money in shares /scripts, company would have to pay salary to its employees – Held that:- Proportionate disallowance u/s. 14A should be limited to only interest liability and not overhead or administrative expenditure, which should be considered for disallowance under Rule 8D of the I.T. Rule, 1962 from 2007-08 - addition made on account of administrative expenses deleted - assessee's appeal is partly allowed. - IT APPEAL NOS. 1869 & 1881 (AHD.) OF 2009 - - - Dated:- 31-5-2012 - A.K. GARODIA, KUL BHARAT, JJ. Kartar Singh for the Appellant. S.N. Soparkar for the Respondent. ORDER Kul Bharat, Judicial Member These are cross-appeals - one filed by the Revenue and another filed by the assessee are directed against the common order of Ld. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that this issue is squarely covered in favour of assessee in ITA No. 4356/Ahd/2007 order dated 31-01-2011 by the co-ordinate Bench. Ld. AR submitted Hon'ble ITAT has followed the decision rendered in respect of A.Y. 2004-05. 5. We have heard the rival submissions, perused the material available on record and the judgment cited by the parties. There is no dispute that the facts in the present case are identical with the facts of the case pertaining to A.Y. 2004-05. We have perused the order of the Hon'ble co-ordinate Bench in assessee's own case in ITA No.4356/Ahd/2007 (supra). The Hon'ble Tribunal following the decision of co-ordinate Bench in ITA No.1347/Ahd/2007 for A.Y. 2003-04 dismissed the ground of appeal raised by Revenue. In view of the fact that issue has already been decided by Hon'ble co-ordinate Bench in ITA No. 4356/Ahd/2007 for A.Y. 2004-05 and ITA No.1347/Ahd/2007 for A.Y. 2003-04 in assessee's own case. Respectfully following the order of the co-ordinate bench, this ground of Revenue's appeal is dismissed. 6. Another effective ground as raised by the Revenue is with regard to deleting the disallowance of weighted expenses on R D of Rs. 1,03,25,000/-. Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enterprise Resource Planning (ERP for short) provided by SAP. It would also train people so that data migration from legacy system to SAP would smooth and train people in the running of the ERP system. Total payments made to IBM amounting to Rs. 63 lakh. It was submitted before Ld. CIT(A) that ERP expenditures are essentially revenue in nature which are related to upgrading its present accounting software and entire exercise of going for ERP for smooth functioning of the organization. Ld. counsel for the assessee submitted that the submission of assessee was not considered in right perspective by Ld. CIT(A). He submitted that the expenditure as claimed by assessee are revenue in nature in view of various judicial pronouncements in this regard. Ld. AR submitted that this issue is decided in favour of assessee in assessee's own case in ITA No.4343/Ahd/2007 order dated 31-01-2011. Ld. AR further submitted that in identical facts, the Hon'ble Bombay High Court has decided this issue in favour of assessee in IT Appeal No. 4176 of 2009 dated 04-07-2011 in the case of CIT v. Raychem RPG Ltd. On the contrary, Ld. CIT-DR supported the orders of authorities below. 11. We have heard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture incurred on ERP is of revenue in nature. Respectfully following the aforementioned decision, we allow this ground of assessee's appeal. 12. Next ground of assessee's appeal with regard to upholding the assessee's claim for deduction in a sum of Rs. 1,24,48,500/- being 150% weighted deduction u/s. 35(2AB) of the Act in respect of capital expenditure on motor cars and interest totaling to Rs. 82.99 lakh. 13. Ld. Authorized Representative for the assessee submitted that Ld. CIT(A) erred in upholding the assessee's claim for deduction u/s. 35(2AB) of the Act. It is submitted that the motor cars provided to employees in the cadre of AGM and once the salary to the employees as provided during the course of employment is also allowable. On the contrary, Ld. CIT-DR supported the orders passed by Ld. CIT(A) and vehemently argued that same is not allowable for weighted deduction. 14. We have heard the rival submissions, perused the materials available on record. We find that Ld. CIT(A) has returned the finding of fact in para-5.3 of his order, which is reproduced hereinbelow:- "5.3 I have considered the facts of the case and the appellant's submissions carefully. Similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came into car provided by the employer or by public transport or hired car has no bearing on in-house research development. 14.2 Now, we examine the applicability of the judgment of Hon'ble Apex Court cited by the Ld. AR of the assessee reported in 209 CTR (Statute) 89 case, the issue involved was regarding deduction u/s 35 (1)(iv) of the Act. When we examine the provisions of Section 35(1)(iv) of the Act, we find that these are materially different from the provisions of u/s. 35(2AB) of the Act because in Section 35(1), there is no condition that the expenditure on scientific research has to be incurred on in-house research development facilities and there, all expenditures incurred on scientific research related to the business is eligible for deduction u/s. 35(1) and in clause (iv) of Section 35(1) is covered the expenditure of capital nature on scientific research related to the business carried on by the assessee and hence, in this clause also, there is no condition that such cost has been incurred on in-house scientific research facilities as in Section 35(2AB) of the Act and because of this reason, this judgment is not applicable in the present case. 14.3 In vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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