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TMI Blog2012 (7) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... aring total income of Rs. 12,79,35,253/-. Subsequently, the case was selected for scrutiny and the assessment proceedings was initiated by issuing notice u/s.143(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). The assessment proceeding was completed on 28-12-2008. The Assessing Officer made following disallowances:- (i) Expenditure capitalized in accounts claimed u/s.37 Rs. 25,20,000/- (ii) Disallowance of garden expenses1 Rs. 27,06,563/- (iii) Disallowance of R & D expenditure Rs. 1,86,24,000/- (iv) Dis of u/s. 14 of the I.T. Act Rs. 3,00,000/- Against these disallowances, assessee filed appeal before Ld. CIT(A). Ld. CIT(A) following the order of predecessor in A.Y 2004-05 directed the Assessing Officer to allow weighted deduction of recurring expenses related to building of Rs. 38.33 lakh, municipal tax of Rs. 9.21 lakh and salary to Dr. C. Dutt of Rs. 75.97 lakh. Hence, the disallowance of weighted deduction on motor car expenses interest etc. was confirmed. However, accepting alternative submission of the assessee allowed depreciation on motor car and interest expenses capitalized. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Hon'ble co-ordinate bench in ITA No.3569/Ahd/2004 (supra) in favouor of assessee. In view of the matter, we do not find any infirmity into the order passed by Ld. CIT(A). Hence, this ground of Revenue's appeal is dismissed. 8. In the result, Revenue's appeal is dismissed. Now we take up assessee's appeal in ITA No1881/Ahd/2009. 9. The assessee has raised following grounds of appeal:- "1. On the facts and in the circumstances of the case, the CIT(A) erred in confirming the disallowance of Rs. 63,00,000 which was claimed by the assessee on revenue account. 2. On the facts and in the circumstances of the case, the CIT(A) erred in not upholding the assessee's claim for deduction in a sum of Rs. 1,24,48,500 being 150% weighted deduction u/s. 35(2AB) in respect of capital expenditure on motor cars and interest totaling Rs. 82,99 lacs. 3. On the facts and in the circumstances of the case, the CIT(A) erred in upholding the disallowance of Rs. 3 lacs made by the Assessing Officer by purportedly invoking the provisions of section 14A. 4. On the facts and in the circumstances of the case, the CIT(A) erred in not upholding the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case, the facts are entirely different and it is not the allegation of the Revenue from the Assessing Officer's stage till now that the assessee has acquired this software for unlimited user of licence and this is outright purchase. The Revenue also relied on the decision of Hon'ble Rajasthan High Court in the case of CIT v. Arawali Constructions Co. (P) Ltd. [2003] 259 ITR 30 (Raj) but the facts in that case are also in regard to distinguishable as in that case the software was an outright purchase of computer programme which relates to technical "know-how". We find that the Assessing Officer has not given any finding as to the fact that whether expenditure on computer software gives an enduring benefit to an assessee, the duration of time for which the assessee right to use the software becomes relevant. Accordingly we are of the view that in case the software becomes obsolete with technological innovation and advancement within a short span of time, it can be said that where the life of the computer software is shorter or say less than 2 years, it may be treated as revenue expenditure. Hence, we find that the CIT(A) has recorded a categorical finding that the sof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82.99 lakhs consisting of car and interest capitalized." 14.1 In the light of these facts as has been noted by Ld. CIT(A) in the above para, we examine the applicability of various contentions raised by Ld. AR of the assessee. First contention of Ld. AR of the assessee is this that since the salary to employee is eligible for deduction u/s 35(2AB) of the Act, acquisition of motor car for those employees should also be considered as eligible for this benefit. We do not find any merit in this contention of Ld. AR of the assessee. Simply because of this reason that motor cars are purchased for providing to the employees of research & development wing of the assessee, it cannot be accepted that the expenditure is incurred on in-house scientific research & development. In our considered opinion, the primary condition to the satisfied by the assessee for being eligible for this weighted deduction is this that the expenditure was incurred on in-house research & development and then only, it can be accepted that, expenditure on motor car is also eligible for such deduction. We would like to observe that the perquisite value of the car being expenditure incurred by the assessee-company on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Kerala High Court in the matter of CIT v. Catholic Syrian Bank Ltd. [2012] 207 Taxman 2/[2011] 9 taxmann.com 148 (Mag.). On the contrary, Ld. CIT-DR supported the orders of authorities below. 16. We have heard the rival submissions, perused the material available on record. We find that Ld. CIT(A) has given a categorical finding in para-6.3 of his order, same is reproduced hereinbelow:- "6.3 I have considered the facts of the case and the submissions of the AR of the appellant. However, I am not in agreement with the 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. I find force in the observation of the AO that certain administrative efforts were necessarily required for earning the exempt income. Hence, I am of the opinion that the disallowance of Rs. 3 lakhs made by the Assessing Officer is quire justified and this ground is dismissed." We find that case law cited by Ld. AR in the matter of Catholic Syrian Bank Ltd. (supra), wherein the Hon'ble Kerala Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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