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TMI Blog2012 (11) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... 54/- C. Capitalisation of expenditure incurred under the head "Repairs and Maintenance" 3,33,435/- 2)Your appellant craves leave to add, to delete or modify all or any of the above grounds which are independent of each other." Revenue's Grounds of Appeal: 1."On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 6,89,768/- being bad debts written off and claimed u/s. 36(1)(vii) r.w.s. 36(2) of the Act." 2 "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of expenses amounting to Rs.53,27,355/- under section 14A r.w.rule 8D of the Act, made by the AO." 3. i. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of penalty of Rs.8,70,951/- on violation of the bye-laws of the stock exchange, which are statutory in character and thus amounted to infringement of law". ii. " On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in ignoring the fact that the penalty is imposed under SEBI [procedure for holding inquiry and imposing penalty by Adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve formula is more than Rs.10,53,610/- then the higher figure should be replaced to the said amount of Rs.10,53,610/-. Both parties are aggrieved with such order of the Ld. CIT(A). 2.2 It was the common contention of both the parties that the matter should be restored back to the file of AO with a direction for denovo consideration of the issue after giving the assessee a reasonable opportunity of hearing. 2.3 In view of the situation, after hearing both the parties, we are of the opinion that the matter should be restored back to the file of AO with a direction to readjudicate the issue as per the provisions of law by taking into consideration the aforementioned decision of Hon'ble Bombay High Court in the case of Godrej Boyce Mfg. Co. (supra) We direct accordingly. The aforementioned ground relating to disallowance u/s. 14A revenue as well as assessee are treated as allowed for statistical purposes. 3. Ground No.1B of the assessee is stated to be covered by the earlier decision of the Tribunal for A.Y 2006-07 in the case of the assessee itself, which is dated 21/3/2012 in ITA No.1873/M/10, wherein similar disallowance of Rs.31,77,416/- was made on account of payments made to n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt judgment in case of Transmission Corporation of India 239 ITR 587 that the moment there is a payment to a non-resident, there is an obligation on the payer to deduct tax under section 195(1)". 10. Before us the learned Counsel submitted that the CIT (A) did not examine the merits of the assessee's contention that the amounts are not covered by TDS provisions but only decided the issue on the basis of the Hon'ble Karnataka High Court in the case of Samsung Electronics 320 ITR 209. It was submitted that the Hon'ble Supreme Court in the case of GE India Technology Centre (P) Ltd 327 ITR 456 reversed the decision of the Hon'ble Karnataka High Court (supra) and held that the expression "chargeable under the provisions of the Act" in section 195(1) shows that the remittance has got to be of trading receipts, the whole or part of it is liable to tax in India. If tax is not so assessable, there is no question of tax at source being deducted. It was submitted that the assessee is covered by the provisions of the DTAA as there was no PE in India. On the basis of the CA certificate, the amount was remitted without any TDS. However, it was fairly submitted that arguments of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder various heads of accounts. The AO sorted out the following expenses which as stated in the assessment order are allowed to be capitalized and eligible for depreciation at the applicable rates. S.No. Description Amount (Rs.) 1.. Net working charges 108385 2. Interior and Alluminium Patti work 108381 3. Exp for Admin. Dept. 116687 Total 333453 4.1. It is the case of the assessee that none of these expenditure can be said to have been incurred on account of capital as these expenditure are routine expenditure incurred for the purpose of carrying on its normal course of business. It is the case of the assessee that these items are of trivial value and are being incurred in the regular course of business and no expenditure had given benefit of enduring nature to the assessee. All the details regarding these expenditure have been filed and copy of these evidences are placed at page 9 to 43 of the paper book. An amount of Rs. 1,08,381/- is paid to M/s. Thulasi Interiors on account of interior aluminum patti work at Santcruz Branch. Another amount of Rs.1,08,355/- is paid to INMAC Computers Pvt. Ltd. which is on account of net working charges for Kolhapur, Nashik and Bhop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute that assesses had made such payments to NSE for non-observance of its regulations regarding capital adequacy settlement period and submissions of datas. As per Explanation to sub-s (1) of s.37 of the Act, an expenditure incurred by the assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business and no deduction or allowance thereof shall be allowed. Therefore, for application of this Explanation, it is necessary there should be an expenditure relatable to an offence or for a purpose which is prohibited by law. Nothing has been brought to rebut the contentions of the assessee that NSE was an independent body and the bye laws made by it for the regulation of its members did not have the force of the law. Such bye-law could be, at the best be seen as private contracts entered between assessee and stock exchange and any violation, therefore, cannot be, in our opinion, equated with an offence or with an act prohibited by law, in the nature of assessee's business, as a member of NSE payments related to switching on the terminals, switched off for not abiding by the regulations of such exchange, or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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