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2015 (12) TMI 498 - ITAT CHENNAI

2015 (12) TMI 498 - ITAT CHENNAI - TMI - Disallowance of expenditure by invoking section 14A read with Rule 8D - Held that:- Rule-8D of the Rules was inserted by the I.T (Fifth Amendment) Rules, 2008 with effect from 24.03.2008. Therefore, this rule will be in operation only from assessment year 2009-10.

The earlier decisions of the Tribunal on several occasions had decided that 3% of the exempt income shall be treated as the expenditure incurred towards earning such exempt income U/s .....

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wance at ₹ 12,31,129/- as against ₹ 14,95,934/- worked out by the Ld. Assessing Officer. Accordingly, the order of the Ld. CIT (A) is confirmed for the assessment year 2009-10. - Decided partly in favour of assessee.

Computing deduction U/s. 10A - not reducing the overseas travel expenses and telecommunication expenses incurred in foreign currency from the total turnover when the same is excluded from the export turnover.( A.Y. 2008-09) - Held that:- This issue is squarely .....

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The software purchased by the assessee are application software used in the back up office operations and thereafter following the decision of CIT Vs. Asahi India Safety Glass Ltd. [2011 (11) TMI 2 - DELHI HIGH COURT ], CIT Vs. Amway India Enterprises Ltd., [2011 (11) TMI 4 - DELHI HIGH COURT] held the issue in favour of the assessee by treating the entire expenses as revenue expenditure. Since no further materials or arguments is brought before us by the Revenue to counter the decision of the L .....

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y directly or indirectly, though as per Income Tax Act such donation may not be allowable as a deduction. The decision of the Ld. CIT (A) in directing the Ld. Assessing Officer to treat the donation paid as allowable expenditure while computing the book profit of the assessee for the purpose of section 115JB of the Act is correct. Therefore we hereby confirm the order of the Ld. CIT (A) on this issue.- Decided against revenue - I.T.A.Nos.58 & 1280/Mds./2014, I.T.A.Nos.362 & 2021/Mds./2014 - Da .....

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of Income Tax (A)-III, Chennai, dated 30.10.2013 for the assessment year 2008-09 in ITA No.514/2013-14 and dated 25.02.2014 for the assessment year 2009-10 in ITA No.1558/2013- 14. Both the order is passed under section 143(3) read with section 250 of the Act. 2.1 The grounds raised by both the parties are concised herein below for adjudication. 2.2 Assessee s appeal A.Ys 2008-09 & 2009-10. The assessee has raised five & four grounds in its appeals for A.Ys 2008-09 & 2009-10 respect .....

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same is excluded from the export turnover for (A.Y.2008-09). 2.3 Revenues s appeal A.Ys 2008-09 & 2009-10. The Revenue has raised four & three elaborate grounds in its appeal for the A.Ys 2008-09 & 2009-10 respectively and the same are concised herein below as follows:- i) Ld. CIT (A) had erred in treating the soft ware expenses for 16.03 lakhs as revenue expenditure for A.Y.2008-09. ii) Ld. CIT (A) had erred in deleting the addition made towards donation of 8.35 lakhs while computi .....

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of Email support, voice support and chatting, filed its of return of income on 25.09.2008 admitting its income of 82,74,530/- for A.Y 2008-09 and on 25.09.2009 admitting its income of 5,12,090/- for A.Y 2009-10. Subsequently, both the cases were taken up for scrutiny and the assessment was completed U/s.143(3) of the Act on 30.12.2011 for A.Y 2008-09 & on 10.12.2012 for A.Y 2009-10 wherein the Ld. Assessing Officer made certain additions which were further sustained by the Ld. CIT (A) agains .....

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putation applying Rule 8D and reduced the disallowance from 11,55.800/- to 9,54,971/-. However, we find that Rule-8D of the Rules was inserted by the I.T (Fifth Amendment) Rules, 2008 with effect from 24.03.2008. Therefore, this rule will be in operation only from assessment year 2009-10. 4.2 The earlier decisions of the Tribunal on several occasions had decided that 3% of the exempt income shall be treated as the expenditure incurred towards earning such exempt income U/s.14A of the Act. Accord .....

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/- as against 14,95,934/- worked out by the Ld. Assessing Officer. Accordingly, the order of the Ld. CIT (A) is confirmed for the assessment year 2009-10. 5.1. Ground No.ii) - computing deduction U/s. 10A of the Act by not reducing the overseas travel expenses and telecommunication expenses incurred in foreign currency from the total turnover when the same is excluded from the export turnover.( A.Y. 2008-09) This issue is squarely covered by the Special Bench of the Tribunal in ITO Vs. Sak Soft .....

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the assessee had incurred expenditure towards purchase of software for 32,42,522. The Ld.A.O after examining the vouchers and ledger account of the assessee disallowed 26,22,322/- as revenue expenditure and treated the same as capital expenditure however allowed depreciation @60% which is applicable to computers. On appeal the Ld.CIT(A) after perusing the issue arrived at a conclusion that the software purchased by the assessee are application software used in the back up office operations and t .....

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Revenue to counter the decision of the Ld.CIT(A) and since the Ld. CIT (A) has only followed the decision of the Hon ble Delhi High Court and Mumbai Bench of the Tribunal in arriving at his decision, we hereby confirm the order of the Ld. CIT (A). 6.2 Ground No.ii) - Deleting the addition made towards donation of 8.35 lakhs while computing the book profit U/s. 115JB of the Act for A.Y.2008-09. It was observed by the Ld. Assessing Officer that the assessee had made a donation of 8.35 lakhs and de .....

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of the assessee and thereafter arrive at the net profit for the purpose of Section-115JB of the Act. We are in agreement with the decision of the Ld. CIT (A) for the following reasons:- i) Section-2(10) of the Companies Act defines the company as defined in Section 3(1) of the Act. ii) As per section 13(1)(d) of the Act, the main objects of the company has to be stated in the Memorandum of Association of the Company. iii) Every company including the relevant assessee company cannot extend its s .....

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