TMI Blog2011 (1) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of assets of various schemes launched by ING Vysya Mutual Fund. The return was filed declaring a loss of ₹ 9,60,46,146/-. However, the assessment was completed at a loss of ₹ 824,90,355/- vide order dated 28.12.2006 passed under section 143(3) of the Income tax Act, 1961 (the Act). On appeal the ld. CIT(A) partly allowed the appeal. 3. Being aggrieved by the order of the ld. CIT(A) the assessee and the revenue both are in appeal before us. ITA No.1975/M/10 (Assessee's Appeal) (Assessment Year 2004-05):- 4. Ground No.1 is against the sustenance of disallowance of ₹ 13,45,013/- u/s. 14A. 5. The brief facts of the above issue are that during the course of assessment proceeding it was interalia observed by the Assessing Officer that the assessee has shown dividend income of ₹ 1,34,50,128/-. The assessee was asked to furnish the details with respect to expenses incurred on earning dividend income. In response it was interalia submitted by the assessee that no expenditure was incurred on earning dividend income for the year under consideration, therefore, no disallowance may be made u/s.14A of the Act. The reliance was also placed on the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities on this account and send back the matter to the file of the Assessing Officer who shall decide the same afresh in the light of the directions of the Hon'ble Jurisdictional High Court in the above cited case after providing reasonable opportunity of being heard to the assessee. 8. As regards the plea of the ld. Counsel for the assessee for the assessee that the disallowance u/s.14A should not exceed the disallowance made by the Assessing Officer in view of the decision of the Tribunal in the case of ACIT vs. Indexport Ltd. 2009-TIOL-136- ITAT-Mum and DCIT vs. Citizen Hotels Pvt. Ltd. 2009-TIOL-398-ITATITA Mum we do not find any merit as both the cases are prior to the judgment of Hon'ble Jurisdictional High Court(supra). The ground taken by the assessee is, therefore, partly allowed for statistical purposes. 9. Ground No.2 is against the sustenance of disallowance of allocated regional overheads ₹ 23,39,857/-. 10. It was observed by the Assessing Officer that the assessee has debited expenses of ₹ 32,64,593/- as allocated regional overheads. In the audit report it was stated that the assessee had provided ₹ 23,39,857/- towards reimburse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the assessee is at liberty to take remedial action in the Assessment Year 2007-08 if the same amount was offered for taxation there. The ground taken by the assessee is therefore, rejected. 14. Ground No.3 is against the sustenance of disallowance of software expenses ₹ 9,46,032/-. 15. Under the head software expenses the Assessing Officer found that the following expenses are incurred by the assessee on software:- S.No. Particulars Amount in Rupees 1. Oracle 9I and IBM MQ series software 6,46,032 2. Onsite software development work 3,00,000 Total 9,46,032 The Assessing Officer after considering the assessee's explanation that the information technology expenses are allowable as revenue expenditure u/s.37(1) of the Act held that these software expenses are capital in nature and accordingly he disallowed the claim of the assessee. 16. At the time of hearing both parties have agreed that this issue is squarely covered by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of the criteria laid down in para-59 of the order supra, and if the Assessing Officer comes to the conclusion that the expenditure is capital expenditure then he should allow due depreciation. Respectfully following the above decision of the Special Bench of the Tribunal we set aside the order passed by the revenue authorities on this account and send back the matter to file of the Assessing Officer who shall decide the issue afresh in the light of the directions of the Tribunal (supra), and according to law after providing reasonable opportunity of being heard to the assessee. The ground taken by the assessee is, therefore, partly allowed for statistical purposes. 18. Ground No.4 is against the sustenance of disallowance of advertisement expense ₹ 10,49,722/-. 19. On perusal of administrative and other expenses schedule, it was interalia observed by the Assessing Officer that the assessee company has debited ₹ 1,35,35,020/- on account of advertisement expenses. The assessee was asked to produce bills for verification. The assessee while submitting details of advertisement expenses with supporting documents on a sample basis interalia submitted that the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file of the Assessing Officer who shall decide the same afresh in the light of the direction of the Tribunal supra, and according to law after providing reasonable opportunity of being heard to the assessee. The ground taken by the assessee is, therefore, partly allowed for statistical purposes. ITA No.2264/Mum/2010 (Revenue s appeal) (Assessment Year 2004-05):- 23. All the grounds taken by the revenue are against deletion of disallowance of ₹ 38,56,963/- out of rent paid by the assessee towards sharing of garden space. 24. The brief facts of the above issue are that it was observed by the Assessing Officer that the assessee during the year under consideration has paid expenses of ₹ 95,01,986/- in respect of office and garden premises situated at 17, Lincoln Lodge, Altamount Road, Mumbai. The break up of these expenses are as under: Nature of Expenses Amount(Rs.) Repairs Maintenance(for 6 years) 1,029,741.00 Compensation for not contributing proportionate security deposit of ₹ 4.67 crores 5,418,498.38 Others ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's own case for the Assessment Years 2001-02 ad 2002-03 supra wherein the Tribunal while following the decision of the Special Bench of the Tribunal in JCIT vs. ITC Ltd. (2008) 115 TTJ (Kol.) (SB) 45 has held vide para-11 of its order dated 18.7.2008 as under :- 11. The Assessing Officer has disallowed the rent of garden space simply on the ground that the nature of assessee s business did not necessitate any garden space. What amount of expenditure is to be incurred by the assessee in carrying on its business purely falls in his domain and the Assessing Officer cannot interfere so long as the expenditure is for business and has been genuinely incurred. For the reason that the Assessing Officer has not denied that the assessee was in fact using the garden space for which it had pad rent in inclusive manner, then the addition is not called for in light of the afore-noted Special Bench order in ITC Ltd. (supra). We therefore, hold that the sustainance of disallowance of ₹ 7,19,954 towards rent for garden space is erroneous. Accordingly, this addition is ordered to be deleted. Now we come to the second component, being the rent for office space. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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