TMI Blog2016 (10) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and confirmed by the CIT-(Appeals). 3. During the course of hearing before us, the Ld.AR submits that the issue squarely covered by the consolidated order of Coordinate Bench in Assessee s own case for A.Y 2003-04 2004-05 in ITA 189/Kol/2007 and ITA 1414/Kol/2007 respectively. The Ld. DR relied on the orders of CIT-A and AO. 4. Heard rival submissions and perused the material on record. We find that the consolidated order supra as placed on record by the Ld.AR, the Tribunal decided the issue therein is similar to the issue on hand covering the grounds as raised in no s 1(a) (b) and the relevant portion of which is reproduced herein below: 25. The issue raised in Ground No. 8 relates to the disallowance of 1.51 crores made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of provision made by the assessee for leave encashment. 26. The assessee-Company during the year under consideration had made a provision of ₹ 1.51 crores for leave encashment on the basis of an acturial valuation and the same was claimed as deduction by relying on the decision of the Hon ble Calcutta High Court in assesese s own case reported in 292 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pendency of this Civil Appeal, pay tax as if section 43B(f) is on the Statute Book but at the same time it would be entitled to make a claim in its returns . 28. We have carefully perused the Interim Order dated 8t h May, 2009 passed by the Hon ble Supreme Court in the matter. It is observed that the Hon ble Apex Court in the said order has made it clear that the assessee, during the pendency of the Civil Appeal, would pay tax as if Section 43B(f) is on the Statute Book, but at the same time, it would be entitled to make claim in its return. Keeping in view all these developments, the Coordinate Bench of this Tribunal in the case of Dy. CIT vs.- BLA Industries Pvt. Ltd. (ITA No. 1434/KOL/2012 dated 16.01.2015) has restored the similar issue to the file of the Assessing Officer with a direction to await till the final decision of the Hon ble Supreme Court on the issue and then to decide the issue accordingly. Following the said decision of the Coordinate Bench, we restore this issue to the file of the Assessing Officer with the similar direction. Ground No. 8 is accordingly treated as allowed for statistical purposes. 5. Taking into consideration the order supra, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the sides and also perused the relevant material available on record. As rightly submitted by the ld. Counsel for the assessee, this issue is covered in principle in favour of the assessee by the decision of the Hon ble Supreme Court in the case of Rotork Controls India (Pvt.) Limited vs.- CIT reported in 314 ITR 62, wherein the Hon ble Apex Court has held that the provision of warranty is allowable as deduction if the following conditions are satisfied:- (i) An Enterprise has a present obligation as a result of past events; (ii) It is probable that an out-flow of resources will be required to settle the obligation; (iii) A reliable estimate based on historical trend can be made on account of obligation on the basis of historical trend. 10. The ld. D.R. has not raised any contention to dispute the proposition propounded by the Hon ble Supreme Court in the case of Rotork Controls India (Pvt.) Limited (supra) on this issue. He, however, has contended that the issue as to whether the assessee in the present case has satisfied the conditions laid down by the Hon ble Supreme Court for allowing deduction on account of provision for warranty requires verification and since the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d non-trade investments respectively. 12. Considering the submissions above, the AO was of the opinion that the assessee could not provide one to one nexus in showing that the borrowed fund not been diverted to investments and by providing cumulative figures of balance sheet or the gross earnings of the year does not establish that borrowed fund has not been used for making investment. The AO further found that the assessee did not allocate that the administrative and miscellaneous charges and direct and indirect expenses properly and proceeded to apply Rule 8D(2)(ii) and (iii). Accordingly, the AO computed the expenditure of ₹ 1,86,487/-, ₹ 9,92,67,063/- and ₹ 2,24,06,750/- U/R 8D(2)(i),(ii) and (iii) respectively and disallowed an amount of ₹ 12,18,60,300/-for the purpose of section 14A of the Act and added same to the total income of the Assessee. 13. In first appeal, the assesse submitted details of interest paid on term loans, working capital and fund mobilization expenses in a tabular form, wherein the assesse admits that ₹ 16.05 crores where it could not be able to specifically show that such sum utilized for business purpose out of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Identified by assessee in tax audit report and duly approved by AO under Rule 8D(i) 1,86,487 In case the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular income Under Rule 8D(ii) the AO considered ₹ 38.17 crores. Of which ₹ 22.04 crores and ₹ 0.07 crores can be identified to be directly linked with regular business needs and generating taxable income. Hence, Interest can be apportioned to: 16,05,61,945 x 429.21/ 1723.27 3,99,90,245 Amount equal to % of avg. investment % x 429.21 under Rule 8D(iii) 2,14,60,500 TOTAL 6,16,37,232 Average of total value of investments, income from which does not or shall not form part of total income:- Rs. In crores 31.3.2007 31.3.2008 Total investments 378. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the amount as computed by applying Rule 8D(2)(i),(ii) and (iii) of ₹ 12,18,60,300/- only on the ground that the assessee could not provide one to one nexus in showing that the borrowed fund not been diverted to investments. We find from the order of CIT-A, that the Assessee submitted details of interest shown in Annual Report by way of tabular form wherein the assesse admitted that it could not able to show an amount of ₹ 16,05,61,945/- has one to one nexus with the business purpose and Assessee itself recomputed the disallowance U/Rule 8D(2)(i),(ii) and (iii) to an extent of ₹ 6,16,37,232/- and urged therein to restrict the same to that extent.The case of the AO that the Assessee could not explain and produce anything during the course of assessment proceedings showing one to one nexus date wise investments and source of fund thereon and in view of the tabular forms as submitted by the Assessee and discussed by the CIT-A as the same were not in the file of AO and it is appropriate, in our view, to remand the issue to the file of AO for verification of details of payment of interest as shown in the annual report as discussed in para-6.2 of impugned order a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally treated as capital in nature. During the year under consideration, the said ERP package was upgraded by the assessee and the expenditure in question thus was incurred by the assessee on upgradation of ERP as well as implementation thereon. As rightly submitted by the ld. Counsel for the assessee, the expenses incurred on upgradation of ERP has already been held as revenue expenditure allowable as deduction in the various decisions rendered by the Hon ble High Courts as well as the different Benches of this Tribunal. In one of such decisions rendered in the case of CIT vs.- Amway India Enterprises, this issue has been elaborately dealt with by the Special Bench of this Tribunal and after discussing all the relevant aspects, it is held that expenditure incurred on upgradation of ERP module would be allowable as deduction being revenue in nature. At the time of hearing before us, the ld. D.R. has contended that the upgradation of ERP is nothing but replacement of ERP package as the earlier version of ERP becomes completely useless after upgradation. We are unable to agree with the contention of the ld. D.R. In our opinion, there is a difference between upgradation of ERP Softwar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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