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TMI Blog2017 (2) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirming the disallowance of consultancy charges of Rs. 27,86,230/- incurred on Assessee by: Shri Mayur Kisnadwala Department by: Shri M. C. Omi Ningshen designing and implementation of TDS and other systems. 1.1 Without prejudice to the above, even after considering the above expenses as capital in nature, the CIT(A) erred in not directing the AO to grant depreciation on the same as allowable under the Income Tax Act, 1961 ('Act'). 2. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the disallowance u/s.14A of the Act to the extent of 10% of the total exempted income. 3. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the action of AO of not granting a deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NO.1:- 4. Under this issue the assessee has challenged the confirmation of disallowance of consultancy charges of Rs. 27,86,230/- incurred on designing and implementation of TDS and other systems. The learned representative of the assessee has argued that the assessee is in the business of manufacturing, purchasing, processing and refining crop protection goods etc. The said expenditure was incurred for improvement and rationalization of the existing system, to make it compatible with the Indian legal requirements. The changes made to the existing system were with respect to the TDS and Works Contract Tax System, Security Deposit Management System, Excel Vouchers upload systems, interface of auto-booking of excise / CENVAT to BayMAP syste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the law settled in Commissioner of Income Tax Vs. Raychem RPG Ltd. [2012] 346 ITR 138 Hon'ble Bombay High Court and Commissioner of Income Tax Vs. Asahi India Safety Glass Ltd. [2012] 346 ITR 329 Hon'ble Delhi High Court. In view of the said circumstances, we set aside the finding of the CIT(A) on this issue and also the expenditure to the tune of Rs. 27,86,230/- is being treated as revenue is nature. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE NO.1.1:- 5. Under this issue the assessee took the alternate plea to treat the consultancy charges to the tune of Rs. 27,86,230/-, if any, capital in nature and to allow the depreciation thereon but the said expenditure has already been treated as r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting to Rs. 8.1 crores, therefore no interest is required to be disallowed. 7. The present assessment year is 2002-03 in which there is no applicability of the provision of section 14A read with Rule 8D of the Act in view of the law settled in Hon'ble Bombay High Court in Godrej & Boyce Ltd. reported in 328 ITR 81. No doubt the CIT(A) confirmed the disallowance to the extent of 10% of the expenditure but did not consider the plea of the assessee with regard to the investment from its own fund to the tune of Rs. 81 crores. The balance sheet of the assessee is on the file which lies at page 23 to 36 of the paper book and speaks that the assessee's own fund is more than the investment. However, in this regard the details have also been give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Ltd. (313 ITR 340), accordingly, we delete the expenditure assessed by the CIT(A) in view of the provision u/s.14A of the Act. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE NO.3 8. Under this issue the assessee has challenged the confirmation of the action of the Assessing Officer for not granting a deduction of Rs. 1,61,500/- towards refurnishing inspite of directions of Hon'ble Income Tax Appellate Tribunal, Mumbai. The Assessing Officer presumed that this ground has not been pressed. But it is not so. This ground is required to be adjudicated. In the said circumstances, it is directed that the Assessing Officer must comply with the directions issued in ITA No.2902/Mum/2007 dated 02.01.2013 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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