TMI Blog2018 (3) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... Held that:- In the instant case, we find that the issue before us is in respect of the custom duty of SAP software purchased by the assessee. No details have either been provided by the lower authorities or by the assessee as how the expenditure incurred on purchase of SAP has been dealt by the Assessing Officer. Further, there are no facts available on record as in which fields of the business activity, the said SAP software has been used by the assessee. For determining, whether the expenditure incurred on the software is capital expenditure of revenue expenditure in view of the decision in the case of Asahi India Safety Glass Limited (2011 (11) TMI 2 - DELHI HIGH COURT ), above facts are crucial and in absence of which, the issue cannot be decided judiciously. Thus restore the issue to the file of the Assessing Officer for deciding afresh in accordance with law. Addition u/s 14A - Held that:- By no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure “incurred by the assessee in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order dated 10/09/2014 passed by the Ld. Commissioner of Income-tax (Appeals), XXI, New Delhi [in short the Ld. CIT(A) ] for assessment year 2010-11. Since both the appeals have emanated from the same impugned order, both these appeals were heard together and disposed off by way of this consolidated order for convenience. 2. The grounds of appeal raised by the Revenue in ITA No. 6611/Del/2014 are reproduced as under: 1. On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition/disallowance of ₹ 13,15,248/- made by the AO on account of mutation of land. 2. On the facts and in the circumstances of the case the Ld. CIT(A) erred in deleting the addition/disallowance of ₹ 3,90,000/- made by the Assessing Officer on account of SAP software license. Ld. CIT(A) had also erred in allowing the depreciation of SAP Software @60% instead of 25%. 3. On the facts and in the circumstance of the case, Ld. CIT(A) erred in deleting the addition/disallowance of ₹ 50,35,000/- made by the AO u/s 14A 4. The appellant craves, leave or reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 44,83,91,310/-. Aggrieved with additions/disallowances, the assessee filed appeal before the Ld. CIT(A), who allowed the appeal partly vide the impugned order. 3.1 Aggrieved, both the parties are in appeal before the Tribunal, raising the grounds as reproduced above. 4. The ground No. 1 of the appeal of the Revenue relates to addition/disallowances of ₹ 13,15, 248/- made by the Assessing Officer on account of mutation of land. 4.1 Before us, the Ld. DR submitted that Ld. CIT(A) has not passed a speaking order on the issue in dispute and, thus, the issue might be restored back to the file of the Ld. CIT(A) for deciding a fresh. 4.2 On the contrary, the Ld. counsel submitted that the Assessing Officer has wrongly disallowed the expenses considering the same in the nature of mutation charges. According to the Ld. counsel, the payment was in the nature of land revenue except for a small amount of ₹ 10,200/- which was paid for changing the name of the company from Jay Engineering Works (old name) to Usha International Ltd . The Ld. counsel filed a paper book containing pages 1 to 82 and referred pages 6 to 16, which are receipt of land revenue charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.07.2009 1,71,380 -do- 11.01.2010 3,61,462 -do- 13.01.2010 10,200 Process fee towards mutation proceedings for change in name of company. 24.03.2010 2,206 Professional charges for a valuer for reconciliation of land measurement. 4.6 The Ld. Counsel has also enclosed letters addressed by the assessee company to Land and Land Reforms Officer for payment towards land revenue charges of land situated in Roynagar Mouza . All these letters are available from pages 7 to 12 of the paper book. Contents of one such letter dated 7th July, 2009 regarding payment of ₹ 5,34,820/- are reproduced as under: We hereby tender the land revenue vide Cheque No.056620 dt. 06.07.2009 for ₹ 5,34,820/- (Rupees Five lacs thirty four thousand eight hundred and twenty only) towards payment of land revenue for Bangla San 1416 in respect of our various premises totaling 27.80 acres in Roynagar Mouza. 4.7 Thus, it is manifested that, these payments are in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses as revenue in nature with following finding: 4.3 I have considered the order of the AO and the submissions of the assessee and find considerable merit in the submissions of the assessee that the computer software is a necessary business too! in the present age for any business activity and as such there is no proper justification for disallowing the expenses. Even otherwise the assessee is eligible for depreciation at the highest rate of 60% in the computer and the computer accessories and no fruitful purpose will be served by treating the same as capital expenditure and allowing the depreciation @ 60%. After considering all the facts and circumstances of the case, I am of the view that the expenses are of the revenue in nature and also not of much revenue significance and accordingly the addition made by the AO is deleted. 5.3 Before us, Ld. DR submitted that the expenditure on software would be revenue, if the software helps in running the business more efficiently without touching the profit-making structure of the assessee and it would be capital expenditure, if it has enhanced capacity of profit-making apparatus of the assessee. According to Ld. DR, the lower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpense or the expense being incurred in close proximity, in the subsequent years, would be conclusively determinative of its nature. The assessing officer has, in our view, erred precisely for these very reasons. 5.6 In the instant case, we find that the issue before us is in respect of the custom duty of SAP software purchased by the assessee. No details have either been provided by the lower authorities or by the assessee as how the expenditure incurred on purchase of SAP has been dealt by the Assessing Officer. Further, there are no facts available on record as in which fields of the business activity, the said SAP software has been used by the assessee. For determining, whether the expenditure incurred on the software is capital expenditure of revenue expenditure in view of the decision of the Hon ble Delhi High Court in the case of Asahi India Safety Glass Limited (supra), above facts are crucial and in absence of which, the issue cannot be decided judiciously. 5.7 In view of the above facts and circumstances, we feel it appropriate to restore the issue to the file of the Assessing Officer for deciding afresh in accordance with law. The assessee is directed to furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id dividend. According to the Ld. counsel, when the profit of all the companies got consolidated, inter alia transaction of inter-se dividend got nullified because persons cannot transact with themselves and, hence, dividend tax to the extent of ₹ 44.05 lacs being excess payment, is refundable. The Ld. counsel submitted that the assessee had filed an application before the Assessing Officer on 18/04/2012, but same was not decided by him. He further submitted that Ld. CIT(A) dismissed the ground raised by the assessee holding that there was no cause of action as the issue was not emanating or arising from the order of the Assessing Officer. 7.2 The Ld. counsel submitted that issue is covered in favour of the assessee by the order dated 15/01/2013 of the Hon ble Gujarat High Court in the case of Torrent Private Limited Vs. CIT, Special Civil Application No. 5857 of 2004. 7.3 On the contrary, Ld. DR relying on the order of the Ld. CIT(A) submitted that the Ld. CIT(A) has rightly not adjudicated the issue as it was not emanating from the order of the Assessing Officer 7.4 We have heard the rival submission and perused the relevant material on record. The Ld. counsel dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dividend distribution tax paid by M/s Greenfield Commercial Private Limited, in accordance with law. The ground No. 2 of the appeal of the assessee is accordingly allowed for statistical purposes. 9. The ground No. 3 of the appeal of the assessee relates to amount of ₹ 4,00,000/- paid to DLF Golf Club towards membership as refundable security. 9.1 The Assessing Officer and the Ld. CIT(A) rejected the claim of the assessee on the ground that the amount of refundable security deposit cannot be allowed as deduction as it was not incurred wholly and naturally for the purpose of business. 9.2 Before us, the Ld. counsel of the assessee submitted that the amount will remain continued to be deposited till the membership of the company would continue and at the end, the company, may not get refund of the same. The Ld. counsel submitted that considering the operation and a status of the company, this is a small amount and if refund is received same shall be considered as income at that stage. The Ld. counsel in support of his contention relied on the CBDT Circular dated 27/10/1993 in regard to security deposit for telephone connection. The Ld. counsel submitted that club e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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