TMI Blog2019 (2) TMI 1511X X X X Extracts X X X X X X X X Extracts X X X X ..... ure i.e. the Government fees paid towards sub leasing of the property should be allowed as expenditure. CIT (A) is not justified in sustaining the addition treating the same as capital in nature. Disallowance of depreciation on UPS - @60% OR 15% - Held that:- As relying on BSES YAMUNA POWERS LLD. / BSES RAJDHANI POWERS LTD. [2010 (8) TMI 58 - DELHI HIGH COURT] UPS is also an integral part of computer periphery system on which depreciation at 60% is allowable. We accordingly allow this ground. Disallowance u/s 14A - HELD THAT:- The coordinate benches of the Tribunal are taking the consistent view that disallowance u/s 14A r.w. Rule 8D cannot exceed the actual exempt dividend income received. Since the assessee in the instant case has received dividend income of ₹ 1,45,616/- only and has disallowed suo-moto an amount which is in excess of the actual dividend income received, therefore, we are of the considered opinion that no further disallowance u/s 14A r/w Rule 8D is called for. The additional ground raised by the assessee is accordingly allowed. - ITA No.2668/Del/2016 - - - Dated:- 25-2-2019 - Sh. R.K Panda, Accountant Member And Ms. Suchitra Kamble, Judicial Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. D. Jindal consequent to which the share holding of the appellant company was expected to be as under :- Copara Group Ltd - 60% M. D. Jindal - 20% Maruti Udyog Ltd - 20% 4.2 However, the allotment of shares to Mr. M. D. Jindal was challenged in Company Law Board and since the said allotment was held to be not permissible, the cheques were returned to Shri M. D. Jindal. However, he returned it back to the appellant. Therefore, the corresponding amount is kept in shares suspense account and the share holding of Caparo Group Ltd. UK and Maruti Suzuki India Ltd in the appellant company becomes 75% and 25%. As per the agreement with M/s. Accenture Services Pvt Ltd. the bills have been raised on the appellant, i.e. Caparo Maruti Ltd. and also another concern of the Caparo Group i.e. Caparo Engineering India Pvt. Ltd. The break up of the same is as under :- Name of Company FY 2010-11 FY 2011-12 FY 2012-13 Total Capa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with such order of the CIT(A), the assessee is in appeal before the Tribunal. 6.1 The Ld. Counsel for the assessee at the outset submitted that the assessee has incurred these charges in interest of its existing business. It is not the case of the revenue that the payment has been made for creating a new line of business or distinct business. The payment has been made for creating expansion of the existing business which is not denied by the Assessing Officer or the CIT (A). The grievance of the revenue is that the payment is of enduring nature and therefore, has to be capitalized. Referring to the decision of the Hon ble Delhi High Court in the case of CIT Vs. Priya Village Road Shows Ltd. reported in 332 ITR 594, he submitted that under identical circumstances the Hon ble Delhi High Court has held that if expenditure is incurred for preparation of feasibility report of a new project, is in respect of same business which is already carried on by assesee, even if it is for expansion of business, namely, to start a new unit which is same as earlier business and there is unity of control and a common fund, then such expenditure is to be treated as revenue expenditure. 7. Ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, then such expenditure is to be treated as revenue expenditure. We find merit in the above arguments of the ld. Counsel for the assessee. In the instant case the payment has not been made for creating a new line of business or distinct business and the payment has been made for expansion or restructuring of the existing business. We find somewhat similar issue had come up before the Hon ble Delhi High Court in the case of Priya Village Roadshows (supra). In that case the Hon ble Delhi High Court has observing as under :- The assessee-company, which was already involved in the business of running cinemas, was pursuing owners of a cinema hall for taking over the cinema for conversion into a multiplex and operation and management thereof. In order to carry out technical and financial feasibility, the assessee availed services of an architect and paid him certain amount as fee in the preceding year. However, the project was not bund to be financially and technically viable. The assessee, therefore, decided to drop the project and amount spent was claimed as revenue expenditure. Similarly, there was another proposal before the assessee to take over one single screen cinema for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other for conversion of Priya Cinema into four-screen multiplex. Payments were made to the consultants for preparing feasibility reports in respect of both the projects. However, ultimately projects were not found to be financially and technically viable and were shelved. Thus, we find that no new asset came into existence, which was the basis adopted by the Assessing Officer for treating the expenditure as capital expenditure but wrongly. 12. In the present case both the ingredients are satisfied, namely,- (, i ) the feasibility study conducted by the assessee was for the same and existing business with a common administration and common fund, and (ii) the study was abandoned, without creating any new asset. 13. We note two judgments of other High Courts taking this view in identical circumstances. One case is decided by Gauhati High Court which is reported as Dy. CIT v. Assam Asbestos Ltd.[2003] 263 ITR 357 . In that case the assessee was in the business of manufacturing asbestos sheets. Contemplating to set up a mini cement plant, which was the same line of business activity of the assessee, a feasibility report was prepared. However, the project wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icular purpose, without considering the fact that the said expenditure incurred by the assesee is of revenue in nature. 14. The facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedings observed that the miscellaneous expenditure includes an amount of ₹ 10,25,304/- paid to HSIDC as subleasing fees for sub letting out the land to its group concerns. On being questioned by the Assessing Officer, the assessee filed a letter of HSIDC on the subject of Regularization of unauthorized leasing which reads as under : : 5.3 This is in reference to our letter HSIDC / GCB/08/410 dated 04.01.2008 vide which the corporation had provisionally allowed leasing permission to you for leasing out 2000 sq mtr. area of plot no.88 to 96 sector, 7, GC, Bawanl in favour of M/s. Caparo MI Steel Processing Pvt. Ltd. For a period of one year w.e.f. 01.07.2007 for manufacturing of tailored welled blanks subject to payment of leasing fee and compliance of other condition as contained in the said letter. 15. The assessee further submitted that it has already shown the rental income from CMI as income from House Property. Since the assessee needs to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by both the sides and perused the orders of the authorities below. We find the Assessing Officer disallowed the amount of ₹ 10,25,304/- being subleasing charges paid to HSIDC on the ground that the same is penal in nature. We find although the Ld. CIT(A) held that the amount so paid towards subleasing fees is not penal in nature, however, he held that the same is capital in nature. It is the submission of the Ld. Counsel for the assessee that since the assessee has already offered to tax the income arising on account of subleasing of the said property to the group concerns, therefore, the corresponding expenditure incurred by the assessee for earning such income should also be allowed as deduction. We find merit in the above arguments of the Ld. Counsel for the assessee. Since there is no dispute to the fact that the assessee has offered to tax the income arising to it on account of subleasing of the said property, therefore, by simple logic corresponding expenditure i.e. the Government fees paid towards sub leasing of the property should be allowed as expenditure. We, therefore, hold that the ld. CIT (A) is not justified in sustaining the addition of ₹ 10,25,304/- tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t find any infirmity in the order of the Id. CIT(A) as the issue, whether computer accessories/ peripherals like printers, scanners, server, UPS etc, the rate of depreciation allowable is @ 60% as held by the Hon'ble Jurisdictional High Court and catena of other judgments. Thus, ground no.3 raised by the Revenue is dismissed. 24. Respectfully following the decision of the Tribunal in the case of sister concern of the assessee and in view of the various other decisions relied on by the Ld. Counsel for the assessee in the synopsis, the above ground is decided in favour of the assessee. 25. The Ld. Counsel for the assesee has also taken an additional ground which reads as under :- 8. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming disallowance of an amount of ₹ 3,08,449/- made by the AO by invoking the provisions of Section 14A of the Act.; 9. Without prejudice to the above and in the alternative, the disallowance under section 14A cannot exceed the tax free income. 26. The Ld. Counsel for the assesee referring to various decisions including the decision of Hon ble Supreme Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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