TMI Blog2016 (9) TMI 1522X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Denial of TDS and TCS claimed in the Return of income - HELD THAT:- We are of the opinion that whether the claim for tax credit was correctly made by the assessee is the issue need to be examined afresh by the ld. Assessing Officer. If the assessee is able to show evidence for TDS/TCS AO is directed to give such credit. Accordingly, ground of the assessee is treated as allowed for statistical purpose. Disallowance u/s.14A - CIT-A restricted addition to 2% of the dividend income - HELD THAT:- By virtue of judgment of Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd [ 2010 (8) TMI 77 - BOMBAY HIGH COURT] Rule 8D cannot be applied for the impugned assessment year. However, Sec.14A of the Act was very much there in statute for the impugned assessment year. Hence, disallowance under the said section could be made dehorse the rules. Co-ordinate Benches of the Tribunal are taking consistent view that disallowance of 2% of the exempt income would suffice for the years were Rule 8D were not applicable - no error in the order of CIT(Appeals) in restricting disallowance 2% of the dividend income claimed by the assessee as exempt. Accordingly, we dismiss the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed due to restriction placed on account of usage for a period less than 180 days could be allowed in the succeeding year had come up for hearing before Jurisdictional High Court in the case of Rittal India Pvt. Ltd [ 2015 (1) TMI 1248 - KARNATAKA HIGH COURT] had held in favour of the assessee. Accordingly, we are of the opinion that claim of additional depreciation has to be allowed. Disallowance of the claim is deleted. Levy of interest u/s.234D - liable to pay interest on the refunded amount - HELD THAT:- As decided in INFRASTRUCTURE DEVELOPMENT FINANCE CO. LTD. [ 2011 (9) TMI 591 - MADRAS HIGH COURT] applicability of provisions of section 234D, the date of assessment is relevant and not the year of assessment therefore/ when once the regular assessment is completed after the amended proviso of law (i. e 1.6.2003) came into operation the assessee is liable to pay interest on the refunded amount as contemplated u/s 234D of the Act. Claim of the assessee has to be allowed. The ld. Assessing Officer is directed to rework interest levied u/s.234D of the Act Admission of additional ground - assessee did not file revise its return claiming either Long Term Capital Loss on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up first for disposal in that order. 2. Assessee in its appeal has taken altogether thirteen grounds of which Grounds No. 1 13 are general in nature needing no specific adjudication. 3. Through its Ground Nos.2 to 4, the assessee is aggrieved by a disallowance of software expenditure of B15,61,995/-. 4. The ld. Counsel for the assessee submitted that the software which were acquired by the assessee did not result in any enduring benefit to it. As per the ld. Authorised Representative these were payments for renewing software licenses and for antivirus for disaster recovery system and for internet usage tracker. The ld. Authorised Representative submitted that the ld. Assessing Officer erroneously held it to be acquisition of capital asset and disallowed the claim. As per the ld. Authorised Representative, the ld. Commissioner of Income Tax (Appeals) confirmed the treatment without properly appreciating the facts relying on the judgment of Hon ble Delhi High Court in the case of CIT vs. Asahi India Safety Glass (346 ITR 329). The ld. Authorised Representative submitted that the expenditure incurred for acquiring software which did not give enduring be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs over 14.92 acres of land. Assessee has started manufacturing facility over the said land in September, 2007. No doubt, the jurisdictional High Court in the case of Gemini Arts Pvt. Ltd (supra) relied on by the ld. Authorised Representative had held that lumpsum lease rent payments, which gave no other advantage than relief from paying annual rent, could not be considered as capital outgo but only as Revenue expenditure, allowable in the year in which it was paid. The above judgment is dated 1st August, 2001. In the case of Rane (Madras) Ltd (supra) their lordship had held that expenditure incurred for setting up new factory which resulted in extension of an existing unit could only be considered as Revenue expenditure. We find that judgment in the case of Gemini Arts Pvt. Ltd (supra) was pronounced much earlier to the judgment of Hon ble Apex Court in the case of Enterprising Enterprises (supra). In the last mentioned case, the Hon ble Apex Court had clearly held that irrespective of whether lease money was paid as slumpsum or installment it was nothing but capital expenditure. As for the reliance placed by the ld. Authorised Representative on Rane (Madra) Ltd (supra) the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned assessment year. However, Sec.14A of the Act was very much there in statute for the impugned assessment year. Hence, disallowance under the said section could be made dehorse the rules. Co-ordinate Benches of the Tribunal are taking consistent view that disallowance of 2% of the exempt income would suffice for the years were Rule 8D were not applicable. Hence, we find no error in the order of the ld. Commissioner of Income Tax (Appeals) in restricting disallowance 2% of the dividend income claimed by the assessee as exempt. Accordingly, we dismiss the ground No.2 of the Revenue. 20. Vide its ground No. 3, the grievance raised by the Revenue is that the ld. Commissioner of Income Tax (Appeals) deleted a disallowance of notional interest working out to B2,70,52,088/-, as relatable to interest free loans granted by the assessee to its subsidiary. 21. Before us, the ld. Departmental Representative submitted that assessee could not show commercial expediency for the loans given to its subsidiaries. As per ld. Departmental Representative, the assessee had borrowed B43,860/- lakhs of which it had given free interest loan of B3,379/- lakhs. Ld. Departmental Repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowability of pro-rata interest on interest free loans granted to subsidiaries, back to the file of the ld. Assessing Officer for consideration of fresh in accordance with law. Ground No.3 of the Revenue is allowed for statistical purpose. 24. Vide its ground No.4, the ground raised by the Revenue is that ld. Commissioner of Income Tax (Appeals) deleted disallowance of B3,04,36,000/- made by the ld. Assessing Officer for want of deduction tax of source relying on Sec. 40(a)(ia) of the Act. 25. The ld. Departmental Representative submitted that the export commissions paid to Non Resident Agents fell within the ambit of Sec. 195(1) of the Act. As per ld. Departmental Representative if the assessee was of the opinion that there was no need for deducting tax at source then it should have obtained a certificate from the ld. Assessing Officer as stipulated u/s.195(2) of the Act. Further, as per ld. Departmental Representative by virtue of explanation added below Sec. 9 of the Act through Finance Act, 2010 with retrospective effect from 01.06.1976 there was no requirement of residency of a Non Resident or place of business or business connection in India, nor it was ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that similar issue was raised by the assessee in its appeal for the assessment year 2006-2007 also. Software purchased and the payment was made for relevant previous year were also similar. It consisted of application software and user licenses. For the reasons by us at para 6, we are of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in allowing the claim. The ground No. 2 is therefore treated as allowed. 32. Vide ground No.3, the grievance raised by the assessee is on disallowance of additional depreciation. 33. Before us, the ld. Authorised Representative submitted additional depreciation of B99,57,900/- claimed by the assessee was disallowed by the ld. Assessing Officer on a ground that such depreciation was admissible only in the year in which new plant and machinery was put to use. As per ld. Authorised Representative, the ld. Commissioner of Income Tax (Appeals) erroneously confirmed this view of the ld. Assessing Officer disregarding the arguments of the assessee that machinery on which additional depreciation was claimed was acquired during the second half of financial year 2006-07 and therefore balance of the additional deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Counsel for the assessee fairly submitted that the said issue has to be decided in favour of the Revenue in view of the subsequent judgment of the Hon'ble Madras High Court in the case of CIT vs. Infrastructure Development Finance Co. Ltd [2012] 340 ITR 580 ( Mad.), which is relevant for the proposition that for the applicability of provisions of section 234D, the date of assessment is relevant and not the year of assessment therefore/ when once the regular assessment is completed after the amended proviso of law (i. e 1.6.2003) came into operation the assessee is liable to pay interest on the refunded amount as contemplated u/s 234D of the Act. 4. After hearing both the parties and on perusal of the orders of the Revenue Authorities as well as the cited judgment of the Hon'ble Madras High Court in the case of Infrastructure Development Finance Co. Ltd (supra), we are of the opinion that the decision taken by the CIT (A) vide para 5.3 of the impugned order is required to be reversed on this issue. Considering the same, the second issue raised by the Revenue is decided in favour of the assessee and against the Revenue . Accordingly, we are of the opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the ld. Commissioner of Income Tax (Appeals) and remit the issue regarding claim of Long Term Capital Loss and upfront lease rent back to the file of ld. Commissioner of Income Tax (Appeals) for consideration a fresh in accordance with law. Ground Nos. 5 6 are partly allowed for statistical purpose. 44. In the result, appeal of the assessee in ITA No.1166/Mds/2013 is partly allowed for statistical purpose. 45. We take up appeal of the Revenue in ITA No.1172/Mds/2013 for assessment year 2008-2009. The Revenue has altogether raised four grounds of which 1 4 are general in nature needing no specific adjudication. 46. Vide ground no.2, the Revenue is aggrieved on deletion of notional interest of B61,31,769/- attributed to interest free loans given by the assessee to its subsidiary SFIL. 47. We find that similar issue has come up before this Tribunal in Revenue s appeal for the assessment year 2006-2007. We have held that at para 23 that the matter requires afresh consideration by the ld. Assessing Officer for verifying commercial expediency. For the impugned assessment year also similar direction is given. Ground No. 2 is allowed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim was unfavorably disallowed. 56. Per contra, ld. Departmental Representative submitted that assessee was not able to show what the type of expenditure was and how the bills were raised in succeeding years. According to him, disallowance is rightly made. 57. We have considered the rival contentions and perused the orders of the authorities below. The claim of the assessee that bills for the expenditure claimed as prior period was received by the assessee only in the previous year relevant to assessment year 2009-2010. The assessment year 2009-2010 is subsequent to the impugned assessment year. If the expenditure was incurred in the previous year relevant to the impugned assessment year, assessee ought have shown it only as a provision and not as prior period of expenditure. We are, therefore of the opinion that assessee failed to justify its claim, and it was rightly disallowed by the lower authorities. Ground No.3 stand dismissed. 58. Vide no. 4, assessee is aggrieved on disallowance of long term capital loss of B90,188/- on redemption of units of ICICI and inclusion of tax free interest income of B1,26,765/- received from UTI. 59. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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