TMI Blog2023 (6) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... aised at the appellate stage by the CIT(Appeals). Thus, the ground deserves to be allowed. TDS u/s 194IB - Disallowance of payment made on account of rent to landlord - no TDS has been deducted by the appellant company - HELD THAT:- TPPL was separate entity and appellant cannot take benefit of the deduction of the TDS by third party. However, the fact is that assessee was not the tenant under the lease agreement dated 11.11.2003. What can be concluded is that assessee may be a sub-tenant qua the land-lord on the basis of estoppels. The Bench is of the considered opinion as there is tri-parte transaction and TPPL is responsible for payment of Rent, so as per 194-IB of the Act, TPPL had liability to deducted the tax. The assessee was not making payment to the landlord/lessor but to actual lessee, TPPL, through whom assessee was in possession as sub-lessee thus the deduction of tax by TPPL met the mandate of law. Learned Tax authorities have failed to appreciate the aforesaid and accordingly ground raised is allowed. Nature of expenses - interior work on basement, for building painting work and for woodwork and painting - tax authorities have considered the same to be lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Accountant Member And Shri Anubhav Sharma, Judicial Member For the Assessee : Shri Gautam Jain, Adv. And Shri Ajit Jha, Adv. For the Department : Shri Yogesh Nair, Sr. DR ORDER PER ANUBHAV SHARMA, JM: The assessee has come in appeal against the order dated 26.12.2018 passed by the Commissioner of Income Tax (Appeals)-34, New Delhi (hereinafter referred as learned First Appellate Authority or in short FAA ) in Appeal no. 356/14-15, for the assessment year 2008-09, arising out of the assessment order dated 22.12.2011 u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred as the Act ), passed by the ACIT, Circle-7(1), New Delhi (hereinafter referred in short as Ld. AO ). 2. Facts, in brief, are that assessee filed its return of income declaring income for current year at Rs. 24,70,705/- after setting off of unabsorbed depreciation for A.Y. 2006-07 amounting to Rs. 3,22,36,103/-. The case was selected for scrutiny and learned AO had made certain disallowances and additions to the extent of Rs. 13,80,75,520/-. Learned CIT(Appeals) had sustained additions on account of provision made on account of performance service incentives; non deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice contract and was part of pay and allowances of the employees. It is admitted case of the Revenue that during the subsequent years when payments were made of these incentives, the tax was deducted. At the same time it is not disputed that these provisions were earlier allowed for A.Y. 2007-08 and subsequently for A.Y. 2009-10 onwards. The Bench is of the considered opinion that learned CIT(Appeals) has failed to appreciate that it was the contingent liability or an estimated provision as it was directly related to the performance of employees. The amount stood accrued to the employee for all purposes and on completion of continuous period of service it would merely became payable. It gave rise to a contingent liability. So a provision of that amount cannot be considered to be one for unascertained liability. At the same time, since this incentive was part of the pay and emoluments of the employee, TDS was supposed to be deducted only at the time of payment. Thus, the provision of non-deduction of TDS cannot be considered to be against the Act. Learned CIT(Appeals) has fallen in error in considering the same to be in the nature of bonus, which was not at all the case of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciate the aforesaid and accordingly ground raised is allowed. 6. Ground No. 3: In regard to this ground the facts are that a sum of Rs. 33,72,421/- was paid by the assessee to M/s Dreamwavers for interior work on basement; Rs. 5,24,996/- for building painting work; and Rs. 1,18,675/- for woodwork and painting. Learned tax authorities have considered the same to be lease-hold improvements of enduring nature and, therefore, held that assessee is entitled for depreciation and these expenditure are not of revenue nature. 6.1 Learned counsel for the assessee submits that tax authorities have failed to appreciate that the expenses were incurred on the day to day maintenance of the building which was in possession as lessee. Learned counsel relied on the judgments of Hon ble Delhi High Court in CIT vs. Hi Line Pens Pvt. Ltd. 306 ITR 182; CIT vs. Escorts Finance Ltd. 205 CTR 574 (Del); CIT Vs. Delhi Press Samachar Patra (P) Ltd. 322 ITR 590 (Del); and Instalment Supply Pvt. Ltd. Vs. CIT 149 ITR 52 (Del) . It was also pointed out that the expenditure on repair maintenance of building incurred in A.Y. 2009-10 was not disallowed in order of assessment framed u/s 143(3) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess is shown at Rs. 1,00,000/-. He submitted there is lack of reconciliation. 7.2. Learned tax authorities have considered it to be prior period expenses and they have not crystallized during the year. However, what they failed to appreciate is that as the bill was raised by auditors the payment was made. Even otherwise when the provision was not disturbed in assessment of FY 2006-07, then in any case when the provision was reversed in the present FY, that entitled assessee to debit the expenses in the present FY. Consequently, ground raised is sustained and is allowed. 8. Ground No. 5: Learned tax authorities have considered software licenses expenditure to be in the nature of perpetual licenses and having enduring benefit while denying the expenditure incurred on software purchase. 8.1. Learned DR has tried to convince the Bench on the basis of nature of software and bills that as they were used for many years after purchase so they have to be considered to be of perpetual license. 8.2. The law in regard to same stands crystallized that the Expenditure on Application Software is revenue. Reliance is rightly place by Ld. Counsel on following judgement; - CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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