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TMI Blog2023 (6) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 TDS on rent account; expenditure inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany." 3. Heard and perused the record. Ground-wise findings are as follows: 4. Ground No. 1: It may be appreciated that the learned AO had considered the provision under the head performance service incentive to be an unascertained liability. Learned DR has also argued that as it was not established that the employees had worked for twelve months so as to be entitled for incentive, the learned tax authorities were right in considering the provision being made for an unascertained liability. 4.1. In this context it can be appreciated from the submissions of learned counsel for the assessee that apart from the pay and emoluments to it's employees, incentive was also to be given. However, when that was earned by the employee, the same bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne Projects Pvt. Ltd. had originally entered into an agreement with Sardar Manmohan Singh on 11.11.2003. The said lease agreement was for a period of five years. The business of Triune Projects in respect of design engineering business in oil and gas industry was transferred to the assessee company vide agreement dated 22.09.2006 and the owner of the premises Sardar Manmohan Singh agreed to continue the lease for the premises with the possession being with the assessee company till the expiry of the lease period upto 11.11.2008. Accordingly, the assessee company made the payment to Triune Project for the rent paid by Triune Project to Sardar Manmohan Singh and the Triune Project deducted tax and also did not claim in its expenditure, while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reasoning by way of examining nature of rights of the assessee in the premises. When assessee is enjoying the premises then the work in the nature of interior decoration and painting and woodwork cannot be considered to be of enduring nature. These are all improvements involving temporary material and can be very well removed at the time of vacation of the premises. The ground is decided in favour of the assessee. 7. Ground No. 4: In regard to this ground it can be observed that provision of Rs. 50,000/- was made on account of audit fee payable for F.Y. 2006-07 and the same was claimed as revenue deduction. The said amount was claimed and was allowed in the assessment completed for the said assessment year. However, during the present as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpetual 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. Asahi India Safety Glass Ltd. 346 ITR 329 (Del); - CIT v. Amway India Enterprises 346 ITR 341 (Del); - CIT v. ACL Wireless Ltd. 261 ITR 210 (Del); - CIT v. G.E. Capital Services 300 ITR 420 (Del); - CIT v. Raychem RPG Ltd. 346 ITR 138 (Bom). 8.3. It is also relevant to mention that claim was allowed in A.Y. 2007-08 U/s 143(3) and in AY 2009-10 the same has been deleted at the stage of learned first appellate authority. In the light of aforesaid, the ground is sustained. 9. As a consequence of aforesaid determination of the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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