TMI Blog2023 (9) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... rest and for giving advances to its supplier which resulted in excess interest burden on the assessee - CIT(A) deleted the addition by thrashing the facts in the light of the decision rendered in case of Reliance Utilities and Power Ltd [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] - HELD THAT:- When the interest free advances given by the assessee to its suppliers were far less than interest free funds available with the assessee in the form of share capital reserves and surplus, by applying the decision rendered in case of Reliance Utilities and Power Ltd. (supra) made by the AO is not sustainable in the eyes of law. So the Ld. CIT(A) has rightly deleted the disallowance. Refund of excess Dividend Distribution Tax ('DDT') paid - application for raising additional ground in its cross objection - HELD THAT:- Since it is a legal ground the assessee is entitled to raise the same at any stage of the proceedings in view of the law laid down in case of National Thermal Power Co. Ltd[ 1996 (12) TMI 7 - SUPREME COURT] However, during the course of argument the Ld. A.R. for the assessee has fairly conceded that the issue raised vide this ground has already been decided against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, Group M Media India Private Limited (hereinafter referred to as 'Group M India') craves leave to prefer cross objections to the appeal filed by the Department (ITA No.3088/M/19) against the order passed by the Hon'ble Commissioner of Income Tax [Learned CIT(A)'), Mumbai under Section 250 of the Income-tax Act, 1961. (hereinafter referred to as the Act'). Deduction in respect of education cess and secondary and higher education cess paid under Section 37(1) of the Act Cross Objection 1- On the facts and in the circumstances of the case and in law, the Appellant prays that the deduction in respect of education cess and secondary and higher education cess on income-tax paid during the year ought to be allowed as a deduction while computing the total income. Cross Objection 2 - On the facts and in the circumstances of the case and in law, the Appellant prays that the Assessing Officer be directed to allow deduction under section 37(1) of the Income-tax Act, 1961 ('Act') in respect of education cess paid on the amount of dividend distribution tax as per section 115-0 of the Act during the year, while computing the total incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to justify as to why the interest may not be disallowed on such advances/interest free loans given to suppliers since the assessee was paying interest on loans taken. Declining the contentions raised by the assessee the AO proceeded to hold that the assessee has used interest bearing funds for giving loans and deposits to the associated concerns without interest and for giving advances to its suppliers which resulted in excess interest burden on the assessee and thereby disallowed the interest expenditure of Rs. 3,19,18,958/- under section 36(1)(iii) of the Act out of interest expenses claimed by the assessee. The AO accordingly framed the assessment under section 143(3) of the Act. 4. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has partly allowed the same. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) both the Revenue as well as the assessee have come up before the Tribunal by way of filing present appeal and cross objections respectively. 5. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e charges and other expenditure of periodic nature. Therefore, I hold that those expenses are allowable as revenue expenditure. Accordingly, I direct the AO to delete the disallowance of remaining expenditure of Rs. 1,08,74,843 / (Rs. 1,12,51,964/ minus Rs. 1,52,906/- minus Rs. 2,24,215/-). 8. We have perused the order passed by the Ld. CIT(A). It is undisputed fact on record that the assessee has got license to use software in question for one year and was not owning the same. It is also not in dispute that the assessee company used the software and paid for the same on yearly basis. 9. We have perused the order passed by the co-ordinate Bench of the Tribunal in assessee s own case in ITA No. 561/M/2012 for A.Y. 2008-09 order dated 06.11.2015 wherein identical issue has been decided in favour of the assessee by returning following findings: 5. After hearing the parties and on perusal of the impugned order, we find that these software license costs which has been paid by the assessee is for using of software for its day-to-day business requirements, as stated by the assessee before the AO. These softwares keep are ever changing from time to time and did not have a use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Ld. CIT(A) and contended that the assessee was having sufficient interest free funds at its disposal and further relied upon Reliance Utilities and Power Ltd. 313 ITR 340 by returning following findings: 5.4.1 I have considered the rival contentions. I find from the balance sheet that the total interest free funds in the form of share capital and reserves and surplus was Rs. 144,08,27,594/- The appellant also received interest free advances from clients amounting to Rs. 18,35,23,580/- Against this, the appellant given advance of Rs. 49,68,47,605/- to its suppliers. The AO observed that the net advance given to supplier was Rs. 31,33,24,025/- (Rs.49,68,47,605/- minus Rs. 18,35,23,580/-). 5.4.2 Thus, the interest free advance given by the appellant to its suppliers was less than the interest free funds available with the appellant in the form of share capital and reserves and surplus. Therefore, no disallowance of interest was called for in view of the decision of the Hon'ble Bombay High Court in the case of Reliance Utilities Power Ltd. 313 ITR 340 wherein the Hon'ble Bombay High Court held as under: The principle therefore would be that if ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividend paid by Group M India to its Singapore shareholder, Group M Asia Pacific Holdings Pte Limited, is liable to tax as per the beneficial tax rate of 10% under Article 10(2) of the India - Singapore Tax Treaty, and thereby, ought to have held that the DDT paid by Group M India in excess of the 10% tax rate should be refunded to Group M India on the ground that the same is a legal ground raised on the basis of decision rendered by Co-ordinate Bench of Delhi Tribunal in case of Giesecke Devrient (India) Pvt. Ltd. (TS-522-Tribunal-2020) wherein it was held that DDT rate should be restricted to the tax rate on dividend under the relevant tax treaty and DDT paid in excess of the tax treaty rate should be refunded to the tax payer. 17. Since it is a legal ground the assessee is entitled to raise the same at any stage of the proceedings in view of the law laid down by the Hon ble Supreme Court in case of National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (SC). However, during the course of argument the Ld. A.R. for the assessee has fairly conceded that the issue raised vide this ground has already been decided against the assessee by the Special Bench of the Tribunal passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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