Tribunal Admits Appeals, Adjusts Disallowances, Allows Retention Money.

The Tribunal admitted the appeals after condoning a 6-day delay. Disallowances under Section 14A were remitted for reexamination or adjusted to 2% of dividend income. Payment to Registrar of Companies was treated as capital expenditure. Retention money payable was allowed on an accrual basis. Trade license fee payments were allowed as revenue expenditure. Additional depreciation on plant and machinery was allowed. Expenditure on AutoCAD software was treated as revenue expenditure. Expenditure on professional services and share capital raising was treated as capital expenditure.

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Issues Involved:
1. Condonation of delay in filing appeals.
2. Disallowance under Section 14A read with Rule 8D.
3. Disallowance of payment to Registrar of Companies.
4. Disallowance of retention money payable.
5. Disallowance under Section 37(1) for payment of trade license fee.
6. Disallowance of additional depreciation on plant and machinery.
7. Treatment of expenditure on purchase of AutoCAD software.
8. Treatment of expenditure on professional services and share capital raising.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing Appeals:
At the outset, it was noticed that all the appeals filed by the assessee were time-barred by 6 days. The assessee filed condonation petitions stating that the delay was due to a typographical error in Form No.36. After reviewing the records, the Tribunal condoned the delay and admitted the appeals.

2. Disallowance under Section 14A read with Rule 8D:
- Assessment Year 2009-10: The Assessing Officer (AO) disallowed Rs. 1,05,93,937/- under Section 14A, which was partially upheld by the Commissioner of Income-tax (Appeals) [CIT(A)]. The Tribunal noted that the Special Bench decision in Cheminvest vs ITO was reversed by the Delhi High Court, holding that no disallowance under Section 14A can be made if no exempt income is earned. The Tribunal directed the AO to reexamine the issue considering relevant case laws.
- Assessment Year 2007-08: The AO disallowed 5% of the dividend income as expenditure. The Tribunal directed the AO to disallow 2% of the dividend income as expenditure, in line with the Madras High Court judgment in Simpson & Co Ltd vs DCIT.
- Assessment Year 2008-09: Similar to the previous year, the Tribunal directed the AO to disallow 2% of the dividend income as expenditure.

3. Disallowance of Payment to Registrar of Companies:
The Tribunal upheld the disallowance of Rs. 1,50,200/- paid to the Registrar of Companies, citing the Supreme Court judgment in Punjab State Industrial Development Corpn Ltd vs CIT, which held that such fees are capital expenditure.

4. Disallowance of Retention Money Payable:
- Assessment Year 2009-10: The AO disallowed retention money held back by the assessee, considering it contingent liability. The Tribunal directed the AO to allow the retention money payment on an accrual basis, citing various case laws supporting the allowance of accrued liabilities.
- Assessment Year 2007-08 & 2008-09: The Tribunal remitted the issue to the AO for quantification, following similar directions as given for the assessment year 2009-10.

5. Disallowance under Section 37(1) for Payment of Trade License Fee:
- Assessment Year 2009-10: The AO disallowed Rs. 2 crores paid to M/s. Samruddhi Holdings, considering it excessive and a device to shift profits. The CIT(A) allowed the deduction, noting the legal obligation and TDS compliance. The Tribunal upheld the CIT(A)'s decision, following its earlier order in the assessee's case for the assessment year 2006-07.
- Assessment Year 2007-08 & 2008-09: The Tribunal dismissed the Revenue's appeals, following its decision for the assessment year 2009-10.

6. Disallowance of Additional Depreciation on Plant and Machinery:
- Assessment Year 2009-10: The AO disallowed additional depreciation on the ground that the assessee was not engaged in manufacturing. The CIT(A) allowed the claim, considering the ready-mix concrete plant as a separate undertaking engaged in manufacturing. The Tribunal upheld the CIT(A)'s decision, citing relevant case laws.
- Assessment Year 2007-08 & 2008-09: The Tribunal dismissed the Revenue's appeals, following its decision for the assessment year 2009-10.

7. Treatment of Expenditure on Purchase of AutoCAD Software:
The AO treated the expenditure on AutoCAD software as capital expenditure. The CIT(A) allowed it as revenue expenditure, citing the jurisdictional High Court judgment in Southern Roadways Ltd. The Tribunal upheld the CIT(A)'s decision.

8. Treatment of Expenditure on Professional Services and Share Capital Raising:
- Assessment Year 2006-07: The AO treated the expenditure of Rs. 1.45 crores on professional services and Rs. 25 lakhs on raising share capital as capital expenditure. The CIT(A) apportioned the expenditure over three years. The Tribunal reversed the CIT(A)'s decision and upheld the AO's treatment as capital expenditure, citing the Supreme Court judgment in Brooke Bond India Ltd.

Summary:
- Appeals were admitted after condoning a 6-day delay.
- Disallowances under Section 14A were remitted for reexamination or adjusted to 2% of dividend income.
- Payment to Registrar of Companies was treated as capital expenditure.
- Retention money payable was allowed on an accrual basis.
- Trade license fee payments were allowed as revenue expenditure.
- Additional depreciation on plant and machinery was allowed.
- Expenditure on AutoCAD software was treated as revenue expenditure.
- Expenditure on professional services and share capital raising was treated as capital expenditure.

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