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of <h1>ITAT rules for assessee on consultancy charges, disallowance u/s.14A, and deduction denial</h1> <h3>Bayer CropScience Limited Versus Asst. Commissioner of Income Tax 15 (1) (2), Mumbai</h3> Bayer CropScience Limited Versus Asst. Commissioner of Income Tax 15 (1) (2), Mumbai - TMI Issues:1. Disallowance of consultancy charges2. Disallowance u/s.14A of the Act3. Non-granting of deduction towards refurnishingIssue No.1:The assessee challenged the disallowance of consultancy charges for designing and implementing systems. The expenditure was incurred for improving the existing system, making it compatible with legal requirements. The ITAT found the expenses to be revenue in nature, citing precedents Commissioner of Income Tax Vs. Raychem RPG Ltd. and Commissioner of Income Tax Vs. Asahi India Safety Glass Ltd. The decision favored the assessee.Issue No.1.1:The alternate plea to treat consultancy charges as capital expenditure for depreciation was dismissed as the expenses were already treated as revenue.Issue No.2:The disallowance u/s.14A of the Act was challenged by the assessee. The ITAT ruled in favor of the assessee, considering the investment from its own funds and the law settled in Reliance Utilities and Power Ltd. The disallowance was deleted based on the fund's analysis and balance sheet details.Issue No.3:The action of the Assessing Officer for not granting a deduction towards refurnishing was challenged. The ITAT directed the AO to comply with the directions issued in a previous order and decide the issue afresh, providing an opportunity for the assessee to be heard. This issue was decided in favor of the assessee.In conclusion, the ITAT partially allowed the assessee's appeal, ruling in favor of the assessee on all three issues discussed. The judgment was pronounced on 10th February 2017.
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