AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (4) TMI 875
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....ub. Since the benefit was spread over the life of the membership AO disallowed the expenditure as capital expenditure. In appeal CIT(A) observed that by making payment for club membership the assessee had not acquired any capital assets and the expenditure had been incurred only for efficient working of the business. The advantage was therefore only in the commercial sense and not in the capital field. The expenditure was therefore allowed as revenue expenditure. Reliance was placed on the judgment of Hon'ble High Court of Gujarat in case of Gujarat State Export Corporation vs CIT (209 ITR 649). Aggrieved by the said decision the revenue is in appeal before the tribunal. 2.1 We have heard both the parties in the matter. The Learned ....
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....nal clients the research reports on Indian capital market and these reports were got printed outside as the clients were located outside. The income on account of these payments did not accrue or arise in India. It was also submitted that the parties which had printed the report had not rendered any technical services. CIT(A) was satisfied by the explanation given by the assessee. It was observed by him that the foreign parties who had printed the reports had no business connection in India and they had no permanent establishment in India and therefore income was not taxable in India. It was also held by him that printing of research reports did not amount to rendering technical services. CIT(A) accordingly deleted the addition made aggriev....
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.... therefore upheld. 4. The third dispute is regarding allowability of expenditure incurred on acquisition of software. The AO disallowed the claim as capital expenditure as the software in his opinion gave enduring benefits to the assessee. In appeal CIT(A) observed that in the present day of fast changing technology, such technical products could not be considered as having enduring life. He referred to the judgment of Hon'ble Supreme Court in case of Alembic Chemical Work Ltd. vs CIT (177 ITR 377) in this regard. He also referred to the judgment of Hon'ble Supreme Court in case of Empire Jute Company Ltd. vs CIT (124 ITR 1) in which it was held that in case there is no advantage in the capital field and the expenditure had been inc....
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....cquisition of software. The decision of the special bench was not available at the time of passing of the order by the authorities below. In our view matter requires fresh examination in the light of said decision. We therefore set aside the order of CIT(A) and restore the issue to the file of AO for passing a fresh order after necessary examination in the light of decision of the special bench (supra) and after allowing opportunity of hearing to the assessee. 5. The fourth dispute is regarding disallowance of legal and professional fees of Rs.15 lacs. The assessee had incurred expenditure of Rs.15 lacs on account of payments to Planet Asia for conducting study on the internet broking activities i.e. using the internet to conduct bu....
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....enditure had been incurred to explore options for providing value added services to the customers through the internet. The expenditure did not result in acquisition of any new assets or in any new source of income. We agree with the finding of the CIT(A) that the expenditure had been incurred for more efficient conduct of the existing business. Therefore we see no infirmity in allowing the claim as revenue expenditure. The same is therefore upheld. 6. The fifth dispute is regarding disallowance of expenses relating to exempt income under section 14A of the Income-tax Act. The AO noted that the assessee during the year had received dividend income of Rs.42,57,450/- which was exempt from tax. He therefore attributed 5% of dividend income as....
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.... KCL from which dividend had been received were acquired during the F.Y.1996-97 out of own funds. This claim is not contraverted before us. Even the AO has not given any finding that the shares were acquired out of borrowed funds. Therefore there is no interest expenditure involved. However as held by Hon'ble High Court of Mumbai in case of Godrej and Boyce Manufacturing Co. Ltd, (supra) both direct and indirect expenses have to be considered for disallowance on a reasonable basis. Though the assessee in this case has received dividend only from one company some indirect expenses on collection of dividend and accounting of income etc have to be incurred even though this may be only nominal. In our view on facts of the case it will be reason....