TaxTMI 
TaxTMI 
2012 (6) TMI 513
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....re us. ITA No.1292/Mum/2011 (By assessee) 5. Ground No.1 and 2 are against the sustenance of adjustment of excise duty and VAT u/s 145A. 6. The brief facts of the above issue are that the AO observed that the assessee has not included the excise duty in the valuation of closing stock. Under the provisions of section 145A of the Act, the assessee should include the excise duty component of purchase price of raw material while valuing closing stock of raw material, Work-in-Progress (WIP) and finished goods. The assessee claimed that non-inclusion of the same will have no effect on its profits. The AO while rejecting the claim of the assessee applied the provisions of section 145A of the Act and discussed the issue at length at pages 2 to 13 of the assessment order and added Rs.1,13,19,681/-, Rs.283,50,504/-, Rs.4,48,190/-, and Rs.2,00,000/- to the total income of the assessee. 7. On appeal, the Ld. CIT(A) after considering the assessee's submissions and the provisions of Section 145A has held as under : "i) "Resultant change", if any, will have to be added to the assessee's income. ii) Anomaly may arise because of the fact that the asseseee has utilised PLA account instead of C....
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.... has upheld the order of the ld. CIT(A) in deleting the addition made by the A.O. vide finding recorded in paragraph 22 of its order dated 11.01.2012 (supra) wherein it has been held as under:- "22. In the absence of any distinguishing feature brought on record by the Revenue, we respectfully following the consistent view of the Tribunal and keeping in view that the assessee is following consistent method of accounting and there is no change in accounting system followed by the assessee in the year under consideration, we hold that the ld.CIT(A) was fully justified in deleting the addition of Rs.11,08,904/- made by the AO u/s 145A of the Act. The grounds taken by the Revenue are therefore rejected." 11. In the absence of any contrary material placed on record by the Revenue, we respectfully following the order of the Tribunal (supra) and the consistent view of the Tribunal and also keeping in view that the assessee is following consistent method of accounting and there is no change in system of accounting followed by the assessee in the year under consideration, we hold that the Ld. CIT(A) was fully justified in deleting the addition of Rs. 1,13,19,681/-. 12. As regards the othe....
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....gainst the sustenance of disallowance of deduction u/s 80IB in respect of interest income of Rs.5,12,420/-. 16. The brief facts of the above issue are that the AO observed that the assessee has claimed deduction u/s 80IB in respect of interest income of Rs.5,12,420/-. (interest on fixed deposit for margin money Rs.2,96,290/- and interest from sundry debtors Rs.2,16,130/-). The AO did not allow the claim of the assessee on the ground that the interest income cannot be said to have been derived from industrial undertaking even if it is assessed under the head business income. However, he assessed the interest income of Rs.5,12,420/- under the head income from other sources as the assessee is not in the business of money lending. On appeal, the Ld. CIT(A) while following certain decisions including the decision in the case of Liberty India V/s. CIT (2009) 317 ITR 218 (SC) held that interest being income from other sources, not derived from industrial undertaking, therefore, the assessee is not entitled to deduction u/s 80IB, and hence upheld the disallowance made by the AO. 17. At the time of hearing, the Ld. Counsel for the assessee, at the outset, submits that the assessee is not ....
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.... out of interest income assessed under the head as income from other sources. The ground taken by the assessee is, therefore, partly allowed. 21. Ground No.4 is against the sustenance of disallowance of netting of interest Rs.5,12,420/-. 22. On this issue, there is no discussion in the assessment order. However, from the order of the Ld. CIT(A), we find that the assessee has raised this issue before the Ld. CIT(A) vide paragraph 4.2 appearing at page 14 of the order, passed by the Ld.CIT(A) but the Ld. CIT(A) has not adjudicated the above issue. In the absence of any finding we are of the view that in the interest of justice, the matter should go back to the file of the Ld. CIT(A) and accordingly, we restore the matter to the file of the Ld. CIT(A) to decide the same afresh and according to law after considering the recent decision of the Hon'ble Supreme Court in the case of M/s ACG Associated Capsules Pvt.Ltd (formerly M/s Associated Capsules Pvt.Ltd.) V/s CIT in Civil Appeal No.1914 of 2012 (Arising out of SLP (C) No.32450 of 2010 with CIT V/s Bharat Rasayan Limited in Civil Appeal No.4534 of 2008 order dated 8.2.2012 and also after providing reasonable opportunity of being hea....
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....er dated 28.4.2011, (b) Radial Marketing (P) Ltd V/s ITO (2010) 2 ITR (Trib) 641 (Mumbai), (c) Polyplex Corporation Ltd V/s ITO (2009) 122 TTJ (Del) 949 and (d) CIT V/s Indian Visit .Com (P) Ltd (2009) 176 Taxman 164 (Del). 26. On the other hand, the Ld. DR supports the order of the AO and Ld.CIT(A). 27. We have carefully considered the submissions of the rival parties and perused the material available on record. We find merit in the plea of the Ld. Counsel for the assessee that the expenditure incurred by the assessee on software are allowable as revenue expenditure. 28. In M/s Asahi India Safety Glass Ltd. (supra),the issue was as to whether the expenditure incurred by the assessee on account of software and professional expenses was a revenue expenditure. Their Lordships while observing that the expenses ought not give a colour to the expenditure incurred as one expended on capital account, decided the issue in favour of the assessee. 29. In M/s Raychem RPG Ltd (supra), it has been held that the software expenditures are allowable as revenue expenditure. 30. In Amway India Enterprises (supra), Their Lordships following the decision in M/s Asahi India Safety Glass Ltd. (sup....
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.... on development of web-site-Is allowable revenue expenditure-Creating a website promotes the business activity- Assessee has not acquired any software though the software itself may be needed to access the website" 39. In Indian Visit .Com (P) Ltd (supra), it has been held that expenditure on development of website with a view to disseminate information about assessee's business activities amongst its clients is revenue expenditure even though resulting in enduing benefit. 40. Respectfully following the above decisions, we are of the view that website expenditures are allowable as Revenue expenditure and accordingly, we while deleting the disallowances of software expenses, website expenses and business loss, direct the AO to allow same as Revenue expenditure after withdrawing the depreciation allowed by him. The grounds taken by the assessee are, therefore, allowed. ITA No.2106/Mum/2011(by Revenue) 41. Ground No.1 and 1(a) are against the relief allowed by the Ld. CIT(A) in allowing export incentives of Rs.1,31,42,063/-. 42. The brief facts of the above issue are that the AO observed and held that the assessee has reduced the income of Export Incentives of Rs.1,31,42,063/- fr....
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....the order of the Ld. CIT(A) on this account. The grounds taken by the Revenue are, therefore, rejected. 47. Ground No.2 and 2(a) are against the deletion of disallowance of foreign currency loss of Rs.7,82,000/-. 48. The brief facts of the above issue are that the AO has not allowed loss on account of foreign exchange rate difference of Rs.7,82,000/- considering the same as capital account. On appeal, before the Ld. CIT(A), it was pointed out by the Ld. Counsel for the assessee that the foreign exchange difference loss of Rs.7,82,000/- is on account of conversion of CC limit to FCNRB (DL) working capital loan Account. The Ld. CIT(A) after examining the matter held that the foreign currency exchange loss relates to the working capital loan and thus, allowable and accordingly he deleted the disallowance made by the AO. 49. At the time of hearing the Ld. DR supports the order of the AO. 50. On the other hand, the Ld. Counsel for the assessee while reiterating the same submissions as submitted before the AO and the Ld. CIT(A) also relied on the decisions in (a) CIT V/s Woodward Governor India (P.) Ltd. (2009) 312 ITR 254 (SC), and (b) Oil & Natural Gas Corporation Ltd. V/s CIT (201....