TaxTMI 
TaxTMI 
2013 (9) TMI 149
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....e considering both direct and indirect expenses incurred by the assessee. Accordingly he arrived at the disallowance of Rs. 16,69,286 being 5 per cent. of the dividend income. The same was confirmed by the Commissioner of Income-tax (Appeals) differing from the orders of his predecessor in the assessment year 2001-02. Learned counsel submitted that the Income-tax Appellate Tribunal in the assessment years 2004-05 and 2005-06 has determined the reasonable amount at a lump sum amount of about Rs. 2 lakhs and accordingly he has no objection if proportionate amount was disallowed but not at the ratio adopted by the Assessing Officer. The learned Departmental representative however, submitted that by the order of the Income-tax Appellate Tribunal in 2001-02, amount of 5 per cent. has been confirmed. We have examined the issue and the details placed on record. In the assessment year 2001-02, the dividend income was only Rs. 4,91,884 and an amount of Rs. 24,594 was disallowed and was so confirmed by the Income-tax Appellate Tribunal. However, in the later years based on the fact that amount of dividend was earned from only one company to an extent of Rs. 3.30 crores, the coordinate Benc....
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.... assessee wrote off the balance amount. There is no dispute with reference to the write off of the amount in the profit and loss account. (B) With reference to the Williamsons Tea Holdings Plc. the assessee was mandated as an exclusive advisor to protect the interest of Williamson Tea Holdings in India in the Williamson Magor group in response to business interest by Khaitan family in India. In consideration for the services assessee was entitled to a monthly retainer fee of USD 50,000 subject to a minimum of USD 2,50,000. All out of pocket expenses are to be reimbursed. In the course of service the assessee paid professional fees to various legal advisors on behalf of the client totalling to Rs. 13,99,689. Further, travel expenses and other miscellaneous expenses were also claimed to an extent of Rs. 15,01,569. Since the client was not satisfied with the services rendered by the assessee, it refused to reimburse the said expenses. Therefore, the assessee wrote off the amount. (C) With reference to bad delivery debtors, the assessee being a stock broker claimed bad delivery debtors amounting to Rs. 87,02,430 as bad debts. These amounts are due from brokers of the selling parties f....
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....herefore, they are capital in nature. Accordingly he allowed 25 per cent. depreciation by capitalising the said amount and making addition of difference of Rs. 16,19,363. The Commissioner of Income-tax (Appeals) upheld part of the amount relying on the decision of the hon'ble Rajasthan High Court in the case of CIT v. Arawali Constructions Co. P. Ltd. [2003] 259 ITR 30 (Raj). It was the contention that the assessee has not obtained any enduring benefit and only paid licence fee for utilising the same in existing computers. Accordingly the expenditure is revenue in nature. The assessee relied on the following decisions : (i) CIT v. Varinder Agro Chemicals Ltd. [2009] 309 ITR 272 (P&H) ; (ii) CIT v. Asahi India Safety Glass Ltd. [2012] 346 ITR 329 (Delhi) ; (iii) CIT v. Raychem RPG Ltd. [2012] 346 ITR 138 (Bom) (I. T. A. No :4176 of 2009) ; (iv) Deputy CIT v. Mahindra Reality and Infr. Developers (I. T. A. No. 1160/Mum/2010) ; (v) Diageo India P. Ltd. v. Deputy CIT [2011] 13 Taxmann.com 62 (Mum) ; and (vi) Amway India Enterprises v. Deputy CIT [2008] 301 ITR (AT) 1 (Delhi). Considering the nature of the expenditure as seen from annexure-A to the submissions before the Commissi....
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....nced to the sister concerns and following his order in the assessment year 2001-02 he deleted the said disallowance. The Revenue is aggrieved. It was fairly admitted that in the assessment year 2001-02 the issue was restored to the file of the Assessing Officer for examination afresh as directed in paragraph 17 of the order in I. T. A. No. 6894/Mum/2004: "17. We have heard the rival submissions and perused the material on record. The Assessing Officer has categorically found that interest free advances to the assessee's related concerns are out of interest bearing HSBC overdraft account, on which the assessee had claimed deduction of interest in its profit and loss account. This finding of the Assessing Officer has not been dislodged by the learned Commissioner of Income-tax (Appeals). On the other hand, he held that the Assessing Officer has failed to establish the nexus between interest bearing funds and interest free advances. We find from the orders of authorities below that the issue has not been considered from the point of commercial expediency which is the proposition laid down by the decision of the hon'ble Supreme Court in the case of S. A. Builders Ltd. v. CIT (Appeals....
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.... violation of their bye-laws could not be considered as violation of law and is only a breach of contractual obligation and therefore, claim is allowable as a deduction. The Assessing Officer however, was of the opinion that the penalty paid violates the provisions of section 37(1) and therefore, the same cannot be allowed as business deduction. The Commissioner of Income-tax (Appeals) allowed the amount stating that the stock exchanges are not Government or semi-Government bodies and the payments are only for technical violation of regulations which cannot be considered as payment prohibited by law or in connection with an offence. The Revenue is aggrieved by this. Similar issue was considered in favour of the assessee in the assessment years 2003-04 and 2005-06 by the co-ordinate Bench of the Income-tax Appellate Tribunal copies of which were placed on record. This issue is now directly covered by the decision of the hon'ble Bombay High Court in the case of CIT v. Angel Capital and Debit Market Ltd. in I. T. A. No. 475 of 2011 dated July 28, 2011 wherein the hon'ble High Court held that the amount paid as penalty to stock exchanges was on account of irregularities committed by t....
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....ng Officer however, was of the view that assessee has purchased specific software licence for use of Ritechoice Spectrum-2000 which is only a licence and accordingly treating it as "intangible asset" allowed depreciation at 25 per cent. as per depreciation schedule. Further he was of the view that since the assessee did not utilise for the full period to claim deduction at 25 per cent., he allowed 50 percent. thereof as the assessee capitalised with effect from December 31, 2001 and accordingly added back an amount of Rs. 35,62,650 being excess depreciation claim on software purchase. The assessee being aggrieved along with the disallowance of software expenses (ground No. 4 in the assessee's appeal) contested before the Commissioner of Income-tax (Appeals) that the entire amount of Rs. 40,60,000 was allowable as revenue expenditure. There is no dispute before the Commissioner of Income-tax (Appeals) with reference to the rate of depreciation. The Commissioner of Income-tax (Appeals) noted that the assessee had acquired a software known as Ritechoice Spectrum-2000 from Ritechoice for Rs. 40,60,000 comprising the basic price of Rs. 24,25,000, customisation of Rs. 7,35,000 and implem....