AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (9) TMI 900
X X X X Extracts X X X X
X X X X Extracts X X X X
....t on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in upholding the action of the Ld. AO in computing the total income of the appellant at INR 389,408,700 by making a disallowance of INR 140,899,500 (INR 18,78,66,000 less 25% dep. on INR 187,866,000) on the purported ground that the same is in the nature of capital expenditure without appreciating that the said amounts were in the nature of normal trade/ volume discount allowed by the appellant to its customers during the normal course of business and is therefore fully allowable under Section 37(1) read with Section 28 of the Act. 3. a. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in rejecting the contention of the appellant that in computing the disallowance at INR 140,899,500 (INR 187,866,000 less 25% dep. on INR 187,866,000) the Ld. AO has not appreciated that the total expense incurred and claimed as an expenditure in the year under appeal by the appellant towards such trade/volume discount is only INR 92,323,607 b. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in rejecting the additional evidence in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aid an amount of Rs. 18,78,66,000/- to obtain exclusive vendor status and this amount was set off against sales of current financial year. As the expenses incurred on exclusive commercial rights and covered under intangible assets, therefore, it needed to be capitalized. Only depreciation @ 25% was allowable on such capitalized amounts. Thus, depreciation of Rs. 4,69,66,500/- was only allowable in the current financial year out of total claim of the assessee amounting to Rs. 18,78,66,000/-. The mistaken resulted in under assessment of income of Rs. 14,08,99,500/- involving tax effect of Rs. 7,47,60,042/-. C. that as per schedule-IV attached to form 3CD report assessee had purchased software of Rs. 1,26,92,880/- and debited this amount in the P&L Account under the head software usage expenses. As the expenses incurred on purchase of software are covered under intangible assets, therefore, it needed to be capitalized. Only depreciation @ 25% was allowable on such capitalized amounts. Thus, depreciation of Rs. 31,73,220/- was only allowable in the current financial year out of total claim of the assessee amounting to Rs. 1,26,92,880/-. Further as per the depreciation chart of the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Maruti Suzuki India Ltd. Vs. DCIT [356 ITR 209(Del)] iv. Moser Baer India Ltd. Vs. DCIT [WP (C) No. 1004 of 2013 (Del.)] v. Cartini India Ltd. Vs. ACIT [21 DTR 281 (Bom.)] vi. M.J. Pharmaceuticals Ltd. Vs. DCIT [297 ITR 119 (Bom.)] vii. Garden Silk Mills (P.) Ltd. Vs. DCIT, [237 ITR 668 (Guj.)] viii. CIT Vs. Eicher Ltd. [294 ITR 310 (Del.)] ix. Jal Hotels Co. Ltd. Vs. ADIT [24 DTR 37 (Del.)] x. ITO Vs. Object Connect India Pvt. Ltd. [1277 & 1278/Hyd/2011 (Hyd.)] xi. Usha International Ltd. [ITA No. 2026/2010]-Delhi High Court 3.2 On the other hand, learned Sr. DR placed reliance on the orders of the CIT(A). 3.3 We heard the rival submissions and perused the material on record. The contention of the appellant is that since the very same issued was considered by the Assessing Officer at the time of framing original assessment proceedings, the present reassessment proceedings on this issue are not valid in law since prompted by mere change of opinion. From the explanation furnished during the course of original assessments, it is clear that the assessee company was harping on that it is nothing but volume discount by the appellant to the M/s Mahindra and Mahindra. There is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r. The total consideration will be paid off by the end of the next financial year." 4.2 During the course of original assessment proceedings, the appellant furnished following explanation on this issue as under: "Lear India is a manufacturer and supplier of specialized car seating systems. As Lear India is not itself a car automobile manufacturer, its business can be understood to be ancillary supplier of key components to a major automobile manufacture. In other words, Lear India can also be understood to be a contract manufacturer specific commissioned cars seating systems at the behest of independent car manufacturers like General Motors, Mahindra & Mahindra Ltd. (M&M) etc. It is a common knowledge that India automobile market for passenger car is highly price competitive and domestic manufacturers like Tata Motors, General Motors, Hyundai are under a significant pressure to bring down costs to make their cars more affordable to an average India. Accordingly, in the experience of Lear India such cost pressure are pushed to the downstream ancillary unit/suppliers. It may be noted that as much as Lear India professes to supply to its customers high performance interior and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sideration is whether it constitutes capital expenditure or revenue expenditure. To decide this issue, in our considered opinion, the principles laid down by the Hon'ble Supreme Court in the case of Assam Bengal Cement Vs. CIT, 27 ITR 34, should be applied. The relevant portion of the aforesaid case are as follows: "..............Under clause 4 of the deed the lessors undertook not to grant any lease, permit or prospecting licence regarding limestone to any other party in respect of the group of quarries called the Durgasil area without a condition therein that no limestone shall be used for the manufacture of cement. The consideration of Rs. 5,000 per annum was to be paid by the company to the lessor during the whole period of the lease and this advantage or benefit was to enure for the whole period of the lease. It was an enduring benefit for the benefit of the whole of the business of the company and came well within the test laid down by Viscount Cave. It was not a lump sum payment but was spread over the whole period of the lease and it could be urged that it was a recurring payment. The fact however that it was a recurring payment was immaterial, because one had got to look....