TaxTMI 
TaxTMI 
2016 (4) TMI 704
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....ax Act, 1961 (herein after referred to as 'the Act'). 2. First, we take up Appeal No ITA No.1810/Mds/2014 of assessment year 2006-07 for adjudication and the assessee raised three grounds:- (i) ''The Commissioner of Income Tax (Appeals) erred in considering the disallowance of fine of B21,000/- paid to National Securities Clearing Corporation Ltd though is allowable as business expenditure u/s.37(1) of the Act. (ii) The Commissioner of Income Tax (Appeals) erred in confirming the disallowance of 5% of exempt income amounting to B3,22,670/- u/s.14A where the provisions of Section 14A does not apply as no expenditure has been incurred for earning exempt income whereas considering the judicial decision 2% of exempt income ....
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.... found B2,70,795/- debited to Profit and Loss account as computer software expenses and relied on the decisions of various High Courts and treated such expenses as capital expenditure and allowed depreciation at 60% B1,62,477/- and disallowed B.1,08,318/- as excess claim and completed assessment alongwith other disallowance and passed order u/s.143(3) of the Act Dt.24.12.2008. Aggrieved, the assessee filed an appeal with the Commissioner of Income Tax (Appeals). 4. In the appellate proceedings the ld. Authorised Representative submitted that Assessing Officer disallowed B21,000/- treating the fine as violation of law and assessee filed written submissions before Commissioner of Income Tax (Appeals) considering the expenses as contractual....
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....Assessing Officer of disallowance of B21,000/- fine imposed by NSCCL based on debit invoice and also confirmed the disallowance u/sec.14A being 5% of exempted income. In the case of software expenses the ld.CIT(A) considered the functional test and usage and characteristics of a software and found MS Office licence software as capital in nature and directed the Assessing Officer to verify the claim and allow the same if it is Revenue or otherwise allow deprecation. Aggrieved by the order of the Commissioner of Income Tax (Appeals) the assessee assailed an appeal before the Tribunal. 5. Before Tribunal, the assessee reiterated his submissions made before the Assessing authorities and appellate proceedings. On the issue of fine of B21,000/....
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....es levied and partially collection of margin and argued that as per the terms of contract with NSCCL such payments are always compensatory in nature. We are of the opinion on the basis of the debit note and debit advices though in debit advice it was referred as penalty for initial margin summary statement they take the characteristic of business transaction wholly and exclusively incurred in trading of securities and compensatory in nature. Considering the apparent facts, we set aside the order of Commissioner of Income Tax (Appeals) on this ground and we direct the Assessing Officer to delete the addition and allow the ground of the assessee. 7.1 The ld. Assessing Officer made disallowance u/Sec 14A of the Act though no expenditure is ....
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....cer. On the issue of disallowance of computer software expenses ld. Commissioner of Income Tax (Appeals) gave direction to Assessing Officer as in earlier years to allow licence fees and expenses having validity period less than one year to be treated as Revenue expenses and remaining as capital expenditure and allow depreciation and on the issue of disallowance of claim of net profit from hedging information in respect of hedging transactions ld. Authorised Representative submitted that loss was incurred due to mistake of future & options transactions and same be allowed. The ld. Commissioner of Income Tax (Appeals) on verifying the submissions and also circumstances of incurring loss directed the Assessing Officer to verify and pass order....
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....ld. Authorised Representative. 13. We heard the rival submissions, perused the material on record. The ld. Authorised Representative argued that assessee has incurred the expenditure of B7,20,560/- which includes licence fees, software upgradation charges, contract note software, licence application software. We have decided the issue in assessee's own case for the assessment year 2006-07 referred at para 7.2 of the order and partly allow the ground of the assessee. 14. The assessee company has made investments in the subsidiary companies. At the time of hearing, the ld. Authorised Representative submitted details of investments made in subsidiaries and others. The ld. Assessing Officer made calculation of disallowance Rule 8D(2)(iii)....