TaxTMI 
TaxTMI 
2016 (11) TMI 254
X X X X Extracts X X X X
X X X X Extracts X X X X
....ommissioner of Income tax (Appeals) has erred both in law and on facts in confirming the following disallowances of following. a). The CIT(A) is not correct in confirming disallowance of Rs. 5,60,000/- for their charges paid to Software Technology Park of India, Noida, the disallowance is unjust, arbitrary & illegal. b). The CIT(A) is incorrect in denial of deduction of Rs. 1,40,000/- Rs, 1,40,000/- allowed by Ld. A.O paid to STPI for their charges. The denial is unjust, arbitrary, illegal, and against facts. c). That the CIT(A) erred on facts and in law in confirming disallowance of Rs. 3,35,625/- in the absence of confirmation from the party M/s Gigaware Software Solutions. The amount was paid for purchase of certain software. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... STPI means the assessee had incurred the expenditure on extension of the existing business. The assessee cannot claim these expenses as whole. These expenses are not routine nature and appearing of enduring benefit nature. Therefore these expenses are amortized being expenses of pre-operative expenses. However, as per Section 35D 1/5 of Rs. 7 lacs is allowable. Thus the Assessing Officer disallowed Rs. 5,60,000/-. As relates to the purchases of software from M/s. Gigaware Software Solutions, the Assessing Officer observed that the Assessee has not furnished any document that exhibits the credit balance. In absence of any detail/confirmation from the said party, the outstanding balance shown to Rs. 3,35,625/- was treated as a deemed income ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Court) and in the case of CIT(A) V R. Venkataswamy Naidu 29 ITR 529 (Hon'ble Supreme Court) had held that to claim an exemption, it is the duty of the assessee to substantiate it with records and evidences. Thus, the CIT(A) upheld the order of the Assessing Officer in making the disallowance of entire amount of Rs. 7,00,000/-. Further the CIT(A) held that since the A.O has allowed 1/5th deduction u/s 35D, the same requires to be withdrawn and disallowance is required to be made for entire amount by Rs. 7,00,000/-. Thus, denied the deduction of Rs. 1,40,000/- allowed by the Assessing Officer paid to STPI for their charges. 5. On the issue of disallowance of Rs. 3,35,625/- in the absence of confirmation from the party M/s. Gigaware Sof....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and payment and expenses booked. Since it was settled in current year and crystallized in current year, it is to be expensed in current year only. The services utilized against the same were booked as income in earlier years. The amount was not expensed since there were disputes between parties on certain issues. However it was resolved in current year and accordingly expensed. The Ld. AR further submitted that under the scheme of STPI, IT industries are provided certain concession in duties, levies and taxes. The Scheme is single point contact service to the STP unit which provides approval as a STP unit, approval for enhancement of capital goods, Issuance of green card, guidance for custom bonding, certification of imports and exports, pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cs charges of earlier year which were also settled/paid in current year. Rs. 1 lac paid on 13.07.2002, paid on 14.08.2002 and payable as on 31.03.2003 is the charges for the FY 2002-03 i.e. previous year in question hence expenses for current year only not registration or prior period expenses. Rs. 1 lac paid on 15.04.2002, Rs. 1 lac on 15.05.2002 and Rs. 1 lac paid on 25.07.2002 are for the FY 2001- 02. These were pending and not expensed in earlier years as there was some dispute between assessee & STPI, which was resolved in current year and payment and expenses booked. Since it was settled in current year and crystallized in current year, it is expensed in current year by the assessee. The said payments are in cheque and there is no nec....