TaxTMI 
TaxTMI 
2017 (7) TMI 199
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....on of Rs. 92,39,520/- made by the AO on account of disallowance of Technical Fees being capital expenditure. 2. On the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in restricting addition of Rs. 29,65,939/- made by the AO on account of disallowance u/s. 14A to Rs. 6,56,227/-. 3. The appellant craves leave to, add to, alter, amend or vary from the above grounds of appeal at or before the time of hearing. 2. The brief facts of the case are that the assessee had filed the original return of Income on 29.9.2009 declaring total income of Rs. 8,37,43,100/-. The AO observed that the assessee has debited an amount of Rs. 92,39,520/- towards technical fee/ consultation fee for designing of the Independent Front S....
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....ccordingly, the appeal of the Revenue may be dismissed. 7. We have heard both the parties and perused the records, especially the impugned order passed by the Ld. CIT(A). We find that Ld. First Appellate Authority has elaborately discussed the issues in dispute by considering the submissions of the assessee and adjudicated the issue No. 1 vide para no. 6.2 at page no. 6 to 9 of the impugned order. The said relevant paras are reproduced as under:- "6.2 Regarding the Ground NO.1 of the appeal relating to treatment of the technical fees paid to M/s Mahindra & Mahindra for use of design, drawing production tooling for manufacturing of independent front suspension for Scorpio Car as capital in nature, the appellant claims that the above expen....
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.... arrange to manufacture the Production Toolings. It is agreed between the Parties that the full amount paid by M&M towards such Development drawing shall be recoverable by M&M from Korin, and for the purpose, Korin shall deduct an amount arrived at by dividing the total amount actually paid by M&M by 500,000 from the supply price of each IFS System in respect of the first 500,000 numbers of IFS System supplied to M&M, pursuant to this Agreement." The Clause (21) of the said agreement relating to intellectual property right arising from said agreement reads as under: "21. INTELLECTUAL PROPERTY /TITTLE The design data, drawinqs, and other technical information generated/developed/ obtained by Samlip pursuant to this Agreement shall bec....
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....s given to it by M/s Mahindra & Mahindra. In view of the required modernization in the IFS system, the said M/s Mahindra & Mahindra made payment to the Korean company, M/s Samlip for developing the prototype tooling and allowed the appellant to use the same for manufacturing the IFS components as per the requirement of M/s Mahindra & Mahindra on payment of technical fee. Clearly in such a case, M/s Mahindra & Mahindra got the ownership over the asset and the appellant was granted limited rights by Mahindra & Mahindra to use the same to Manufactur IFS System, in accordance with their requirement, on payment of Technica1 fee'. In view of the same, the payment is held to be revenue in nature. I find that the appellant has been making such ....
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..... With regard to issue no. 2 relating to restricting addition of Rs. 29,65,939/- made by the AO on account of disallowance u/s. 14A to Rs. 6,56,227/- is concerned, we find that Ld. CIT(A) has adjudicated this issue para no. 6.3 at page no. 9 to 10 of the impugned order which is reproduced hereunder:- "6.3 Regarding ground No. 2 of the appeal, I find that there is no dispute that Rule 8D ought to have been applied for working out of disallowance under section 14A. The only dispute is with respect to calculation therein, particularly in respect of Rule 8D(2)(ii). The appellant had submitted that the company has significant own funds available with it. On the basis of a day-to-day availability of cash flow fn the CC account, the appellant fu....
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....ut of the total investment of Rs. 20 crores, in respect of investment of 9.72 crores, the assessee had realized adequate income from sales to cover such borrowing on the same day and hence the contention that no interest ought to have been charged for such investments is found to be correct. Similarly, the assessee contention that for making investment on different dates aggregating to RS.8.63 crores, the debit balance in the CC account was duly squared up within 2 days on receipt of income from sale, is also found to be correct on perusal of such cash flow statement. The assessee accordingly made additional disallowance before the ld. CIT(A) of further amount of Rs. 61,271/- in respect of the exact period for which borrowed funds were used....