TaxTMI 
TaxTMI 
2018 (1) TMI 928
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.... passed by the Commissioner of Income-tax (Appeals)- 19, New Delhi qua the assessment year 2000-01 on the grounds inter alia that :- "On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax Appeals - XIX, New Delhi ('learned CIT(A)') has erred in passing an order under section ('u/s') 250 of the Income Tax Act, 1961 ('Act'), partly confirming the order passed by the Deputy Commissioner of Income Tax, Circle 12(1), New Delhi ('learned AO') in the order passed u/s 143(3) for the subject A Y. Ground No. 1- Disallowance of license fee u/s 37(1) of the Act 1.1. On the facts and in the circumstances of the case and in law, the learned CIT(A)....
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....ounts received on capital account, as income chargeable to tax in the year of waiver. 4.1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not appreciating that the character of receipt is decided in law at the time of the receipt and that such character does not change by any subsequent event and hence merely because the amount is waived during the captioned year, what was originally received as a capital receipt does not lose its character and become a revenue receipt. 4.2. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not appreciating that the copy of the Foreign Inward Remittance Certificate ('FIRC') submitted by the A....
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.... its business on the ground that the corporate guarantee given by the assessee company is not an expenditure wholly and exclusively for the purpose of business nor the assessee company brought on record any evidence that it was not a mere provision and not a sum actually paid or incurred. Assessee company has claimed deduction of Rs. 5,29,34,650/- as capital receipt in computation of income. AO disallowed the same on the ground that the assessee company has failed to submit the agreement, copy of agreement or the receipt of this sum or the waiver of liability by the Swisscom and as such, the exact amount of the said receipt is not clear. 3. Assessee carried the matter by way of filing appeal before the ld. CIT (A) who has partly upheld t....
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.... Essar Pvt. Ltd., pertains to the assessment year 1999-2000 i.e. year ending 31st March, 1999. It is for the period prior to the period 31st July, 1999. As per the discussion above, the licence fee payable on or before 31st July, 1999 should be treated as capital expenditure and the licence fee payable thereafter should be treated as revenue expenditure. In view of the aforesaid position, the question of law admitted for hearing in this appeal as recorded in the order dated 21st August, 2013, has to be answered in favour of the revenue and against the respondent assessee." 8. So, following the decision rendered by the Hon'ble High Court, we are of the considered view that AO/CIT (A) have erred in disallowing the amount of Rs. 51,60,37,61....
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....alternative except to write off the loss incurred on account of nonrecoverability of any benefit qua funds placed at the disposal of ADIL. So, we are of the considered view that the funds invested was for commercial business expediency and are allowable u/s 37 of the Act being investment in the subsidiary company. 12. Hon'ble Supreme Court in S.A. Builders Ltd. vs. CIT, Chandigarh - (2007) 288 IT4 1 (SC) held that, "even when the expenditure has not been incurred under any legal obligation yet is allowable to be as business expenditure if it was incurred on ground of commercial expediency." So, in this case, we are of the considered view that investment in the OFCD by the assessee company in its subsidiary to utilize the license of ADIL ....
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....lowable business expenses." So, following the aforesaid decision rendered by Hon'ble Supreme Court, we are of the considered view that the amount of Rs. 28,36,26,000/- is an allowable expenditure. So, ground no.3 is determined in favour of the assessee company. GROUND NO.4 15. AO/CIT (A) have treated the amount of Rs. 5,29,34,650/- being the waiver of the amount received on capital amount as income chargeable to tax in the year of waiver. At the very outset, it is fairly conceded that copy of agreement to prove the receipt of the amount from Swisscom or the waiver of the liability by Swisscom has not been brought on record by the assessee company to work out the exact nature of consideration for which amount in question was received f....