TaxTMI 
TaxTMI 
2017 (11) TMI 1715
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....f the Act are applicable to the Appellant, although no deduction was claimed under section 10A. 3. Without prejudice to the above grounds of appeal and in the alternative, the Learned DCIT erred in not appreciating that the provisions of section 14A does not apply to loss. 4. Without prejudice to the above grounds of appeal and in the alternative, the Learned DCIT erred in not appreciating that the amount of Rs. 2,24,57,168 represented a loss of the unit at Chennai and section 14A does not apply to loss. 5. On the facts and in the circumstances of the case and in law, the Learned DClT erred in holding that the expenses incurred amounting to Rs. 22,86,948 in respect of stamp duty and professional fees (Rs.12,74,100 + Rs. 10,12,848) for setting up the STPI division at Chennai is capital in nature. 6. On the facts and in the circumstances of the case and in law, the Learned DClT erred in making a double disallowance of Rs. 22,86,948 in respect of stamp duty and professional fees (Rs.12,74,100 + Rs. 10,12,848) for setting up the STPI division at Chennai which already formed a part of the disallowance made under section 14A thereby not following the d....
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....stances of the case and in law the Learned DCIT erred in not reducing the provision for Fringe Benefit Tax amounting to Rs. 7,50,000 while computing book profit under section 115JB. 14. On the facts and in the circumstances of the case and in law the Learned DCIT erred in not granting credit of tax deducted at source amounting to Rs. 63,80,046. 5.0n the facts and in the circumstances of the case and in law the Learned DCIT erred in not granting credit of advance tax paid aggregating to Rs. 57,00,000." 2. The brief facts of the case are that the assessee company, engaged in the business of trading in pharmaceutical products filed its return of income for the assessment year 2006-07 on 30-11-2006 declaring total income at Nil after setting off of earlier losses under normal provisions of the Act and book profit of Rs. 9,19,69,250 u/s 115JB of the Act. The case has been selected for scrutiny and notice u/s 143(2) and 142(1) of the Act were issued. In response to the said notices, the assessee filed various details, as called for by the AO from time to time. The AO has passed draft assessment order u/s 144C(1) r.w.s. 143(3) on 31-12-2009 proposing to assess total income of ....
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.... Therefore, the AO was incorrect in disallowing expenditure by invoking provisions of section 14A of the Act. In this regard, he relied upon the decision of ITAT, Mumbai Bench in the case of Meditap Specialities Pvt Ltd vs ACIT 33 CCH 360. The Ld.AR further submitted that section 10A of the Act is a provision for deduction and not exemption provision, therefore, the AO was incorrect in disallowing expenditure incurred for setting up STPI unit at Chennai which is generating income which is deductible u/s 10A by invoking section 14A of the Income-tax Act, 1961 which provides for disallowance of expenditure incurred in relation to exempt income which does not form part of total income. 4. The Ld.DR, on the other hand, supported the orders of the AO to argue that the AO has rightly invoked section 14A to disallow expenditure incurred for setting up STPI unit as the income from STPI unit is tax exempt u/s 10A of the Act. Though the auditor had quantified disallowance to be made u/s 14A, the assessee has failed to disallow expenditure in its computation and hence, the AO was right in disallowing impugned expenditure and his order should be upheld. 5. We have heard both the parties,....
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....norms set up by STPI authorities are in the nature of recurring expenditure. The assessee further submitted that stamp duty incurred for registration of lease agreements is also in the nature of revenue expenditure as the assessee is not deriving any enduring benefit out of lease agreement. In this regard he relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs Cinecita (P) Ltd 137 ITR 652 (Bom). Alternatively the assessee submitted that if the said expenditure is held to be capital in nature, depreciation ought to be allowed on the same. 7. Having heard both the sides and considered the materials available on record, we find that the expenditure incurred is in the nature of professional expenditure for Oracle migration and accounting software for STPI unit and annual membership fees paid to STPI, a government of India undertaking are in the nature of recurring expenditure which does not give any enduring benefit to the assessee. We further notice that stamp duty incurred for registration of lease agreement is also revenue expenditure irrespective of period of lease. This legal proposition is supported by the decision of Hon'ble Bombay High Court in the cas....
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....of expenses for which the provisions of TDS has no application. In this regard, he relied upon the decision of the Hon'ble Supreme Court in the case of GE India Technology Centre (P) Ltd vs CIT 372 ITR 456 (SC). 10. Having heard both the sides and considered material on record, we find that the assessee has filed various details to support its arguments in the form of bills and confirmations from person to whom the amount has been paid. According to the assessee, all these expenses are reimbursement of expenditure incurred by third parties on behalf of the assessee without any profit element. The assessee further contended that reimbursement of expenditure is outside the purview of provisions of section 194C / 194J; therefore, there is no obligation on the part of the assessee to deduct TDS. We find force in the arguments of the assessee for the reason that the Hon'ble Bombay High Court in the case of CIT vs Siemens Aktiongesellschaft 310 ITR 320 (Bom) has held that payment by way of reimbursement of expenditure incurred on behalf of payer is not income chargeable to tax in the hands of the payee. The Hon'ble Supreme Court in the case of GE India Technology Centre (P) Ltd vs CIT....
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....provision in Finance bill 1999, that ihe assessee was entitled to bring forward business losses of the earlier years. The DR relied upon the order of the FAA. 7.3.We have heard the rival submissions and perused the material before us in our opinion provisions of section 72 would be applicable in the present case and not the provisions of section 71 ,as held by the AO and the FAA.We further find that the pre-condition of continuation of business has been dispensed with by the Fin bill 1999. Therefore, we are of the opinion that the claim made by the assessee should have been allowed. Reversing the order of the FAA,we decide the issue in favour of the assessee. Considering the facts and also consistent with the view taken by the coordinate bench, we are of the view that the AO was erred in restricting set off of brought forward business losses; hence, we direct the AO to allow brought forward losses as claimed by the assessee. 12. The next issue that came up for our consideration from grounds 11 & 12 is disallowance of miscellaneous hardware expenditure amounting to Rs. 8,61,215 and depreciation on miscellaneous hardware expenditure. The AO disallowed miscellaneous hardware exp....