TaxTMI 
TaxTMI 
2019 (8) TMI 369
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....rized share capital. 4. At the time of hearing, the Ld. AR of the assessee submitted that this ground is covered by the decision of Co-ordinate Bench of the Tribunal, Pune in assessee‟s own case in ITA No.1311/PUN/2011 & ITA No.1414/PUN/2011 for assessment year 2002-03 and in ITA No.1676/PUN/2011 & ITA No.54/PUN/2011 for assessment year 2003-04. In assessment year 2002-03, the Tribunal on this issue has held as follows: "22. We have perused the case records and heard the rival contentions. We have also analyzed the facts and circumstances on the issue. The Ld. CIT(Appeals) allowed the stamp duty expenses to be amortized u/s.35DD of the Act stating that to be part of amalgamation proceedings, following the decision of his predecessor in assessee's own case for assessment year 2004-05 and 2005-06 as on record. The Assessing Officer and the Ld. CIT(Appeals) has not denied the facts that there were amalgamation proceedings with respect to the assessee, however they have not brought out any reasons, specially in the order of the Ld. CIT(Appeals) that when entire expenses are in connection with amalgamation proceedings and the Revenue Authorities have allowed stam....
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....ear from the findings of the Assessing Officer it is crystal clear that the software in question were in the nature of specialized software. In such case, the assessee, no doubt shall derive enduring benefit even beyond two years. Therefore, the Ld. CIT(Appeals) upheld the addition made by the Assessing Officer as capital expenditure. 8. At the time of hearing, the Ld. AR of the assessee relied on the decision of the Hon‟ble Bombay High Court in the case of CIT Vs. Geoffrey Manners & Co. Ltd., 49 taxmann.com 320 wherein the findings of the Tribunal was upheld by the Hon‟ble Bombay High Court. In that order the Tribunal has observed that in the present world scenario, technology plays an essential role regarding advancement of research and therefore, technology has to be updated from time to time and judicial note has to be taken with regard to the technological advancement and though there is small degree of endurability that should not mean expenses incurred are capital in nature. Rather they are revenue in nature. 9. Per contra, the Ld. DR relying on the order of the Assessing Officer submitted that in the case of the assessee, it is not a question of simple upd....
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.... directly for manufacturing and production and for longer degree of endurability then there cannot be any iota of doubt that they are capital in nature. However, if the degree of endurability is small then following the decision of the Hon‟ble Bombay High Court (supra.) this expenditure should be treated as revenue expenditure and hence, allowable. In view of the matter, we set aside the order of the Ld. CIT(Appeals) on this issue and restore it to the file of Assessing Officer for detailed verification as herein above mentioned after complying with the principles of natural justice. Thus, ground No.2 raised in appeal by the assessee is allowed for statistical purposes. 11. Ground No.3 relates to the expenditure on premises of Rs. 35,46,311/-. 12. The Assessing Officer on perusal of the profit and loss account of the assessee observed that an amount of Rs. 35,46,312/- has been debited to expenditure on premises account under the head "Miscellaneous Expenses". After going through the details submitted by the assessee as called for by the Assessing Officer it was seen that the expenditure debited to expenditure on premises account mainly include capital expenditure mad....
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.... the Ld. CIT(Appeals) should be deleted and entire amount should be allowed. 15. Per contra, the Ld. DR relied on the orders of the Sub-ordinate Authorities. 16. We have perused the case records and heard the rival contentions. We observe that the assessee company during the year had purchased a second hand bungalow for MD. Thereafter, all these repairs works had taken place. The case laws relied on the by the Ld. AR are on the facts and situation that renovation/repairs were taken place where already the property was in use. But in this case during the year property was purchased and suitable repairs/renovation were made and then it was put to use. So substantially facts are different as compared to the case of the assessee. The Assessing Officer had directed 80% to be capitalized which was reduced to 40% by the Ld. CIT(Appeals) considering that some of the repairs were in nature of current repair. We find this reasoning to be judicious so as that it had maintained the principles of equality with regard to the parties herein in the given facts and circumstances. We do not find any infirmity with the findings of the Ld. CIT(Appeals) which is thereby upheld. Thus, ground No.3 rai....
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....eting the addition has to be upheld. On the other hand, if it is found that the amount of Rs. 77,53,766/- was credited to Provision for warranty account, but was not offered for taxation, in that case, provision will have to be restricted @ 0.40% of total sales, which is Rs. 1.17 crore as against the claim of deduction for provision at Rs. 1,76,75,590/-. Excess amount of provision in that case will have to be disallowed. We therefore, set aside the impugned order on this score and remit the matter to the file of Assessing Officer for deciding the issue afresh in accordance with the above directions. Needless to say, the assessee will be allowed a reasonable opportunity of hearing. Thus, ground No.6 raised in appeal by the Revenue is allowed for statistical purposes. 21. Ground No.4 is with regard to the disallowance of miscellaneous expenses. This issue has been discussed by the Assessing Officer at Para 12 of his order and as per the detailed reasons and investigation carried out, he disallowed 60% of the miscellaneous expenses and added to the total income of the assessee. Prima facie, the Assessing Officer disallowed 60% of these expenses since proper documentary evidences we....
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....alt with this issue and allowed the assessee‟s claim for statistical purposes. This amount is, therefore, directed to be excluded from the total of Miscellaneous expenses. A sum of Rs. 25,83,042/- included under this head is on account of actual expenditure on warranty repairs during that period. Similar issue has been decided by the Tribunal in the immediately preceding year against the assessee. We, therefore, direct to disallow the amount of Rs. 25,83,042/-. In the preceding year, we have also disallowed expenditure incurred by the assessee on Gifts and Donations, in entirety. The Assessing Officer is directed to verify the details of such Miscellaneous expenses and disallow the amount relating to Gifts and Donation, if included, under this head. For the preceding year, we have allowed full deduction towards fees for share handling. The Assessing Officer is directed to allow deduction for the full amount towards fees for share handling, after excluding it from this head, if already included. In so far as the remaining amount is concerned, following the view taken in the preceding year, we direct the Assessing Officer to restrict the disallowance to 15% of such remaining ex....
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....us, grounds No.6 and 7 raised in appeal by the assessee are allowed for statistical purposes. 29. In the result, appeal of the assessee in ITA No.1303/PUN/2010 is partly allowed for statistical purposes. ITA No.1302/PUN/2010 (By Revenue) A.Y.2004-05 30. Apart from grounds appearing in appeal Memo, the Revenue had preferred an additional ground with respect to Section 35DDA of the Act. 31. At the time of hearing, the Ld. DR submitted that grounds No.1, 2 and 3 in the appeal Memo and the additional ground are similar in nature. The Ld. DR further submitted that in assessee‟s own case in ITA No.1676/PUN/2011 and ITA No.54/PUN/2011 for assessment year 2003-04, the Tribunal had restored the issue to the file of Assessing Officer with certain directions. In this regard, the Ld. DR invited our attention to Para 10 and 11 of the Tribunal‟s order for assessment year 2003-04 wherein it was held and observed as under: "10. Ground no.2 of the assessee's appeal is against not allowing proper deduction u/s.35DDA towards Voluntary Retirement Scheme (VRS) on accrual basis. 11.Similar issue came up for consideration before the Tribunal in assessee's own ....
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....in ITA No.1676/PUN/2011 and ITA No.54/PUN/2011 for assessment year 2003-04 wherein the Tribunal has held as follows: "31. Second ground by the Revenue is against allowing claim of Dealer Commission. Here again, we find that similar issue has been determined by the Tribunal at page 37 of its order for the immediately preceding year. The relevant discussion has been made from para 64 onwards and eventually the view taken by the ld. CIT(A) has been approved. Following the same, we countenance the impugned order on this score. This ground is not allowed." Respectfully, following our decision as hereinabove mentioned, ground No.5 raised in appeal by the Revenue is dismissed. 36. Ground No.7, 8 and 9 of the Revenue‟s appeal is with regard to TP adjustment on account of royalty payment made to AE. 37. With regard to these grounds, it is observed that similar issue had come up for consideration before us ITA No.1311/PUN/2011 & ITA No.1414/PUN/2011 for assessment year 2002-03 and in ITA No.1676/PUN/2011 and ITA No.54/PUN/2011 for assessment year 2003-04. In assessment year 2003-04, the Tribunal in its order has held as follows: "34. We have heard both the si....