AI Drafter 
TaxTMI 
TaxTMI 
2016 (5) TMI 1518
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.... the Revenue for the assessment years 2003-04 to 2007-08, wherein, the first common ground raised is with regard to allowability of 60% depreciation on V-sat equipment. 2. Brief facts of the case are that the assessee is engaged in the business of stock broking with Membership on National Stock Exchange with branches all over the country. For the assessment year 2003-04, the assessee has filed its return admitting income of Rs. .12,17,832/-. The return filed by the assessee was processed under section 143(1) of the Income Tax Act, 1961 ["Act" in short] on 31.12.2003. Subsequently, the case of the assessee was selected for scrutiny and notice under section 143(2) of the Act was duly served on the assessee. The assessee filed all details as required by the Assessing Officer. 3. Against the claim of depreciation of 60% on V-sat equipment, the Assessing Officer has restricted the depreciation at 25% and completed the assessment under section 143(3) of the Act by determining the income of the assessee at Rs. .30,97,639/- under normal provisions and under section 115JB of the Act, the income of the assessee was worked out to Rs. .1,19,19,881/-. 4. The assessee carried the matter....
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....the branches on the other end. All these computers have to be actively connected to the server of the NSE and to give real time advantage of executing the various trade orders in dealing with the equities. Thus, the V-sat plays a very vital role in bringing all the computers live and hooked on to the NSE servers. He has also relied upon the following case laws. (i) An AC fitted in a bus should be allowed depreciation applicable to a bus. [Delhi Airport Services 255 ITR 91 Delhi]. (ii) Materials used far measurement of electricity used in the industry for generation and transmission of electricity will be treated as eligible far higher deprecation [Simca Meters Ltd. 251 ITR 46]. 9. On perusal of the definition of 'Computer System' under the Explanation to clause (ix) of Section 36, it, can be noticed that devices supporting communications are also included in the definition. Further, the Sec. 2 of Information Technology Act of 2000 has explicitly laid dawn that a 'Computer' includes 'computer network', the latter also defined as a multitude of computers connected through communication media. By virtue of reading bath the definitions....
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....%. It was submitted before the learned CIT(A) that the assessee relied upon the statement of fact and addition may be deleted. The learned CIT(A) however, noted that his predecessor in the case of the same assessee for assessment year 2003-04 vide order dated 10-08-2006 held that VSAT equipments are not computer but communication equipments for which depreciation rate applicable to the machinery should be applied. The learned CIT(A) also noted that the facts of this case are same as is considered in earlier years. The order of the AO was accordingly confirmed and the appeal of the assessee was dismissed. 3. The learned Counsel for the assessee very fairly conceded that in the preceding assessment year 2003-04 the assessee did not prefer any appeal before the Tribunal against the order of the learned CIT(A) and as such the order of the learned CIT(A) in assessment year 2003-04 has become final. He has however, relied upon the order of ITAT, Mumbai Special Bench in the case of DCIT Vs Datacraft India Ltd., 40 SOT 295 and reiterated the submissions made before the authorities below. 4. On the other hand, the learned DR relied upon the orders of the authorities below.....
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.... or reversed the above decision of the Tribunal and accordingly the same is binding on us. Under the above facts and circumstances, we set aside the order of the ld. CIT(A) on this issue and respectfully following the decision of the Ahmedabad Bench of the Tribunal, we concur with the findings of the Assessing Officer. Thus, the ground raised by the Revenue for all the above assessment years are allowed. 10. The next common issue raised in the appeals of the Revenue is with regard to deleting the disallowance of ROC fees paid to Registrar of Companies for increasing the share capital for the assessment years 2005-06 and 2007-08. 11. In the assessment year 2005-06, the assessee has claimed the expenditure of Rs. .5,00,000/- and Rs. . 4,00,000/- for the assessment 2007-08 under 'Rates and taxes' paid to Registrar of Companies [ROC] towards enhancing the authorised share capital as revenue expenditure. However, the Assessing Officer has not accepted the claim of the assessee in view of the decision of the Hon'ble Delhi High Court in the case of CIT v. Hindustan Insecticides Ltd. 250 ITR 338, wherein, the Hon'ble High Court has observed that the matter is squarely concluded in fa....
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....venue is that the ld. CIT(A) erred in deleting the disallowance of lease rentals made by the Assessing Officer for the assessment years 2005-06 and 2006-07. 18. The following lease rental expenses were claimed by the assessee and disallowed by the Assessing Officer: Asst. Year Claimed (Rs. ) Disallowed (Rs. ) 2005-06 Nelco 21,81,591/- Nelco 21,81,591/- HCL Comnet 62,95,392/- HCL Comnet 29,16,640/- Total 84,76,983/- Total 50,98,231/- 2006-07 Nelco 15,35,040/- Nelco 15,35,040/- HCL Comnet 71,91,971/- HCL Comnet 3,60,000/- Total 87,27,011/- Total 18,95,040/- From the above, the amount claimed as lease rentals paid to NELCO has been disallowed by the Assessing Officer stating that the liability has not been crystallized. The lease rentals amounting to Rs. .21,81,591/- in the assessment year 2005-06 and Rs. .15,35,040/- in the assessment year 2006-07 paid to NELCO were claimed by the assessee, as submitted in its letter dated 23.12.2007 for the assessment year 2005-06 before the Assessing Officer is reproduced as under: (a) Rs. .2,66,436....
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....ase rentals against the claim of Rs. .62,95,392/-. Similarly, for the assessment year 2006-07, against the claim of Rs. .71,91,971/-, the Assessing Officer has disallowed Rs. . 3,60,000/-. 21. The assessee carried the matter in appeal before the ld. CIT(A). After considering the submissions of the assessee, the ld. CIT(A) directed the Assessing Officer to allow the claim of the assessee with regard to lease rentals for both the assessment years. 22. On being aggrieved, the Revenue is in appeal before the Tribunal. 23. We have heard both sides, perused the materials on record and gone through the orders of authorities below. After considering the submissions of the assessee, the ld. CIT(A) has observed as under: "34. I have gone through the rival contentions. As narrated by the AR, vide his letter dated 23.12.2007 filed before the AO, it is a fact that the payments were with held in the earlier years but were all crystallized in this FY 2004-05 and 2005-06 following the settlement of the disputes, complaints and grievances with NELCO. The later event of purchasing the V-sat equipments from NELCO would not make liability a contingent one. The mere fact that the paym....
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.... lease rentals while considering the same. With these observations, we set aside the order of the ld. CIT(A) and remit the matter back to the Assessing Officer to work out the allowable deduction in accordance with law. Thus, the ground raised by the Revenue is allowed for statistical purposes. With regard to the lease transactions with HCL Comnet Ltd., the ld. CIT(A) has observed that the advance payments were down payments towards lease rentals for both the assessment years. It is a fact that a mere down payment does not make the transaction a sale nor the amount can be treated as refundable deposit without any basis. Therefore, these expenditures should be considered as revenue expenditure. Further, the Assessing Officer has not given any finding to disallow the band width charges for 256 KBPS and lease rental charges paid to various franchisees as well as v-sat shifting charges. Though both the items are not provided in the books of accounts, but the assessee has made the claim in the computation of income statements, which is found to be in order in view of the judgement of the Hon'ble Bombay High Court in the case of CIT v. Pruthvi Brokers and Shareholders P. Ltd. 349 ITR ....
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....ipments obviously and apparently falling under Block III are entitled to 15% depreciation rate. The contention of the assessing officer that the assessee is entitled to depreciation @ 10% is incorrect, arbitrary and illegal and therefore, liable to be dismissed as baseless and frivolous. Hence, the assessee prays for directions to the assessing officer to allow the depreciation @ 15% on Office Equipments and render justice and other contentions of the assessing officer in this connection are dealt with as follows. In the case of assets acquired by the assessee during the previous year, proviso to section 32 of the Income Tax Act, 1961 permits 50% of the applicable rate of depreciation. Hence, the assessee has claimed 50% of applicable rate of depreciation as per the above proviso and complied with the provisions of section 43(6)(c) of the Income Tax Act, 1961 applicable to Block of assets and there is no violation of any of the above provisions of Income Tax Act, 1961 quoted by the assessing officer." After considering the above submissions of the assessee, the ld. CIT(A) was of the opinion that the claim of the assessee seems to be in order. He also observed that as per Appendi....
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.... Rs. .5,12,455/- under section 14A of the Act. The assessee has accounted an amount of Rs. .5,41,699/- as dividend from Mutual Funds/shares and LTCG of Rs. .7,65,145/- during the year and claimed the same as exempt under section 10(34)/10(38) of the Act. The Assessing Officer has observed that the assessee has received exempt income but not disallowed any expenditure relatable to earning of such income even though it has debited several expenses in P & L account in earning income during the year. The Assessing Officer was of the opinion that some expenditure, direct or indirect, must have been incurred and such expenditure should be disallowed as per section 14A of the Act. Thus, the assessee was asked to clarify as to why the disallowance should not be made under section 14A r.w. Rule 8D. The assessee vide its reply dated 15.2.2013 stated that no disallowances is called for as the above amounts already suffered tax by way of DDT/STT. The contention of the assessee was not accepted and worked out the disallowance under section 14A r.w. Rule 8D and added back to the total income of the assessee. 37. On appeal, after considering the submissions of the assessee and also by consider....
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....xpenses attributable to earning such exempt income, the Finance Act, 2006 had brought in the provisions of Section 14A(2) which requires the Assessing Officer to determine the expenses relating to exempt income in accordance with Rule 8D. Reliance is placed on the decision of the Bombay High Court in the case of Godrej & Boyce vs. DCIT, wherein it has been held that disallowance under Sec. 14A is 'fair and reasonable'. 40. After considering various judicial pronouncements, the ld. CIT(A) confirmed the disallowance made by the Assessing Officer. In this case, the assessee has not maintained separate account for its investments in mutual funds/shares. Moreover, the assessee has incurred an amount of Rs. .2,61,38,850/- as interest and other finance expenses during the year. The assessee has also claimed that borrowed funds were not utilized for making investments. The Assessing Officer has observed that the funds for the company come in a common kitty and it comprises of borrowed funds, share capital and retained earnings (Reserves & Surplus). Therefore, he held that borrowed funds were not utilized for making investment in mutual funds/shares. 41. Before us, the ld. Cou....