TaxTMI 
TaxTMI 
2011 (8) TMI 1343
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....Membership fee of Rs. 10,00,000/- paid to WIAA Club. Having regard to the facts and circumstances of the case, the appellant submits that the disallowance be deleted." 5. The Ld. Counsel for the assessee Shri. P.j. Pardiwalla submitted that the decision in the case of 209 ITR 649 and 326 ITR 425 are in favour of the assessee. The Mumbai High Court in the case of Otis Elevators (I) Ltd vs CIT 195 ITR 682(Bom) has held as follows: "Payment of club fees made to promote business interests and membership of club would provide officers better contact with persons in good position and would result in publicity, Club Fees is allowable expenditure." 6. Respectfully following the decision of the above cited decision, we are of the opinion that Membership in clubs are taken with the expectation that it would enable the officers of assessee to meet persons in high social status which would result to the growth of the business of the assessee. The expenditure can be said to have been incurred is wholly and exclusively for the purpose of his profession and hence allowable u/s 37(1). The appeal of the assessee on this issue is allowed. 7. Ground No. 2 to 4 raised by the assessee....
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....ls during the year under consideration were Rs. 217.40 crores and the percentage of the incidence of Purchase Tax on such purchases amounts to only 0.12%. c) The assessee has followed a regular method of accounting which has been accepted by the Department in the past. In the context of the relevant figures indicated above, there can be no dispute with the Auditors remark that the figure that would be required to be included in closing stock is not material. d) The appellant submitted that if the Assessing Officer wants to rely on the Tax Audit Report, he cannot adopt a piece-meal approach and rely on one observation, ignoring the remark of the auditor on the entire issue. 11. The Ld. CIT(A) held as follows: I have considered the submissions of the appellant very carefully. There is merit in the claim of the appellant that if the Assessing Officer wants to rely on the tax audit report, he is required to rely on the same in its entirety. The Tax Auditor has clearly indicated that he incidence of purchase tax in closing stock is not material. This is also apparent from the fact that the purchase tax involved in the instant case is Rs. 25,12,691/- as comp....
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.... Plant and Machinery instead of the rate of 60% claimed by the appellant". 14. The assessee relied on the decision in the case of Orient Ceramic Industries 3 ITR (AT) 346 to 348. All the bills have been produced at pages 10 to 100 of the Paper Book. As far as the uninterrupted power supply system (UPS) is concerned, the submissions of the assessee is that it is part and parcel of the computer-neither can function without the other in today's environment of fluctuating power supply. It is necessary to adjunct to the computer, and depreciation is allowable thereon @ 60%. 15. The Ld. CIT(A) held as follows: "The UPS system is not a part of the computer system and is more akin to air-conditioner or furniture and should not be entitled to the same rate of depreciation as that provided on the computer. In the decision reported in ITO Vs Samiran Majumdar (280 ITR (AT) 74 (Kol), it has been held that a printer, a scanner and a colour Xerox machine were an integral part of the computer system and were, therefore, entitled to the higher rate of depreciation. The reliance placed by the appellant on this decision is distinguishable. A printer or scanner is ordinarily utilizable ....
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....ptember, 2003, the had been put to use long before that Many of the parts of the various machineries were in fact bought as early as March and April, 2003. The only reason for capitalizing these particular plants or machineries in the month of September was because minor accessories or parts had to be added later, and in some cases mere fabrication work was pending which was duly completed before 30.09.03. it is common for the accounting entry to be passed at the end of the quarter, even if the asset is put to use earlier. To demonstrate the above, a list of all the assets capitalized on 30.09.2003, (which were bought for use in the plant at the appellant's factory at Ankleshwar and Patancheru) is given at Page 100 of the compilation. The appellant also submitted the bills of these purchases (Page 102-189 and Page 191-194 of the Compilation) which clearly show that the assets were purchased much before September 2003. Further, the appellant also submitted certificates from the plant managers at Ankleshwar and Patancheru factories (Page 101 and page 190 of the Compilation). Thus, the claim of the Assessing Officer that the assessee company had purchased Plant & Mac....
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....s that the AO be directed to exclude the said two items from the computation of book profit u/s. 115JB. 23. The AO objected to the assessee excluding capital profits from its calculation of book profits for the year and has added back the said profits. 24. The Ld. CIT(A) held as follows: "I have considered the submissions of the appellant very carefully and I am unable to agree with the contentions raised. The accounts of the appellant show that both these items have been duly credited to the profit and loss account. In my opinion, the judgment of the Supreme Court in CIT Vs Apollo Tyres (255 ITR 273) squarely applies. It was held by the Hon'ble Apex Court that the AO while computing the book profits has only the power of examining whether the books of account have been properly maintained in accordance with the Companies Act. The AO, thereafter has limited power of making additions and deductions as provided for in the explanation. The AO does not have the jurisdiction to go behind the net profits shown in the profit and loss account, except to the extent provided. The AO has to accept the authenticity of the accounts, which have been certified by the Statutory Audi....
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....the specific provisions of Sec. 115JB(5) which state as under: "Save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee, being a company, mentioned in this section". 31. In view of the decision of the Apex Court in the case of JCIT vs Rolta India Ltd., 330 ITR 470, wherein it has been held as follows: "It is clear from reading sections 115JA and 115JB of the Income-tax Act, 1961, that the question whether a company which is liable to pay tax under either provision does not assume importance because specific provision is made in the section saying that all other provisions of the Act shall apply to a MAT company (section 115JA(4) and section 115JB(5) ). Similarly, amendments have been made in the relevant Finance Acts providing for payment of advance tax under sections 115JA and 115JB. Section 234B is clear that it applies to all companies. The pre-requisite condition for applicability of section 234B is that the assessee is liable to pay tax under section 208 and the expression "assessed tax" is defined to mean the tax on the total income determined under section 143(1) or under section 143(3) as reduced by the....
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..... 24,46,700/- out of the claim of Rs. 30,58,375 (125%). Grounds No. 1 & 2 are, thus, partly allowed." 35. This issue is remitted back to the Assessing Officer for verification of the additional evidence filed by the assessee before the Ld. CIT(A) and if found in order allow the claim of the assessee. 36. Ground No.2 & 3 raised by the Revenue read as follows: "2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that fees paid to agency which installed and implemented SAP software to be part and parcel of the acquisition of software itself and thereby allowing 60% depreciation on the same. 3. Without prejudice to the above ground, the Ld. CITR(A) erred in holding that fees paid to agency which installed and implemented SAP software to be part and parcel of the acquisition of software and thereby allowing 60% depreciation on the same when the assessee himself submitted a working of disallowance during the assessment proceedings. 37. The AR submitted as follows: " The appellant submitted that SAP is an enterprise-wide software, which enables an organization to have an integrated platform for financial accounting ....
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....e implementation methodology. On inquiry, I was informed that the payment for acquisition of software was Rs. 8 ½ crores, which has been duly capitalized by the appellant. I am of the opinion, having regard to the nature of software and the terms of the service agreement, that the fees paid to the agency which installs and implements the said software has to be part and parcel of the acquisition of the software itself. The installation and implementation of such an enterprise wide software has to be considered as part and parcel of the software delivery system, and cannot be divorced in the manner suggested by the AO. Possibly, the appellant may have been able to contend the entire expenditure is allowable as a revenue expenditure, but it has been fair to capitalize the same to the software and claim depreciation thereon." 39. Expenditure incurred in installation/commissioning an asset should be considered as part of cost of acquisition of asset and depreciation allowed thereon. The Ld. CIT(A) had correctly allowed depreciation at 60% on the expenditure on installation treating it as part of cost of acquisition of software. Hence, Revenue's appeal on this issue is dismiss....
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.... erred in deleting the addition of Rs. 58,10,379/- made to the total income of the assessee on account of CENVAT credit obtained from Ralchem Ltd during the amalgamation. (ii) Without prejudice to the above ground, the Ld. CIT(A) erred in deleting the addition of Rs. 58,10,379/- made to the total income of the assessee on account of CENVAT credit obtained from Ralchem Ltd during the amalgamation by admitting additional evidence in violaion of Rule 46A of the I.T. Rules. 44. The assessee submitted as follows: "The relevant facts are that a subsidiary by name of Ralchem Ltd. was merged with Rallis India Ltd under orders of the Bombay High Court from 1st April, 2003. Ralchem Ltd. had a closing CENVAT credit balance of Rs. 58,10,379/- (relevant extract of closing Tax Audit Report of Ralchem Ltd. is given at page 196-197 of the Compilation). This CENVAT credit balance was treated as an opening CENVAT credit balance in the books of the assessee post merger. The usage of the CENVAT credit of Ralchem Ltd. has enabled the assessee to pay lesser excise duty. If the AO had seen the Auditors chart carefully, he would have observed that the CENVAT credit available and utili....
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....of Compilation) by which it agrees to initiate certain measure and undertakes specific obligations and responsibilities as stated at para 13.1.2 of Ld. CIT(A)'s order. 49. The AO stated that the company has made huge business losses and since there is no profit before tax the brand equity payment was disallowed by him. 50. The AR of the assessee submitted that the accounts of the assessee reveal profit before tax at Rs. 26,18,63,000/- and the AO has completely ignored the fact. Further the brand equity had to be paid by the assessee company as per the agreement and it has done so. 51. The ld. CIT(A) discussed elaborately in his order and finally concluded as follows: "The accounts of the appellant for the relevant year which have been appended in the compilation disclose profit before taxation of Rs. 26.18 crores, and profit after taxation of Rs. 25.54 crores. I find that the payment of Rs. 70,00,000/- does not contravene paragraph 12.2 of the Agreement because it does not exceed 5% of the annual profits before tax. Further, the calculation reproduced by the AO in the assessment order itself shows that the percentage prescribed in the Agreement has been duly adher....
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....e assessee to RPGEL was allowable expenditure u/s. 37(i). Respectfully following the ratio of the decision in the case of Harrisons Malayalam (supra) we dismiss the revenue's appeal on this issue. 53. Ground No. 7 raised by the Revenue reads as follows: "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 1,09,22,869/- paid as brokerage to Tata Sons Ltd." 53. The assessee objected to the disallowance of Rs. 1,09,22,869/- being brokerage paid to Tata Sons Ltd. The assessee submitted that the AO has disallowed certain payments made to Tata Sons Ltd. by relying on conjectures and surmises which are unjustified in fact and in law. Tata Sons has a separate full fledged division called "Tata Financial Services". This division arranges loans for group companies, as also funds infusion in times of need, temporary accommodation in the form of ICDs, etc. and charges a brokerage for carrying out the said activities. The assessee further submitted that the AO has given a wrong finding that loans and borrowings from international corporate markets can be obtained without incurring expenses for brokerage. The assessee poi....
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....if the bad debt is written off as irrecoverable in the accounts of the assessee. 58. In the instant case there is no controversy about the write off. Therefore respectfully following the decision in the case of TRF Ltd. (supra), we allow the appeal of the assessee. 59. The last ground raised by the Revenue reads as follows: "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to adopt Rs. 4,50,50,775/- as cost of acquisition of Ralli House instead of Rs. 1,20,71,800/- as computed by the AO." 61. The AO has taken a bare plot of land on 1160.75 sq. mtr and applied thereon the rate adopted by the Regd. Valuer. 62. On further appeal before the Ld. CIT(A), the ld. CIT(A) observed that the asset which have been sold for which consideration has been received amounting to Rs. 56 crores, was a plot of land on which stands an existing building having a built up area of 62,139 sq.ft. and therefore the AO is required under section 55 (2)(b) to value the same asset which has been sold. 60. The Ld. CIT(A) further held as follows: "The section makes it clear that it is the same asset, which is being sold, which is requir....