TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 702
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....ner of Income Tax (Appeals) is contrary to the Law and facts of the case. 2.1. The CIT(A) erred in deleting the addition made on account of belated remittance of employees' contribution on ESI & PF relying on the decision of the Hon'ble High Court in the case of M/s. Industrial Security & Intelligence India Pvt. Ltd. which has not been accepted by the Department and a Review Petition has been preferred by the Revenue. 2.2. The CIT(A) ought to have appreciated that the employee's contribution of ESI & PF are governed by the section 36(1)(va) of the Act and not under section 43B of the Act. 2.3. The recent Board's Circular No.22/2015, dt.17.12.2015 has accepted the decision of the Supreme Court in the case of Alom Extrusions only in respect of disallowance u/s 43B of the Act and has stated that this Circular does not apply to the claim of deduction relating to employee's contribution to welfare funds which are governed by section 36(1)(va) of the Act. 3.1. The CIT(A) erred in holding that the royalty payment is to be treated as revenue expenditure. 3.2. The CIT(A) failed in not appreciating the fact that when royalty falls under the definition of in....
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....ers of Ld. AO and assailed the relief granted in the impugned order. The Ld. AR, on the other hand, supported the impugned order. For the same, our attention has been drawn to various documentary evidences as placed on record. The Ld. AR submitted that royalty and management service charges were paid as certain percentage of annual sales turnover and no enduring benefit arose to the assessee. 3. Having heard rival submissions and after going through the order of lower authorities, our adjudication would be as given in succeeding paragraphs. 4. The assessee being resident corporate assessee is stated to be engaged in providing security services and sale of electronic equipments. An assessment was framed u/s 143(3) wherein certain additions/disallowance were made. The additions/disallowances which are the subject matter of appeal before us are as under: (i) Disallowance of delayed payment of ESI It transpired that the assessee delayed remittance of employees' ESI contribution to ESI corporation. Accordingly, the sum of Rs. 26.60 Lacs was disallowed and added to the income of the assessee. Upon further appeal, Ld. CIT(A) allowed the claim by relying upon various decisions. N....
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....patents etc. The assessee had only a limited right to use the same in India. Upon termination of the royalty agreement, all rights & benefits granted under the license shall lapse and assessee was to return all manuals, reports etc. without making any copies. Similarly, as per the management service agreement, ISS A/S Denmark provided various support services in the field of operation management, human resource management, support towards corporate finance, legal affairs etc. which were to be remunerated on Annual basis as fixed percentage of net sales turnover. Upon termination of the managerial service agreement, all rights& benefits shall lapse. Therefore, the payments were merely for right to use and not towards acquisition of any property, rights or otherwise. The royalty was not a lump sum payment to purchase or acquire any IPR, technical know-how, license etc. Therefore, the expenditure could not be regarded as capital expenditure by any stretch of imagination. The Ld. CIT(A), upon perusal of factual matrix, concurred with assessee's submissions and observed that the payment was as license fees only and not price for acquisition of any capital assets. The ratio of decision o....
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.... The grounds raised by the revenue, in this regard, stand dismissed. (iii) Disallowance u/s 14A The assessee earned exempt dividend income of Rs. 2.84 Lacs. The assessee submitted that investments were out of internal accruals. However, rejecting the same, Ld. AO computed aggregate disallowance of Rs. 0.39 Lacs u/r 8D(2) which comprised-off of interest disallowance u/r 8D(2)(ii) for Rs. 0.20 Lacs and indirect expense disallowance u/r 8D(2)(iii) for Rs. 0.19 Lacs. The Ld. CIT(A) directed Ld. AO to exclude strategic investments to compute the disallowance. The Ld. AO was also directed to verify if the own funds were more than the investment. If so, the disallowance was to be deleted on the presumption that investments were out of own funds as per the decision of Hon'ble Bombay High Court in the case of HDFC Bank Ltd (89 CCH 185) as well as the decision of Hon'ble Madras High Court in the case of Hotel Savera (239 ITR 795). Aggrieved the revenue is in further appeal before us. At the outset, so far as the exclusion of strategic investment is concerned, the directions of Ld. CIT(A) stand reversed in the light of the decision of Hon'ble Supreme Court in the case of Maxopp Invest....