TaxTMI 
TaxTMI 
2022 (5) TMI 269
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.... the Act. The said disallowances/addition made by the Assessing Officer were deleted by the Ld. CIT(A) against which the department has filed the present appeal. 3. Revenue has raised following grounds in its appeal: - "1. Whether on the fact and circumstances of the case the Ld.CIT(A) erred in restricting the disallowance u/s 14A to exempt income earned without appreciating the fact that circular no. 5 of 2014 dated 11' February, 2014, issued by the Central Board of Direct Taxes Clearly provides for disallowance of the expenditure even where taxpayer in particular year has not earned any exempt income. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to treat the expenses on Software renewal license as revenue expenses, which is a capital asset 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO Rs. 9,50,00,000/- as u/s 69A of the Income Tax Act, 1961 as unaccounted receipts which is bad in law. 4. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A), erred in deleting the addition made by the AO of Rs. 9,50,00,00....
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....n ITA.No. 174 of 2013. b. E.N. Gopakumar v. CIT [75 taxmann.com 215 (Kerala)] c. M/s. Canara Housing Development Company v. DCIT in ITA 38/2014 dated 25.07.2014 [Hon'ble Karnataka High Court] d. CIT v. Raj Kumar Arora [52 taxmann.com 172 (Allahabad)] 5. Ld. AR of the assessee with regard to disallowance u/s. 14A of the Act submitted that, Assessing Officer has disallowed Rs..40,05,040/- u/s.14A of the Act (Pg no 3 of the order). The said disallowance was also made in the original order passed u/s 143(3) of the Act on 31.03.2016 (Pg nos 6-12 of P.B.). The Ld. CIT(A) granted part relief to the assessee by directing the Assessing Officer to exclude foreign investments while computing disallowance u/s 14A r.w. Rule 8D of the Act since dividend from the same is taxable. This was in line with the order passed by his predecessor in an appeal against order passed u/s 143(3) of the Act. Ld.CIT(A) observed as below: - "5.1.8 I am of the view that, all the assets which either yielded exempted income or could yield exempted income should to be considered for working out the disallowance under rule 8D. However, in the present case the assessee has made investments in foreign securi....
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....ng material found during the course of search. It is submitted that the said disallowance was already made in the original assessment order passed u/s 143(3) of the Act on 31.03.2016 (Pg nos 6-12 of P.B.). It is further submitted that against the original assessment order passed u/s 143(3) of the Act (Pg nos 5-17 of P.B.), the assessee had filed an appeal before the Ld.CIT(A) challenging the disallowance u/s.14A of the Act. The Ld.CIT(A) granted part relief to the assessee (Pg nos 18-46 of P.B.) against which the department has filed an appeal before the Hon'ble Tribunal (Pg nos 1-4 of P.B.) wherein they have challenged the decision of the CIT(A) in granting part relief to the assessee. It is submitted that the merits of the disallowance u/s 14A of the Act would be decided by the Hon'ble Tribunal while deciding that appeal. In fact, in the present assessment order, the Assessing Officer has not even mentioned about the merits of disallowance u/s 14A of the Act. He has made the disallowance merely because the same was made in the original assessment proceedings (Pg no 3, 6 of assessment order). In the present case, since no incriminating material is found during the course o....
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....lished that the software installed has a very long lasting life and enduring benefit on a capital asset and in this case assessee has not installed new software. The assessee has incurred not a big amount for renewal of this software which, certainly required for keeping the software in working position. The assesse has incurred amount for renewal charges paid towards maintaining of the usage facility and upgradation of the said software. This expenditure is type of upgrading the existing software license or renewal of licence. The time period of the software which gives profit to the capital asset ultimately to the business is the important part while deciding the issue whether expenditure is capital or revenue expenditure. Since the assessee has paid this charges towards renewal of software firstly, the ownership of software remained with the software selling Company. The assessee has to necessarily renew the license period for using the same in the business. Merely because the assessee is using software as operating software in its system, it does not mean that software is the capital asset in the hands of the assessee. This expenditure is for upgrading the existing software lic....
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....ith regard to Ground No. 3 &4 which are in respect of deleting addition u/s 69A of the Act. Ld. AR of the assessee submitted that the Assessing officer has discussed this issue on pg nos 4 and 5; para 9 of his order. On perusal of the same, it is evident that the addition is based on the documents found during the course of survey conducted u/s 133A of the Act on 09.05.2014 in the case of M/s Windsor Realty Pvt. Ltd. The Assessing Officer has also observed that in the case of M/s. Windsor Realty Pvt. Ltd, addition has been made u/s 69 of the Act on account of alleged payments made to assessee. Based on that, the Assessing Officer, in the present case, has added the similar amount u/s 69A of the Act as unexplained cash credit. The Ld.CIT(A) has discussed this issue from pg nos 29-47 of his order. The CIT(A) has deleted the addition following the order passed by CIT(A) in the case of M/s Windsor Realty Pvt. Ltd. For the sake of brevity, the observation of the Ld.CIT(A) is reproduced below:- "8.2.3 I am in agreement with my Ld. colleague, Ld.CIT(A)-21, Mumbai. It appears that these were the future payments to be made by the assessee but were not made. In fact, the director of M/s. W....
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....n of Rs.9.50 cr. was directed to be deleted by the Id. CIT(A)-21 in the case of M/s. Windsor Realty Pvt. Ltd. for the year under consideration. 8.2.6 I am, in complete agreement with the finding of my Ld. Colleague and feel that there was no sufficient evidence for making the addition of Rs.9.50 crs, in the hands of the assesse. Since the addition has been deleted in primary case itself, namely in the case of M/s. Windsor Realty Pvt. Ltd., there is no reason why this addition could have been made or sustained in the present case. Therefore, respectfully, following the findings of Ld. CIT(A)-21, Mumbai, in the case of Windsor Realty Pvt. Ltd, vide his order dated 27.12.2016, the addition of Rs.9.50 crs. made in the hands of the assessee is directed to be deleted." 13. Ld. AR of the assessee submitted that the assessee relies on the submissions made in para nos 5 and 6 herein above. It is further submitted that the incriminating material, on the basis of which addition is made, has to be found during the course of search conducted in the premises of assessee. In the present case, admittedly the document on the basis of which addition made is not found during the course of search c....
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....ncipal Commissioner of Income Tax v. Gahoi Foods (P.) Ltd [2020] 117 taxmann.com 118 (SC) 2 Principal Commissioner of Income-tax v. Param Dairy Ltd. [2021] 133 taxmann.com 148 (SC) 3 Principal Commissioner of Income-tax v. Gaurav Arora [2021] 133 taxmann.com 293 (SC) 4 Commissioner of Income-tax-II v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 64 taxmann.com 34 (SC) 15. Considered the rival submissions and material placed on record, we observe from the submissions that the addition made by the Assessing Officer is based on the survey conducted in the case of M/s Windsor Realty Pvt. Ltd and not based on any material found during the search conducted in the premises of the assessee. The addition made in the case of Windsor Realty Pvt Ltd was deleted subsequently on further appeal by the assessee and revenue respectfully by the Ld CIT(A) and ITAT with the finding that there was no such payments were ever made in order to invoke the provisions of section 69A. Therefore, the basis of addition made itself was deleted by the appellate authorities in the case of Windsor Realty Pvt Ltd, the same addition cannot be made in the case of the assessee without thei....