TaxTMI 
TaxTMI 
2023 (6) TMI 976
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....n Appeal no. 356/14-15, for the assessment year 2008-09, arising out of the assessment order dated 22.12.2011 u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred as the "Act"), passed by the ACIT, Circle-7(1), New Delhi (hereinafter referred in short as "Ld. AO"). 2. Facts, in brief, are that assessee filed its return of income declaring income for current year at Rs. 24,70,705/- after setting off of unabsorbed depreciation for A.Y. 2006-07 amounting to Rs. 3,22,36,103/-. The case was selected for scrutiny and learned AO had made certain disallowances and additions to the extent of Rs. 13,80,75,520/-. Learned CIT(Appeals) had sustained additions on account of provision made on account of performance service incentives; non deduc....
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.... of Rs. 16,99,448/- out of expenditure incurred on software by the appellant company." 3. Heard and perused the record. Ground-wise findings are as follows: 4. Ground No. 1: It may be appreciated that the learned AO had considered the provision under the head performance service incentive to be an unascertained liability. Learned DR has also argued that as it was not established that the employees had worked for twelve months so as to be entitled for incentive, the learned tax authorities were right in considering the provision being made for an unascertained liability. 4.1. In this context it can be appreciated from the submissions of learned counsel for the assessee that apart from the pay and emoluments to it's employees, incent....
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....ves to be allowed. 5. Ground No. 2: Factual aspects of this ground are that M/s Triune Projects Pvt. Ltd. had originally entered into an agreement with Sardar Manmohan Singh on 11.11.2003. The said lease agreement was for a period of five years. The business of Triune Projects in respect of design engineering business in oil and gas industry was transferred to the assessee company vide agreement dated 22.09.2006 and the owner of the premises Sardar Manmohan Singh agreed to continue the lease for the premises with the possession being with the assessee company till the expiry of the lease period upto 11.11.2008. Accordingly, the assessee company made the payment to Triune Project for the rent paid by Triune Project to Sardar Manmohan Sing....
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....ties have failed to appreciate the aforesaid and accordingly ground raised is allowed. 6. Ground No. 3: In regard to this ground the facts are that a sum of Rs. 33,72,421/- was paid by the assessee to M/s Dreamwavers for interior work on basement; Rs. 5,24,996/- for building painting work; and Rs. 1,18,675/- for woodwork and painting. Learned tax authorities have considered the same to be lease-hold improvements of enduring nature and, therefore, held that assessee is entitled for depreciation and these expenditure are not of revenue nature. 6.1 Learned counsel for the assessee submits that tax authorities have failed to appreciate that the expenses were incurred on the day to day maintenance of the building which was in possession as....
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....irs or any interior work was of enduring nature and capital in nature is not supported by any cogent reasoning by way of examining nature of rights of the assessee in the premises. When assessee is enjoying the premises then the work in the nature of interior decoration and painting and woodwork cannot be considered to be of enduring nature. These are all improvements involving temporary material and can be very well removed at the time of vacation of the premises. The ground is decided in favour of the assessee. 7. Ground No. 4: In regard to this ground it can be observed that provision of Rs. 50,000/- was made on account of audit fee payable for F.Y. 2006-07 and the same was claimed as revenue deduction. The said amount was claimed and....