TaxTMI 
TaxTMI 
2024 (9) TMI 1737
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....f Scientific & Industrial Research, (prescribed authority) granting their approval. However as per the 3CL. Report of the DSIR the scientific research capital expenditure is approved only to the tune of Rs.4306.28 lakhs and revenue expenditure was approved only to the tune of Rs. 11901.80 lakhs (net of income). Hence assessee's claim of weighted deduction w/s 352AB is to be restricted accordingly" 3.2 Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who has upheld the action of the AO by holding as under: "I have considered the submissions of the Appellant and do not agree, since it is not in line with the provisions of section 35(2AB) which grants a weighted deduction for R&D expenditure only on approval by the DSIR. The Form 3CL issued by the DSIR is the basis on which the AO can grant the weighted deduction and AO does not have any powers in deciding the quantum of weighted deduction on his own. Hence, the ground of the Appellant to grant allowance of weighted deduction over and above what is approved by the DSIR is rejected" 3.3 Aggrieved, the assessee is before us. 3.4 We have heard both the parties and perused the material available on record. We no....
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....le, and the prescribed authority was not required to quantify the expenditure and had to only give report in relation to the approval of in-house facility and development facility, and therefore, in the absence of any requirement of law, the AO erred in curtailing the expenditure and consequent weighted deduction claimed by assessee. Therefore, the non-approval of the expenditure by the DSIR doesn't disentitle the assessee to make the claim of Rs.14,20,60,668/- in the relevant year under consideration and hence, the AO couldn't have disallowed Rs.68,16,668/-. Therefore, respectfully following the ratio of the decision of the Tribunal in the case of Crompton Greaves Ltd. (supra), we allow grounds of appeal of the assessee and direct deletion of Rs.68,16,668/-. 3.5 In the light of the foresaid discussion, we allow this ground of appeal of the assessee and direct the AO to grant/deduction on R & D expenditure to the tune of Rs.35,92,94,618/-. 4. Ground No.3 is regarding disallowance of software expenditure u/s.40(a)(i) of the Act for non-deduction of tax at source to the tune of Rs.1,03,21,040/-. 4.1 The AO has disallowed the claim of expenditure on account of purchase of software....
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....ee's own case in ITA Nos.2825 to 2827, 2834 to 2839/Mds./2014 order dated 23.09.2016 wherein, the Tribunal observed asunder: 24.5 We heard the rival submissions, perused the material on record and judicial decision cited. In our opinion this is purchase of software which is in a nature of capital asset. Hence, the assessee is entitled for deprecation at prescribed rates, the issue is remitted to Assessing Officer for fresh consideration. 4.5 The Ld.AR also submitted that anyway the amendment which AO refers to disallow the claim of the assessee was brought in by Finance Act, 2012 (i.e. applicable from AY 2012-13 retrospectively from 01.04.1976). According to the Ld.AR, the assessee can't be presumed to be a clairvoyant to know about the future (amendment brought in by Finance Act, 2012) in the relevant AY 2010-11 itself. Therefore, relying on the legal maxim "lex non cogit ad impossiblia", he submitted that the assessee can't be directed to do an impossible task and therefore, nondeduction of TDS ought not be used against the assessee for disallowing the claim. Moreover, according to the Ld.AR payments for purchase of software is not "royalty" under DTAA, since royalty covers o....
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....ance of expenditure under Section 40(a) (vi) of the Act, can be made in the present facts. (g) In the above view, as it is a self evident position from the reading Section 40(a) (i) of the Act, no substantial question of law. Thus, question (a) not entertained. 4.6 On this issue, without going into the other grounds raised by the assessee, based on the of the discussion (supra), we allow this ground of appeal of the assessee and direct the AO to allow the expenses incurred for purchase of software to the tune of Rs.1,03,21,040/- and other alternate grounds on this issue are left open. 5. Ground No.4 is regarding disallowance of Rs.11,64,109/- u/s.14A r.w.r.8D while computing book profit u/s.115JB of the Act. 5.1 In this regard, it is noted that there is no discussion by the AO on applicability of disallowance u/s.14A read with Rule 8D of the Income Tax Rules, 1962 (hereinafter in short 'the Rules') while computing book profit u/s.115JB of the Act. The AO has merely computed disallowance made under Rule 8D for normal provisions while computing book profit u/s.115JB of the Act as well. 5.2 Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who upheld the action....
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....n order to prove that the said aircraft has been used, wholly and exclusively for the purpose of business, the assessee has to establish the usage of aircraft with the relevant Log Book Entries vis-a-vis the specific business activities carried out based on the above journey In the absence of details regarding specific business activities carried out based on the journey(s), the business exigency for owning and maintaining an aircraft is not convincingly proved 6) Also, the assessee has not furnished the requisite Log Books that are required to be maintained as per Rule 67 of the Aircraft Rule 1937." 8.1 Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who allowed the claim by taking note of the decision of this Tribunal in the assessee's own case for AY 2007-08 & 2008-09 by holding as under: "I have perused the order of the Hon'ble ITAT in Appellant's own case in AY 2007-08 and 2008-09 (supra) in which the ITAT directed the AO to verify the licensing requirements for claim of aircraft. Based on the direction, the AO passed a speaking order allowing the claim in favour of the Appellant, after duly verifying the licensing requirements and confirming all t....
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....s that the Commissioner of Income Tax (Appeals) erred in confirming the disallowance of depreciation on Aircraft of Rs.21,70,15,709/-. 17.1 The ld. Assessing Officer observed that during the current Year, the assessee had claimed depreciation to the tune of Rs..21,70,15,709/- towards the capitalization of Aircraft. In order to ascertain its usage wholly and exclusively for the purpose of assessee's business activity, the assessee was asked to substantiate its claim of depreciation by way of proving that the above aircraft has been used wholly and exclusively for the purpose of its business activity. In response to the same, the assessee replied that it has business in various states of India as well as its business activities has been expanded in the international arena. Further, it has stated that during the current year the sale by way of domestic and international marketing has increased substantially. Since the business activities are being located at the various places of the country and also to promote its business activities outside India, possession of an aircraft is essential for the assessee. In the assessment order, the ld. Assessing Officer has incorporated the r....
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....orGeneral. (2) The Director-General may require that a technical log or flight log be provided in respect of an aircraft and be maintained in such manner as may be specified by him (3) Log books shall be of such type and shall contain such information, entries and certification as may be specified by the Director-General. Log books and logs shall be preserved until such time as may be specified. Explanation- For the purpose of this rule, the expression 'Journey log book" includes any other form or manner of re cording (he requisite information and acceptable to the Director General". (4) Based on the 'above facts, it has been clear that, the assessee has got licence for the purpose of Non-Schedule Aircraft Operator only from the Financial Year 2009-10. It is further notable that the assessee cannot operate as Non-Schedule Operator without the permission of specific licence issued by the Director General of Civil Aviation for that purpose (5) In order to prove that the said aircraft has been used wholly and exclusively for the purpose of business, the assessee has to establish the usage of aircraft with the relevant Log Book Entries vis-a-vis the specific busi....
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....own. But the assessing officer has disallowed the depreciation claim of the assessee stating that the assessee has not furnished the log books to establish that the aircraft is being used wholly and exclusively for the purpose of assessee's business. The ld. AR submitted that the log book details were never been called by the assessing officer. Therefore, the assessing officer is not a tall justified in making a disallowance based on a detail which has not been called by him. The ld. Authorised Representative explained the details of trips made during the assessment year 2007-08 and prayed for allowing the ground. 27.4 On the other hand, the ld. Departmental Representative relied on the orders of the Commissioner of Income Tax (Appeals) and vehemently opposed to the grounds. 17.5 We heard the rival submissions and perused the material on record. In our opinion if the Aircraft is kept ready for use for the business purpose, the assessee is entitled for depreciation. Before us, the ld. Authorised Representative submitted that Aircraft was kept ready for usage and permission from Director General of Civil Aviation is not necessary for assessee's own use but giving the Ai....