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2014 (4) TMI 1091 - AT - Income TaxComputation of deduction allowable u/s.10B - Held that - In view of the detailed reasoning given by the Ld.CIT(A) directing the AO to exclude the Freight and Insurance charges from the total turnover for computing deduction u/s.10B we find no infirmity in the same. Accordingly the order of the CIT(A) on this issue is upheld and the grounds raised by the Revenue are dismissed. Eligibility of depreciation - classification as Furniture and Fixtures and Plant and Machinery - Held that - Respectfully following the decision of the Tribunal in assessee s own case in the preceding years and in absence of any contrary material brought to our notice we find no infirmity in the order of the CIT(A) directing the AO to allow depreciation @15%. Disallowance of deduction u/s.10B with reference to export invoice for want of extension letter - Held that - Since the assessee in the instant case has applied for extension of time by the prescribed authority which has neither been rejected nor declined and the RBI has taken the inward remittances on record therefore we hold that the CIT(A) is not justified in curtailing the deduction u/s.10B by excluding the delayed receipt of export proceeds from the export turnover. We therefore set-aside the order of the CIT(A) on this issue and direct the AO to allow the claim of the assessee u/s.10B with respect to the export invoice - Decided in favour of assessee Refusing to treat PMS fees paid as part of either of cost of acquisition/improvement or as Cost of transfer for working Income from Capital Gain - Held that - Respectfully following the decision of the Tribunal in the case of KRA Holding and Trading Pvt. Ltd. (2013 (9) TMI 1013 - ITAT PUNE ) we hold that the PMS fees paid by the assessee is an allowable deduction from the capital gains.- Decided in favour of assessee Entitlement for higher depreciation on SMF batteries - Held that - Since SMF batteries are integrated with UPS and used with it we hold that the assessee is entitled to higher rate of depreciation on SMF Batteries.- Decided in favour of assessee
Issues Involved:
1. Exclusion of Freight and Insurance Charges from Total Turnover for Deduction under Section 10B. 2. Classification of Furniture and Machinery for Depreciation. 3. Deduction of Export Turnover Realized Beyond Prescribed Time Limit under Section 10B. 4. Allowability of Portfolio Management Scheme (PMS) Fees as Deduction from Capital Gains. 5. Deduction of Provision for Leave Encashment. 6. Classification of Foreign Travel Expenses as Capital Expenditure. 7. Depreciation Rate on Sealed Maintenance Free (SMF) Batteries. 8. Classification of Stainless Steel Items as Furniture or Plant and Machinery. Issue-wise Detailed Analysis: 1. Exclusion of Freight and Insurance Charges from Total Turnover for Deduction under Section 10B: The Revenue challenged the CIT(A)'s decision to exclude freight and insurance charges from the total turnover for computing the deduction under Section 10B. The CIT(A) relied on the decisions in the cases of Sak Soft Ltd. and Gems Plus Jewellery India Ltd., which held that such expenses should be excluded from both export turnover and total turnover. The Tribunal upheld the CIT(A)'s decision, stating that excluding these charges from total turnover is consistent with the principles laid down by the jurisdictional High Court and Special Bench. 2. Classification of Furniture and Machinery for Depreciation: The Revenue contested the CIT(A)'s direction to segregate furniture into two categories for depreciation purposes. The CIT(A) had directed that items used for carrying products from the laboratory to the store should be classified as plant and machinery eligible for 15% depreciation, while other items should be classified as furniture eligible for 10% depreciation. The Tribunal upheld this decision, citing its own previous rulings in the assessee's case for earlier years. 3. Deduction of Export Turnover Realized Beyond Prescribed Time Limit under Section 10B: The assessee appealed against the CIT(A)'s decision to exclude export turnover realized beyond the prescribed time limit from the deduction under Section 10B. The CIT(A) had upheld the AO's decision on the grounds that the export proceeds were not received within six months and no extension was obtained from RBI. The Tribunal, however, allowed the assessee's appeal, referencing the decision in Morgan Stanley Advantage Services Pvt. Ltd., which held that if the RBI has not rejected the extension, the approval is deemed granted. 4. Allowability of Portfolio Management Scheme (PMS) Fees as Deduction from Capital Gains: The assessee contended that PMS fees should be deducted from capital gains. The AO and CIT(A) had disallowed this, stating that such fees are not incurred wholly and exclusively for the transfer of assets. The Tribunal, following its own precedent in KRA Holding and Trading Investment Pvt. Ltd., allowed the deduction, stating that PMS fees are an allowable expenditure. 5. Deduction of Provision for Leave Encashment: The CIT(A) upheld the AO's disallowance of the provision for leave encashment, amounting to Rs. 11,40,849, as it was not deductible under the Income Tax Act. The Tribunal dismissed the assessee's appeal on this issue, consistent with its previous rulings in the assessee's case for earlier years. 6. Classification of Foreign Travel Expenses as Capital Expenditure: The assessee's appeal against the classification of foreign travel expenses as capital expenditure was dismissed by the Tribunal, following its own previous rulings in the assessee's case for earlier years. 7. Depreciation Rate on Sealed Maintenance Free (SMF) Batteries: The AO classified SMF batteries as plant and machinery eligible for 15% depreciation. The CIT(A) upheld this classification. The Tribunal, however, allowed the assessee's appeal, holding that SMF batteries, being integral to UPS systems, qualify for a higher depreciation rate of 80%, as they are energy-saving devices. 8. Classification of Stainless Steel Items as Furniture or Plant and Machinery: The CIT(A) directed the AO to segregate stainless steel items into furniture and plant and machinery for depreciation purposes. The Tribunal upheld this decision, citing its own previous rulings in the assessee's case for earlier years. Conclusion: The Tribunal dismissed the Revenue's appeals and partly allowed the assessee's appeals, providing detailed reasoning for each issue based on precedents and statutory interpretation. The judgments were consistent with prior rulings and higher court decisions, ensuring a thorough and legally sound resolution of the disputes.
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