2012 (10) TMI 1086 - AT - Income Tax

Summary

Issues involved: Cross appeals by assessee and Revenue against Commissioner of Income-tax(Appeals) order for assessment year 2008-09 u/s 143(3) of the Income-tax Act, 1961.

Assessee's Appeal:

1. Addition of Membership Fees: Assessee challenges addition of Rs. 158,43,81,853 being 40% of deferred membership fees. Tribunal finds addition unjustified based on earlier orders and rules in favor of assessee.

2. Disallowance of Foreign Exchange Loss: Disallowance of Rs. 1,83,10,529 upheld by Commissioner as capital in nature due to revaluation loss on foreign exchange fluctuation. Tribunal agrees with lower authorities, confirming disallowance.

3. Disallowance of Unabsorbed Depreciation: Disallowance of Rs. 96,75,008 upheld as assessee not eligible under section 72A. Tribunal rejects argument, deciding against assessee.

4. Taxability of Excess Assets: Rs. 80,76,889 treated as short-term capital gains by lower authorities. Tribunal finds excess notional and arising from amalgamation, thus deletes the addition in favor of assessee.

5. Capital Nature of Expenditure: Disallowance of expenditure on building extension upheld as capital in nature by Commissioner. Tribunal finds no reason to interfere, dismissing the ground.

6. Verification of Expenditure: Direction to verify Rs. 2,07,14,756 expenditure dismissed based on previous decision for assessment year 2006-07.

7. Disallowance of Software Purchase: Disallowance under section 40(a)(ia) deleted as provisions of section 194J not applicable, following Special Bench decision.

Revenue's Appeal:

1. Deduction of Furniture Cost: Commissioner directed deduction of furniture cost, which Tribunal allows based on earlier decision for assessment year 2006-07.

2. Disallowance of ESOP Compensation: Disallowance deleted by Commissioner following Tribunal's order in similar case, binding on Commissioner. Revenue's ground fails.

3. Disallowance of Consultancy Charges: Disallowance under section 40(a)(i) deleted by Commissioner as taxes withheld on income chargeable to tax in India. Revenue's ground dismissed.

In conclusion, both assessee and Revenue appeals partly allowed. Orders pronounced on 17th October 2012 at Chennai.