2013 (1) TMI 907 - AT - Income Tax

Summary

Issues involved: Disallowance of various expenditures u/s 14A, software license fees, consultancy charges, repairs to furniture, and legal fees.

Legal Fees and Other Fees Disallowance:
The appeal contested the disallowance of legal fees and other fees, treating them as contingent liabilities. The assessee failed to provide evidence to justify the claims, leading to dismissal of these grounds as provisions are not allowable deductions without proper substantiation.

Software License and Consultancy Charges Disallowance:
Both parties agreed to remand the issues of software license fees and consultancy charges back to the AO for fresh adjudication, considering the decision in the case of Amway India Enterprises Ltd vs. DCIT. The AO was directed to reexamine the issues after considering relevant judgments.

Repairs to Furniture Disallowance:
The expenditure on repairs to furniture was challenged, with the assessee demonstrating that the payment was for refurbishing old furniture, not for procuring new items. The Tribunal found the expenditure to be revenue in nature, reversing the addition confirmed by the CIT (A).

Interest Expenses Disallowance u/s 14A:
The disallowance of interest expenses u/s 14A was contested, highlighting that the CIT (A) did not consider the binding jurisdictional judgment of the High Court. It was noted that Rule-8D applied by the AO was not applicable for the assessment year in question. The issue was remanded to the AO for fresh adjudication in line with the relevant judgment.

Conclusion:
The Tribunal partly allowed the appeal, setting aside certain disallowances and directing the AO to reexamine specific issues in light of relevant legal precedents. The order was pronounced on January 2, 2013.