2010 (10) TMI 688 - AT - Income Tax

Disallowance - Regarding software expense - It is found that similar issue was raised in the assessee s own case in assessment year 2000-01 - pecial Bench of the Tribunal in Amway India Enterprises vs. DCIT (2008 -TMI - 64346 - ITAT DELHI)- Decided in the favour of the assessee and matter is remanded back to AO Repairs and renovation - AO made the said disallowance which came to be upheld by the CIT(A) on the basis of the reasoning given by him in the assessee s case for the asstt. year 2002-03 - In the absence of any distinguishing feature having been brought to our notice in the facts and circumstances of this year visa- vis those already decided by the Tribunal - This ground is allowed Bad debts - The AO called upon the assessee to produce the details of each and every TDS certificate, the amount involved and the year in which it was taxed - It is noted that the assessee claimed deduction for bad debts on the ground that the benefit of TDS certificates could not be availed by the assessee due to such certificates either being lost or not available - In the absence of any details of such TDS certificates claimed as bad debts in this year or earlier years, it is not possible to ascertain as to whether the deduction on account of bad debts towards the bill amounts, for which separate deduction has been claimed, contain the amount of TDS - Matter is remanded back to AO Carry forward of unabsorbed long term capital loss - The AO opined that the brought forward loss was to be adjusted in its entirety before allowing any relief u/s.54EC - The amount of brought forward long-term capital loss is the subject matter of Chapter VI - As the claim of the assessee is in accordance with the scheme of the Act viz. firstly allowing relief u/s.54EC while computing income u/s.45 and thereafter adjusting brought forward capital loss - Accordingly this ground of the appeal is allowed

Summary

Issues involved:
1. Disallowance of software expenses
2. Disallowance of repairs and renovation expenses
3. Disallowance of bad debts
4. Disallowance of expenses u/s.14A
5. Carry forward of unabsorbed long-term capital loss

Issue 1: Disallowance of software expenses
The Tribunal referred to a previous case and remanded the matter to the AO for a fresh decision based on the view taken by the Special Bench in Amway India Enterprises vs. DCIT. The Tribunal set aside the order and directed the AO to reconsider the issue in line with the Special Bench's decision.

Issue 2: Disallowance of repairs and renovation expenses
The Tribunal noted that a similar issue had been decided in the assessee's favor in a previous year. As there were no distinguishing features from the previous case, the Tribunal decided to delete the disallowance of repairs and renovation expenses.

Issue 3: Disallowance of bad debts
The AO disallowed bad debts claimed by the assessee, suspecting double deduction due to TDS amounts. The Tribunal found merit in the AO's concern and directed the matter to be reconsidered by the AO with complete details provided by the assessee.

Issue 4: Disallowance of expenses u/s.14A
The ground related to disallowance of expenses u/s.14A was not pressed by the assessee's representative and was dismissed by the Tribunal.

Issue 5: Carry forward of unabsorbed long-term capital loss
The AO refused to allow the carry forward of a portion of the unabsorbed long-term capital loss. The Tribunal disagreed with the AO's interpretation and held that the relief u/s.54EC should be allowed first before adjusting the brought forward capital loss. The Tribunal directed the AO to allow the carry forward of the remaining long-term capital loss.

In conclusion, the appeal was partly allowed by the Tribunal, addressing each issue raised by the assessee and providing detailed reasoning for the decisions made on each issue.