9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (12) TMI 376 - AT - Income TaxDisallowance of Rs.1,78,562 being prior period adjustments - held that - The entire dispute thus hinges on the question as to the previous year in which liability to pay has crystallized and there is no dispute about admissibility of the claim per se - Once the books of accounts of the assessee are closed and it is not possible to provide for an expense on the basis of subsequent information coming to the assessee, the assessee cannot claim it in the year in respect of which books are closed. It is not a case of double deduction and the amounts involved are relatively insignificant - the assessee s claim for expenses, even though strictly speaking these expenses pertain to the preceding year, are eligible for deduction in this year that is the year in which liability has crystallised and bills are received - Appeal is allowed. Regarding disallowance of Y2K expenses - revenue or capital expenditure - Held that as a result of insertion of Section 36(1)(xi), with effect from 1st April 2000, all the Y2K expenses are allowable - whether capital or revenue, but merely because this section came into effect from 1st April 2000, it cannot be inferred that even revenue expenses, which were otherwise eligible for deduction under section 37(1), were to be treated as inadmissible in the earlier assessment years even when there is no specific finding, backed by cogent reasons, to the effect that such Y2K expenses are capital in nature - In the present case, the expenses are only for systems testing and consultancy charges and there is no material whatsoever, except for pointing out that these are once in a millennium expenses , that these expenses are capital expenses - Appeal is allowed
Issues Involved:
1. Disallowance of lease premium paid to BMRDA. 2. Disallowance of prior period adjustments. 3. Disallowance of Y2K expenses. 4. Disallowance of expenditure related to earning exempt interest income. 5. Disallowance of PF contributions under Section 43B. 6. Deduction of prior period expenses. 7. Treatment of VSAT shifting expenses. 8. Deduction of interest under Section 36(1)(iii). 9. Disallowance of software expenses. 10. Treatment of maintenance charges as income from house property. 11. Disallowance of expenses under Section 14A. 12. Depreciation on software expenses. 13. Depreciation on VSAT equipment. Issue-wise Detailed Analysis: 1. Disallowance of Lease Premium Paid to BMRDA: The assessee's appeal against the disallowance of lease premium paid to BMRDA was dismissed. The Tribunal followed the decision of the Special Bench in the case of Mukund Ltd., which held that the lease premium paid for obtaining leasehold land was capital in nature and not allowable as a deduction. 2. Disallowance of Prior Period Adjustments: The Tribunal allowed the assessee's claim for prior period expenses, stating that expenses should be allowed in the year in which the liability to pay crystallizes, even if they pertain to an earlier year. The Tribunal criticized the revenue's hyper-technical approach and emphasized that the deduction should not be declined merely because the provision could not be made in the year of expense. 3. Disallowance of Y2K Expenses: The Tribunal allowed the assessee's claim for Y2K expenses, rejecting the Assessing Officer's view that these were capital expenses. The Tribunal noted that the expenses were for consultancy and system evaluation charges and did not result in an enduring benefit to the assessee. 4. Disallowance of Expenditure Related to Earning Exempt Interest Income: The Tribunal restricted the disallowance of expenditure related to earning exempt interest income to 1% of the gross interest income, following its decision in the assessee's own case for the assessment year 1998-99. 5. Disallowance of PF Contributions under Section 43B: The Tribunal allowed the assessee's claim for PF contributions paid before the due date of filing the return, following the Supreme Court's decision in the case of CIT v. Alom Extrusions Ltd. 6. Deduction of Prior Period Expenses: The Tribunal allowed the assessee's claim for prior period expenses, consistent with its earlier findings that such expenses should be allowed in the year in which the liability to pay crystallizes. 7. Treatment of VSAT Shifting Expenses: The Tribunal upheld the CIT(A)'s decision to treat VSAT shifting expenses as revenue expenditure, following its decision in the assessee's own case for the assessment year 1998-99. 8. Deduction of Interest under Section 36(1)(iii): The Tribunal allowed the assessee's claim for interest under Section 36(1)(iii), following its decision in the assessee's own case for the assessment year 1998-99, which held that interest on borrowings for capital assets not put to use in the concerned financial year is allowable as revenue expenditure. 9. Disallowance of Software Expenses: The Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to decide the issue afresh based on the guidelines laid down in the case of Amway India Enterprises and the judgment of the Madras High Court in the case of Southern Roadways Ltd. 10. Treatment of Maintenance Charges as Income from House Property: The Tribunal remitted the issue to the CIT(A) for a fresh adjudication, directing the CIT(A) to deal with all the contentions of the assessee by way of a speaking order. 11. Disallowance of Expenses under Section 14A: The Tribunal restricted the disallowance under Section 14A to 1% of the exempt income, following its decision in the assessee's own case for the earlier assessment years. 12. Depreciation on Software Expenses: The Tribunal directed the Assessing Officer to allow depreciation on software at the rate of 60%, following the Special Bench decision in the case of Amway India Enterprises and the coordinate bench decisions in the case of National Securities Clearing Corp Ltd. 13. Depreciation on VSAT Equipment: The Tribunal upheld the CIT(A)'s decision to allow depreciation on VSAT equipment, following the coordinate bench decisions in the assessee's own cases for the assessment years 1997-98, 2001-02, and 2003-04. Separate Judgments: The Tribunal delivered a single consolidated judgment for all the assessment years involved, without separate judgments by different judges.
|
