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2013 (4) TMI 394 - AT - Income TaxDepreciation claim on intangible assets acquired in earlier year - Held that - Decided against assessee as relying on its own case peroprted in 2013 (4) TMI 380 - ITAT MUMBAI Disallowance under section 14A - Held that - CIT (A) has directed AO to recomputed the disallowance on a reasonable basis following the decision of in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT). Since the issue was already before AO who has to give effect to the direction of the CIT (A),no reason to interfere. AO is directed to follow the direction of the CIT (A). Disallowance u/s 40(a)(ia) - TDS was not made on these amounts on royalty, courier charges etc at the end of the year pending receipt of bills - Held that - AO has not examined the issue about year-end payments. There is a difference between the payments that are made during the year and the payments made at the fag-end of the year. In 2nd category of payments tax has been detected in the subsequent year when Bills are booked. In this regard the amendment made to Sec.40(a)(ia) by the finance act,2008, with retrospective effect from 1.4.2005. Also perusuing the case laws relied upon by the AR of GE India Technology Centre Private Ltd. (2010 (9) TMI 7 - SUPREME COURT OF INDIA) and Industrial Development Bank of India (2006 (7) TMI 248 - ITAT BOMBAY-H) in this regard. Thus tax deducted at source were not applicable in case consideration. Addition made on the basis of information received in AIR - Held that - Restore the issue to the file of AO to make inquiries with the said parties whether the transactions indeed pertain to assessee. In case of mistaken reporting, the same cannot be added in the hands of assessee. Keeping in mind that assessee has discharged its onus of reconciling most of the amounts reported which are duly accounted, direct AO to enquire from the above two parties about the nature of transactions and if they pertain to assessee, enquire from assessee and do the needful after examining the facts. If the transactions does not pertain to assessee, there is no need to make any addition, just because the information came through AIR.
Issues Involved:
1. Claim for depreciation on intangible assets. 2. Disallowance under section 14A. 3. Disallowance under section 40(a)(ia). 4. Addition based on AIR Report discrepancies. Issue-wise Detailed Analysis: 1. Claim for Depreciation on Intangible Assets: The appellant contended that the CIT(A) erred in not accepting the claim for depreciation amounting to Rs. 15,87,046 on intangible assets acquired in the earlier year. The Tribunal noted that this issue was covered against the assessee by the ITAT orders for AY 2006-07 and AY 2000-01. It was admitted that the issue had been decided unfavorably for the assessee in previous years. Consequently, the Tribunal dismissed Ground No. 1, following the precedent set by earlier decisions. 2. Disallowance under Section 14A: The appellant argued that the CIT(A) erred in directing the AO to work out the disallowance under section 14A in line with the Bombay High Court's decision in the case of Godrej & Boyce Mfg. Co. Ltd., instead of deleting the disallowance based on the appellant's representation. The Tribunal observed that the CIT(A) had directed the AO to recompute the disallowance on a reasonable basis following the Bombay High Court decision. Since the AO was already instructed to follow the CIT(A)'s direction, the Tribunal saw no reason to interfere and dismissed Ground No. 2. 3. Disallowance under Section 40(a)(ia): The appellant contended that the CIT(A) erred in confirming the disallowance of Rs. 63,54,156 under section 40(a)(ia), rejecting the contention that the provisions were not applicable. The issue arose from the assessee making provisions for various amounts without deducting TDS at the year-end. The Tribunal noted that the issue was covered in favor of the assessee by the ITAT order in AY 2006-07, which followed the decision in the case of Mahindra and Mahindra Ltd. The Tribunal held that the amounts in question did not attract TDS provisions and thus, there was no need for disallowance under section 40(a)(ia). Consequently, Ground No. 3 was allowed. 4. Addition Based on AIR Report Discrepancies: The appellant contended that the CIT(A) erred in confirming the add-back of Rs. 89,230 based on discrepancies in the AIR Report, asserting that no such sum/income was assessable in its hands. The Tribunal examined the rival contentions and noted that the assessee had reconciled most of the amounts except the two in question. The Tribunal, agreeing with the principles laid down in the case of Shri S. Ganesh vs. ACIT, restored the issue to the AO to make inquiries with the concerned parties to verify whether the transactions pertained to the assessee. If the transactions did not pertain to the assessee, no addition should be made. The issue in Ground No. 4 was restored to the AO for further examination, and the ground was allowed for statistical purposes. Conclusion: The appeal was partly allowed, with specific directions for further examination by the AO on the AIR report discrepancies while dismissing the grounds related to depreciation on intangible assets and disallowance under section 14A, and allowing the ground related to disallowance under section 40(a)(ia).
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