2016 (6) TMI 1317 - AT - Income Tax

Addition to the total amount as been received by the assessee for post settlement of claims - Held that - In the assessee s own case for A.Y.2007-08 2016 (2) TMI 157 - ITAT MUMBAI wherein it has been held that this amount was not the income of the assessee and upheld the finding of the learned CIT(A) in the assessee s own case. Accordingly it is apparent that this ground has been squarely covered by the order passed by the Income Tax Appellate Tribunal in the assessee s own case for A.Y.2007-08 and therefore we are of the view that on this ground learned CIT(A) has passed the order judiciously and correctly which does not required to be interfere with at this appellate stage. Accordingly these issues are decided in favour of the assessee. Addition of software expenses and disallowance of net amount of capitalised and depreciation allowed - Held that - In the assessee s own case it is not in dispute that the co-ordinate bench of Income Tax Appellate Tribunal has treated that software expenses as revenue in nature and allowed the same. No distinguishable facts has been placed on record. No any other order which is contrary to the order passed by the Income Tax Appellate Tribunal in 2016 (2) TMI 157 - ITAT MUMBAI in the assessee s own case has been produced. Therefore in the said circumstance by following the observations of co-ordinate bench we are of the view that the CIT(A) has rightly deleted the expenses and allowed the same. Addition u/s.40A(9) - contribution to employees recreation club - reimbursement of expenses incurred by the club for the welfare of the employees. - Held that - CIT(A) by following ITAT order and also after considering the order passed by Assessing Officer for A.Y.2006- 07 in the set aside proceedings deleted the addition made in this year. - learned CIT(A) has passed the order judiciously and correctly which does not require to be interfere with at this appellate stage.

Summary

Issues Involved:

1. The revenue challenged the deletion of the addition of an amount received post settlement of claims.
2. The revenue disputed the observation that an amount was held in trust by the appellant in a fiduciary capacity.
3. The revenue contested the deletion of software expenses and disallowance of an amount.
4. The revenue objected to the deletion of an addition made under section 40A of the Income Tax Act.
5. The revenue questioned the deletion of the additions under section 40A(9) of the Income Tax Act.

Issue No.1 & 2:

The revenue contested the deletion of the addition of an amount received post settlement of claims by the CIT(A). The appellant was a public limited company involved in Export Credit Insurance. The CIT had deleted the addition based on the grounds of fiduciary capacity for exporters/banks. The Income Tax Appellate Tribunal upheld the CIT's decision. The revenue argued that the CIT's order was wrong, but the Tribunal dismissed the appeal.

Issue No.3 & 4:

The revenue challenged the deletion of software expenses and disallowance of an amount. The CIT(A) had deleted the addition, considering the expenditure on antivirus software as revenue in nature. The Tribunal agreed with the CIT's decision and dismissed the appeal, as the expenditure was on software, not a capital asset.

Issue No.5 & 6:

The revenue disputed the deletion of an addition made under section 40A(9) of the Income Tax Act. The CIT(A) deleted the addition, and the Tribunal found that the expenditure was on the contribution to the employees' recreation club. The Tribunal upheld the CIT's decision, as there was no contrary order. The revenue's appeal was dismissed.

In summary, the revenue's appeal was dismissed in the case where the CIT(A) had justified the deletion of additions to the total income of the assessee. The Tribunal upheld the decisions related to the addition of an amount post-settlement of claims, the deletion of software expenses, and the disallowance of an amount. The revenue's challenge to the deletion of the addition under section 40A of the Income Tax Act was also rejected.