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2019 (8) TMI 1803 - HC - Income TaxNature of expenses - acquisition of computer software - revenue or capital expenditure - HELD THAT - It is an admitted position between the parties that this issue was urged by Revenue in Principal Commissioner of Income Tax-2 vs. M/s.Tata AIG General Insurance Co.Ltd 2019 (8) TMI 1800 - BOMBAY HIGH COURT . This Court by an order in respect of the same Respondent-assessee, did not entertain the above identical questions. Therefore for the reasons above this question does not give rise to any substantial question of law. Thus not entertained. TDS u/s 194D - payment of reinsurance commission - Revenue in its own case appeals had not raised any grievance with regard to the order of the Tribunal to the extent it holds that no tax is deductable u/s194D of the Act in respect of payment of reinsurance commission - HELD THAT - Revenue has accepted the impugned order of the Tribunal so far as the above issue is concerned. Therefore, this question does not give rise to any substantial question of law, particularly, in the absence of any change in facts and law being pointed out to us or any other feature which would warrant that this appeal to be prosecuted by the Revenue. No substantial questions of law Appeal admitted on substantial questions of law framed as Question Nos.(ii), (iii), (iv), (v).
Issues:
1. Capital expenditure on computer software 2. Exemption on profit from investment 3. Applicability of sec 14A of the IT Act 4. Treatment of premium on investments 5. Amortization of preoperative expenses 6. Tax deduction on reinsurance commission Analysis: Capital Expenditure on Computer Software: The appellant challenges the Tribunal's decision regarding the acquisition of computer software, arguing that it should be considered capital expenditure eligible for depreciation under section 32 of the Income Tax Act. However, the court notes that a similar issue was previously addressed in a different case involving the same respondent, where identical questions were not entertained. Consequently, the court declines to entertain this question, citing lack of substantial legal grounds. Exemption on Profit from Investment: The appellant contests the Tribunal's ruling that a profit of ?5,37,000 on the sale of investments is exempt based on a CBDT circular. The court is set to examine whether the circular, originally intended for specific entities, applies to the current scenario. This question is admitted for further consideration based on substantial legal issues raised. Applicability of Sec 14A of the IT Act: The Tribunal's decision confirming that section 14A of the IT Act does not apply to the assessee's income assessed under section 44 is challenged. The court will review the circumstances and legal provisions to determine the correctness of the Tribunal's ruling. This question is admitted for detailed analysis. Treatment of Premium on Investments: The Tribunal's decision not to add back the amortized premium on investments to the balance of profits is disputed by the appellant. The court will assess whether there is a specific prohibition against such expenditure under relevant sections of the Income Tax Act, despite the requirement for adding it back as per the First Schedule. This question is admitted for further examination. Amortization of Preoperative Expenses: The Tribunal's approval of amortizing preoperative expenses over several years is questioned by the appellant, as there is no specific provision in the Income Tax Act for such allowances. The court will determine the legality of claiming these expenses over an extended period without explicit statutory provisions. This question is admitted for detailed scrutiny. Tax Deduction on Reinsurance Commission: The Tribunal's decision that tax deduction under section 194D is not required for reinsurance commission is challenged by the appellant. However, it is revealed that the Revenue previously accepted a similar decision in the respondent's case for other assessment years. As no new facts or legal changes are presented, the court finds no substantial legal grounds to entertain this question. Consequently, this issue is not pursued further. The court directs the Registry to inform the Tribunal of its order, ensuring the availability of relevant documents for future proceedings.
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