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2020 (7) TMI 506 - AT - Income TaxDepreciation on payment of brand license fees - HELD THAT - We find that the year under appeal is the third year of claim of depreciation by the assessee on payment of brand license fees. Respectfully following the aforesaid decision in assessee‟s own case by this Tribunal, we direct the ld. AO to delete the disallowance made on account of depreciation on payment of brand license fees. Accordingly, the ground raised by the assessee are allowed. Disallowance of property tax which was reimbursed to Precision Components Pvt. Ltd., (PCPL) - HELD THAT - Respectfully following the aforesaid decision in assessee‟s own case for the A.Y.2006-07 2016 (4) TMI 1353 - ITAT MUMBAI we remand this issue to the file of the ld. AO for fresh adjudication in accordance with law. Accordingly, the ground raised by the assessee is allowed for statistical purposes. Claim of depreciation on software expenditure - HELD THAT - We find that the expenditure incurred towards software need to be treated as capital in nature in the facts and circumstances of the case before us and the ld. AO is directed to grant depreciation on the software expenditure incurred during the year in addition to granting depreciation on opening WDV of computer and computer software. Accordingly, the ground raised by the assessee is allowed for statistical purposes. TDS u/s 194C - Disallowance made by the ld. AO u/s.40(a)(ia) of the Act in respect of channel placement fees -HELD THAT - As decided in UTV ENTERTAINMENT TELEVISION LTD. 2017 (11) TMI 915 - BOMBAY HIGH COURT activities covered by Section 194C are more specific and the activities covered by Section 194J are more general in terms. - by no stretch of imagination, considering the nature of transaction, the argument that carriage fees or placement fees are in the nature of commission or royalty can be accepted. - we direct the ld. AO to delete the disallowance made u/s.40(a)(ia) of the Act in the hands of the assessee. Short grant of credit for tax deducted at source AND Short grant of foreign tax credit - HELD THAT - We direct the ld. AO to verify the same with the relevant records and decide the issue as per law
Issues Involved:
1. Disallowance of depreciation on payment of brand license fees. 2. Disallowance of property tax reimbursement. 3. Depreciation on software expenditure. 4. Disallowance under Section 40(a)(ia) for channel placement fees. 5. Short grant of credit for tax deducted at source. 6. Short grant of foreign tax credit. 7. Initiation of penalty proceedings under Section 271(1)(c). Issue-wise Detailed Analysis: 1. Disallowance of Depreciation on Payment of Brand License Fees: The assessee contested the disallowance of depreciation on brand license fees. The Tribunal noted that this issue was previously decided in favor of the assessee for the assessment years 2011-12 and 2012-13. The Tribunal reiterated that the brand license payment was capitalized and depreciation was claimed annually. The Tribunal directed the Assessing Officer (AO) to delete the disallowance, allowing the assessee's grounds. 2. Disallowance of Property Tax Reimbursement: The assessee reimbursed property tax to Precision Components Pvt. Ltd. (PCPL) and claimed it as a business expenditure under Section 37(1). The AO disallowed this claim, stating that property tax should be borne by the landlord. The Tribunal referred to a previous decision for the assessment year 2006-07, which required fresh examination by the AO. Consequently, the Tribunal remanded the issue back to the AO for fresh adjudication, allowing the assessee's ground for statistical purposes. 3. Depreciation on Software Expenditure: The assessee sought depreciation on software expenditure treated as capital in nature. The Tribunal directed the AO to grant depreciation on both the fresh software expenditure incurred during the year and the opening written down value (WDV) of computer software. The assessee's ground was allowed for statistical purposes. 4. Disallowance under Section 40(a)(ia) for Channel Placement Fees: The AO disallowed channel placement fees under Section 40(a)(ia) due to short deduction of tax at source, treating the payments as royalty under Section 194J instead of Section 194C. The Tribunal referred to the jurisdictional High Court decisions in favor of the assessee, particularly in the cases of UTV Entertainment Television Ltd. and Times Global Broadcasting Co. Ltd., which held that placement fees are covered under Section 194C. The Tribunal directed the AO to delete the disallowance, allowing the assessee's grounds. 5. Short Grant of Credit for Tax Deducted at Source: The assessee claimed short grant of credit for tax deducted at source. The Tribunal directed the AO to verify and rectify the issue as per the relevant records, allowing the ground for statistical purposes. 6. Short Grant of Foreign Tax Credit: Similar to the previous issue, the assessee claimed short grant of foreign tax credit. The Tribunal directed the AO to verify and rectify the issue as per the relevant records, allowing the ground for statistical purposes. 7. Initiation of Penalty Proceedings under Section 271(1)(c): The Tribunal noted that the initiation of penalty proceedings under Section 271(1)(c) was premature for adjudication at this stage. Conclusion: The appeal of the assessee was allowed for statistical purposes, with directions for fresh examination and verification by the AO on specific issues. The Tribunal's order was pronounced on 17/07/2020.
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