9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (4) TMI 257 - AT - Income TaxLate payment of employees contribution to PF u/s 43B - HELD THAT - This issue is covered in favour of Department by the Judgment of the Hon ble Supreme Court in the case of M/s. Checkmate Services (P) Ltd. 2022 (10) TMI 617 - SUPREME COURT following the same this ground is dismissed. Disallowance on account of prior period expenses - HELD THAT - Since the amounts involved in all these issues are very small the same are dismissed without going into the merits of the case for which the Ld. Counsel for the assessee has no objection. Thus ground dismissed. Disallowance of interest as capital expenditure - AO capitalised the interest at the rate of 12% on closing balance of CWIP in the absence of exact computation provided by the assessee and this disallowance is confirmed by the Ld. CIT(A) - HELD THAT - The Reserves and Surplus as on 31st March 2013 are Rs. 37.04 Cr as against that of Rs. 39.68 Cr in addition to the share of Rs. 3.22 Cr. It is also observed that the addition to the capital work-in-progress is only Rs. 3.33 Cr which is much lower than the available free funds in the form of Reserves and Surplus. The AO has worked out the disallowance based on the closing balance of CWIP at the rate of 12%. While doing so AO has ignored the availability of own funds and wrongly assumed that the addition to CWIP was entirely out of borrowed funds. Therefore in view of the wrong application of facts by the Ld.AO and judicial precedents on the above subject we find no merit in the order of Ld.CIT(A) in confirming the addition under section 36(1)(iii) of the Act and we hereby delete the same. In the result Ground of the appeal is allowed. Addition in view of the Provisions of section 50C on the Gift of Plots - Transfer of property by a Company as a gift - AO concluded how the gift by one company to other company can be genuine considering the fact that the company is an Artificial Judicial Person and the element of natural love and affection cannot be exist and why not to invoke the provisions of section 50C of the Act for the above Gift transaction - HELD THAT - Section 5 of the Transfer of Property (TP) Act 1882 defines the term transfer of property as an act by which a living person conveys property in present or in future to one or more other living persons or to himself or to himself and one or more other living persons.TP Act considers a company not only as a Person but literally speaking as a living person a person with life. The same expression person is provided in section 5 is transplanted in section 122 of the TP Act which defines a gift . There is no restriction in law against a company making Gift of its property to another company. A transfer without consideration when claimed as a gift is always a gift. Further Section 47(iii) of the I.T. Act specifically provides that any transfer of a capital asset under a Gift is not regarded as a transfer. Therefore the Plots transferred by the assessee company by way of executing Gift Deed in favour of M/s. Ratnakar Estate Developers Pvt. Ltd. is a valid Gift and not liable for capital gain. Consequently invoking the provisions of Section 50C of the I.T. Act does not arise in the above transaction. Decided against revenue. Depreciation on Computer software - AO disallowed the claim stating that the assessee has only purchased license to use the software and therefore not entitled to claim depreciation at 60% - HELD THAT - Depreciation on computer software is no more res integra as this issue is settled by the Special Bench of the Tribunal in the case of DCIT vs. Datacraft India Limited (2010) 133 TTJ 0377 (Mum) (SB) wherein it was held that as per the meaning of expression computer could not be restricted only to CPU of computer by pulling out import and output devices from ambit of computer -All input and output devices which in fact support in receipt of input and outflow of output were also part of computer - When particular hardware or software was used along with computer and when their functions were integrated with computer such hardware or software would be termed as computer -Items on which Assessee claimed depreciation at rate of 60% by treating them as computer were being used as input or output device of computers-Any device used along with computer and when their functions were integrated with computer came within ambit of the expression computer - Assessee was entitled to avail depreciation at rate of 60% as was applicable to a computer . Decided in favour of assesee.
Issues Involved:
1. Disallowance u/s 43B of the Act. 2. Prior Period Expenses and Income. 3. Non-Deduction of TDS on International Transaction. 4. Disallowance u/s 50C of the Act. 5. Capitalization of Interest on Capital Work in Progress. 6. Disallowance u/s 40A(3) of the Act. 7. Depreciation on Software Licenses. Summary of Judgment: 1. Disallowance u/s 43B of the Act: The issue of disallowance on account of late payment of employees' contribution to PF u/s 43B of the Act is covered in favor of the Department by the Judgment of the Hon'ble Supreme Court in the case of M/s. Checkmate Services (P) Ltd. vs. CIT (2022) 143 taxmann.com 178 (SC). Therefore, this ground is dismissed. 2. Prior Period Expenses and Income: Ground Nos. 2 to 3 relate to disallowance on account of prior period expenses of Rs. 91,956/-. Ground No. 4 relates to non-deduction of TDS on International Transaction of Rs. 54,000/-, and Ground No. 6 relates to disallowance of Rs. 60,517/- u/s 40A(3) of the Act. Since the amounts involved in all these issues are very small, the same are dismissed without going into the merits of the case, for which the Ld. Counsel for the assessee has no objection. 3. Capitalization of Interest on Capital Work in Progress: The Ld. CIT(A) erred in sustaining disallowance of interest amounting to Rs. 47,37,168 as capital expenditure by the Assessing Officer. The assessee has sufficient interest-free funds in the form of share capital, reserves, and surplus. The AO wrongly assumed that the addition to CWIP was entirely out of borrowed funds. Therefore, the addition under section 36(1)(iii) of the Act is deleted. 4. Disallowance u/s 50C of the Act: The issue relates to the addition of Rs. 6,71,29,538/- in view of the Provisions of section 50C of the Act on the Gift of Plots. The CIT(A) deleted the addition made by the Assessing Officer by observing that a company is capable of making a gift if it is authorized to do so by its Memorandum of Association. Consequently, the provisions of sec.50C of the Act will not be applicable to such a transaction. 5. Depreciation on Software Licenses: The AO disallowed the claim stating that the assessee has only purchased a license to use the software and therefore not entitled to claim depreciation at 60%. The Special Bench of the Tribunal in the case of DCIT vs. Datacraft India Limited (2010) 133 TTJ 0377 (Mum) (SB) held that any device used along with a computer and when their functions were integrated with the computer came within the ambit of the expression 'computer'. Therefore, the assessee was entitled to avail depreciation at the rate of 60%. Conclusion: The appeal filed by the Assessee is partly allowed, and the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 03-04-2024.
|
