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2015 (6) TMI 278 - AT - Income TaxDisallowance of depreciation on motor car - CIT(A) allowed the claim - Held that - As decided in assessee s own case for assessment year 2005-06 registration under Motor Vehicle Act is not an essential requirement for acquiring ownership of the motor vehicle and that an assessee purchasing a motor vehicle for valuable consideration and using the same for his business cannot be denied benefit of depreciation on the ground that the vehicle was not registered under Motor Vehicle Act. See USHA RECTIFIER CORPORATION (I) PVT. LTD. V/s INSPECTING ASSISTANT COMMISSIONER 1989 (9) TMI 162 - ITAT DELHI-A and Commissioner Of Income-Tax Versus Dilip Singh Sardarsingh Bagga 1992 (9) TMI 74 - BOMBAY High Court - Decided in favour of assessee. Disallowance of bad debts - CIT(A) deleted disallowance - Held that - the value of the shares transacted by the assessee as a stock broker on behalf of its client is very much a part of the debt as is the brokerage which is charged by the assessee on the transaction. Since the brokerage and value of shares both form a component part of the debt, the requirements of section 36(2)(i) are fulfilled where a part thereof is taken into account in computing the income of the assessee. Further, it is not disputed that the assessee has written off the debts as bad in its books of account. Under these set of facts, we notice that the assessee complied with the provisions of sections 36(1)(vii) as well as 36(2)(i). Hence, by following the decision of Jurisdictional High Court rendered in the case of SHREYAS S. MORAKHIA (2012 (3) TMI 103 - BOMBAY HIGH COURT), we uphold the order of the ld.CIT(A) on this issue.- Decided in favour of assessee. Computer and software development expenditure - capital or revenue expenditure - Held that - Since the break-up details of the expenditure are not available on record, we are of the view that this issue requires fresh examination at the end of the AO. Accordingly, we set aside the order of ld. CIT(A) on this issue and restore the same to the file of AO with a direction to examine the same in the light of the decision of ITAT in the case of AMWAY India Enterprises (2008 (2) TMI 454 - ITAT DELHI-C ) by duly considering the break-up details, information and explanation that may be furnished by the assessee. - Decided in favour of assessee for statistical purposes. Disallowance of penalty paid to the Stock Exchange for violation of its bye-laws - CIT(A) allowed claim - Held that - Explanation to Sec 37(1) are not applicable to the penalty paid on contravention of bye-laws of the Stock Exchange. Accordingly, the claim of the assessee to be allowed. See ITO V/s VRM Share Broking (P) Ltd 2008 (11) TMI 441 - ITAT MUMBAI - Decided in favour of assessee. - Decided in favour of assessee for statistical purposes. Disallowance made under section 14A - Held that - Since the provisions of Rule 8D are not applicable to the year under consideration, the disallowance to be made u/s 14A of the Act should be computed in a reasonable manner. We have earlier noticed that the AO has applied the provisions of Rule 8D for computing the disallowance. Hence, we are of the view that this issue requires fresh examination. See case of Godrej & Boyce Mfg Co. Ltd 2010 (8) TMI 77 - BOMBAY HIGH COURT Disallowance of Bombay Stock Exchange Card Amortization expenditure - Held that - this is the last year of claim, which means that the assessee had made similar amortisation claim in earlier years also. However, it was not shown to us by either parties that the said claim was allowed or disallowed in earlier years. Be that as it may, the ld. CIT (A) has pointed out that, after corporatisation of BSE, even the depreciation on BSE card is allowable up to 19.8.2005 only. Under these set of facts, we are of the view that the assessee has failed to demonstrate us as to how the amortization amount of ₹ 6,42,500/- is allowable as deduction under the Income Tax Act. Hence, we are of the view that the ld. CIT(A) was justified in confirming the disallowance made by AO. - Decided against assessee. Sale of shares - Short Term Capital Gains OR business income - Held that - Both the tax authorities have given findings that the assessee has earned above said amount on purchase and sale of shares on the very same date. It is well established principle that the intention of a person at the time of purchase of shares is one of the most important criteria to be considered while deciding about the nature of a transaction. The very fact that the assessee has been indulging in intraday transaction, i.e., purchase and sale of shares on the very same day would only show that the assessee has not intended to purchase them as an investor. Hence, we are of the view that the ld.CIT(A) was justified in confirming the assessment of STCG as business income of the assessee. - Decided against assessee.
Issues:
1. Disallowance of depreciation on motor car. 2. Disallowance of bad debts. 3. Treatment of computer and software development expenditure. 4. Disallowance of penalty paid to Stock Exchange. 5. Disallowance under section 14A of the Act. 6. Confirmation of web and software development expenses. 7. Disallowance of Bombay Stock Exchange Card Amortization expenditure. 8. Assessment of Short Term Capital Gains as business income. Issue 1: Disallowance of Depreciation on Motor Car: The dispute arose over the disallowance of depreciation claimed on vehicles not registered in the name of the Assessee Company. The Tribunal upheld the decision of the ld. CIT(A) based on previous rulings regarding ownership of motor vehicles for business purposes, emphasizing that registration under the Motor Vehicle Act is not a prerequisite for claiming depreciation. Issue 2: Disallowance of Bad Debts: The AO disallowed the bad debts claimed by the assessee, but the ld. CIT(A) allowed the claim citing relevant case law and the assessee's compliance with statutory provisions. The Tribunal upheld the ld. CIT(A)'s decision based on the assessee's adherence to the provisions of sections 36(1)(vii) and 36(2)(i). Issue 3: Treatment of Computer and Software Development Expenditure: The Tribunal remanded this issue to the AO for further examination due to the lack of detailed expenditure breakup. The Tribunal directed the AO to reconsider the matter in light of a specific decision and to consider any additional information provided by the assessee. Issue 4: Disallowance of Penalty to Stock Exchange: The Tribunal upheld the decision of the ld. CIT(A) to allow the penalty paid to the Stock Exchange, following precedents that the Explanation to Sec 37(1) does not apply to penalties for breaching Stock Exchange bye-laws. Issue 5: Disallowance under Section 14A of the Act: The Tribunal remanded the matter to the AO for a fresh computation of the disallowance under section 14A, emphasizing the need for a reasonable approach in the absence of Rule 8D applicability. Issue 6: Confirmation of Web and Software Development Expenses: The Tribunal directed the assessee to present its arguments to the AO for reconsideration of the issue, which was previously remanded back for fresh examination. Issue 7: Disallowance of Bombay Stock Exchange Card Amortization Expenditure: The Tribunal upheld the ld. CIT(A)'s decision to disallow the amortization claim, stating that the assessee failed to demonstrate the allowance of the claimed deduction under the Income Tax Act. Issue 8: Assessment of Short Term Capital Gains as Business Income: The Tribunal agreed with the AO and ld. CIT(A) in treating Short Term Capital Gains as business income due to the nature of intraday transactions, rejecting the assessee's contention of being an investor based on established principles and previous rulings. In conclusion, the Tribunal partly allowed both the appeals filed by the Revenue and the assessee, addressing each issue based on legal interpretations and factual considerations.
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