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TMI Blog2015 (8) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... ark licencee fee. This Tribunal found that there is nothing uncommon in assessee's making payment to the use of the trademark to M/s Redington Distribution Pte. Ltd, Singapore. Referring to the judgment of the Apex Court in S.A.Builders (2006 (12) TMI 82 - SUPREME COURT), this Tribunal found that the expenditure is an allowable business expenditure. In view of the order of this Tribunal for the assessment year 2009-10, this Tribunal do not find any reason to interfere in the order of the lower authority. Accordingly, the same is confirmed.- Decided in favour of assessee. Disallowance of depreciation on temporary structure - Held that:- The assessee claims that expenditure was incurred in wooden partitions, plastering, water proofing treatment, installation charges ad flooring charges etc. Though the ld. Counsel says that the expenditure was incurred in the building taken on rent, no material is available on record to suggest that the abovesaid expenditure was incurred on the building taken on lease/rent. Whatever may the nature of the building, the assessee incurred the expenditure on the temporary structure like office cabins, wooden partitions, plastering, water proofing treatmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of earning profit from the business of the partnership firm or from agricultural income cannot be treated as laid out or expended wholly and exclusively for the purpose of business of the assessee. Therefore, even before introduction of sec. 14A, the expenditure relatable to any incomes which do not form part of the total income cannot be allowed while computing the taxable income under the Income-tax Act, 1961. Therefore, irrespective of the provisions of sec. 14A r.w. Rule 8D, the expenditure claimed by the assessee for earning the exempted income cannot be allowed as deduction for the purpose of computing taxable income. - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee's own case for assessment year 2009-10. 6. In view of the above, by following the order of the Delhi bench of this Tribunal in Bharti Airtel Ltd (supra) and the order of this Tribunal in the assessee's own case for assessment year 2009-10 and for the reasons stated therein, we hold that the corporate guarantee given by the assessee to its AEs does not involve any cost to the assessee, therefore, it has no bearing on the profits, income, loss or assets of the assessee and outside the ambit of international transaction to which ALP adjustment has to be made. According, the orders of the lower authorities are set aside and the Assessing Officer is directed to delete the addition of ₹ 1,84,17,371/-. 7. The next issue arises for consideration is disallowance of trade mark licence fee. 8. The ld. Counsel for the assessee submitted that the Assessing Officer disallowed a sum of ₹ 1,80,98,708/-. The ld. Counsel further submitted that the very same issue came before this Tribunal in the assessment year 2009-10 in assessee's own case and this Tribunal found that the assessee was exploiting the trade mark 'REDINGTON' for the purpose of carryin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure was incurred in wooden partitions, plastering, water proofing treatment, installation charges ad flooring charges etc. Though the ld. Counsel says that the expenditure was incurred in the building taken on rent, no material is available on record to suggest that the abovesaid expenditure was incurred on the building taken on lease/rent. Whatever may the nature of the building, the assessee incurred the expenditure on the temporary structure like office cabins, wooden partitions, plastering, water proofing treatment, installation charges, flooring charges etc. These expenditure are for the purpose of making the building fit for use of the business. Therefore, this Tribunal is of the considered opinion that these expenses are to be allowed as revenue expenditure. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow deduction of ₹ 1,18,69,510/- as revenue expenditure. 15. The next issue arises for consideration of disallowance of payment made to Microsoft Corporation u/s 40(a)(i) of the Act of the Act. 16. Ld. Counsel for the assessee submitted that the Assessing Officer disallowed a sum of ₹ 40,60,298 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of account. However, the TPO and DRP found that the assessee has not established that the debt has become bad. According to the ld. Counsel, it is not necessary for the assessee to establish that the debt became bad once it is written off in the books of account. According to the ld. Counsel, the same has to be allowed as deduction. 21. Shri Joe Sebastin submitted that what is claimed is a mere debt and not a bad debt. According to the ld. DR, all debts cannot be allowed as a bad debt. The assessee has to establish that the debt has become bad. 22. We have considered the rival submissions on either side and also perused the material available on record. We have also gone through the provisions of sec.36(1)(vii) of the Act which reads as follows: "subject to the provisions of sub-section(2), the amount of [any bad debt or part thereof which is written-off as irrecoverable in the accounts of the assessee for the previous year]: 23. Sec.36(1)(vii) was amended by Direct Tax Laws (Amendment) Act, 1987, with effect from 1.4.1989. In fact, the Parliament deleted the following from section 36(1)(vii): "any debt, or part thereof, which is established to have become a bad d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays that income of a person being a partner in a partnership firm also do not form part of the total income. Sec. 10(1) of the Act also provides for exclusion of agricultural income. "Total income" is defined in sec. 2(45) of the Act. "Total income" means the total amount of income referred to in sec. 5, computed in the manner laid down in this Act. Therefore, it is obvious that any income for earning agricultural income, or earning a profit in the partnership firm or dividend from the shares of the companies cannot form part of the total income. The total income is nothing but an income assessed under the Income-tax Act, 1961, for the purpose of levy of tax. Sec. 37(1) of the Act provides for allowing the expenditure laid out or expended wholly and exclusively for the purpose of business or profession in computing the income chargeable for taxation. The expenditure incurred by the assessee for the purpose of earning the dividend income or for the purpose of earning profit from the business of the partnership firm or from agricultural income cannot be treated as laid out or expended wholly and exclusively for the purpose of business of the assessee. Therefore, e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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