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TMI Blog2016 (11) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... any has own sufficient fund. We have noticed that before making disallowance the AO not made any enquiry about the nature of investment as if it was strategic or the investment were made in earlier years and the manner in which exempt income was derived and credited to the account of assessee. Similarly no such exercise was made by Ld. CIT(A). The power of ld CIT(A) is co-terminus with AO. The disallowance made by AO and sustained by ld CIT(A) is not in accordance with the procedure prescribed u/s 14A r.w.s. Rule 8D. There is no finding that assessee has sufficient fund available with him or not. Hence, we deem it appropriate to restore this ground of appeal to the file of AO to pass order afresh. Disallowance of Software Usages Charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Rule 8D of the Act. (2) Disallowance of Software Usage Charges. ITA No. 1778/Mum/2013- AY-2009-10 2. Brief facts of the case are that the assessee filed return of income for relevant Assessment Year (AY) on 22.09.2009 declaring total income of Rs. NIL. The return of income came under scrutiny. The assessment under u/s 143( 3) was framed vide order dated 13.02.2011. While framing the assessment, the AO made the disallowance u/s. 14A of ₹ 19,43,486/-. The assessee claimed Software uses Charges of ₹ 14,56,292/-. The AO hold that the payments were made on account of software development which is capital in nature. Thus, depreciation @ 60% was allowed and accordingly. ₹ 5,82,517/- was disallowed. Aggrieved b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther relied upon the decision of Rajshree Production Pvt. Ltd. (TS-570 ITAT 2013, Mum), Kalyan Steel Ltd. vs. ACIT (ITA No. 1733/PN/2011), CIT vs. Gujarat State Fertilizers Chemicals Ltd. (2013) 85 CCH 226 (GUJHC), Shopper Stop Ltd. vs. ACIT, ACIT vs. Midcaps Ltd. decision of Indore Tribunal. On the other hand, Ld. DR for the Revenue strongly supported the order of authorities below. 4. We have considered the rival contention of the parties and perused the material available on record. The AO while making the assessment observed that the assessee derived dividend income of ₹ 2,30,94,862/- which is claimed as exempt income, the assessee has paid interest of loan of ₹ 3,92,930/- on interest. The assessee has not allocated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-sections (2) (3) of section 14A of the Act as the assessee is claiming that no expenditure has been incurred by it in relation to the exempt income. We have seen that as per the balance sheet , investment reflected in as on 31.03.2010 was of ₹ 29,98,21,124/-. Further, as per the balance sheet for AY 2009-10, the total investment of the assessee as on 31.03.2010 was ₹ 29,98,21,124/- and the assessee was having reserve and surplus amount of ₹ 1,48,60,50,942/-. The assessee has secured loan of ₹ 3,70,00,000/-. The assessee-company has own sufficient fund. We have noticed that before making disallowance the AO not made any enquiry about the nature of investment as if it was strategic or the investment were made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the AO observed that assessee-company claimed Software Uses Charges of ₹ 14,56,292/- which was paid on account of Software Uses Charges. The AO concluded it as Capital in nature and allowed only 60% depreciation, thus ₹ 5,82,517/- was disallowed. The CIT(A) while considering this ground concluded that the AO has given consequential effect on the depreciation in the specific year in accordance with provision of the Act and on the written down value of the previous year mentioned software capitalized by him on the basis of depreciation allowed @ 60% in AY 2006-07. For ascertaining as to whether the expenditure of computer software gives enduring benefit to assessee, the duration of time for which assessee required right to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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