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TMI Blog2016 (5) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance of 50%. The AO is directed to delete the entire disallowance so made. Disallowance of 25% on procurement expenses made to I-Bank - addition as it is unreasonable and not incurred wholly and exclusively for the purpose of assessee’s business - Held that:- As carefully gone through the order of Tribunal and found that exactly similar issue was dealt by the Tribunal in assessee’s own case and entire disallowance so made by the AO was deleted. As the facts and circumstances during the year under consideration are same, respectfully following the order of the Tribunal in assessee’s own case, we direct the AO to delete the disallowance so made on account of procurement expenses. Disallowance of software expenses - revenue or capital expenditure - Held that:- The issue under consideration is squarely covered by the decision of Hon’ble Bombay High Court in the case of Raychem RPG Ltd.(2011 (7) TMI 953 - Bombay High Court). Respectfully following it, we do not find any merit for disallowance of software expenses of ₹ 1,20,000/- so incurred by assessee, which is essentially revenue in nature. Invoking Explanation to Section 73 and treating share trading loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee claimed expenditure on account of incentive paid to the various concerns. In respect of incentive paid to ICICI Bank, the AO disallowed the same on the plea that ICICI Bank is coming within the purview of Section 40A(2)(b), therefore, he disallowed 95% of the total brokerage earned by the assessee. 3. By the impugned order the CIT(A) deleted disallowance to the extent of 50%, against which assessee is in further appeal before us. 4. It was argued by ld. Senior AR Mr. S.E.Dastur that similar incentive has been passed on by the assessee to other concerns, who are independent, therefore, it cannot be said that any excessive or unreasonable amount was given to ICICI Bank. He further contended that amount invested by ICICI Bank was ₹ 310 crores as against investment made by other concerns i.e. Hotel Corporation of India ₹ 60 crores and Bank of Baroda ₹ 25 crores. He further submitted that incentive so passed by assessee was in the normal course of assessee s business and was comparable with the commission passed on to the other independent concerns. 5. On the other hand, ld. DR relied on the order of lower authorities. 6. We have considered rival c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on revenue to prove unreasonableness. 7. We also found that since the bonds were acquired by ICICI Bank (l-Bank) and aforesaid entities, which were financial institutions and not retail investors, there was no expenditure incurred by the assessee towards marketing in retail business. The pass on of such incentive was based on the market practice followed in assessee s line of business. Incentive passed on to I-bank was duly offered to tax by that client in its return of income. As regards the reasonableness, the incentive passed on to I-Bank was comparable to other two independent entities. Therefore, the incentive paid to I-Bank was allowable u/s.37(1) of the Act. Thus, we do not find any merit in the action of CIT(A) for upholding the disallowance of 50%. The AO is directed to delete the entire disallowance so made. 8. The next grievance of assessee relates to disallowance of 25% on procurement expenses made to I-Bank on the plea that it is unreasonable and not incurred wholly and exclusively for the purpose of assessee s business. 9. We have considered rival contentions. Ld. AR drew our attention to the order of Tribunal in assessee s own case for the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow 100% of the incentive payments so made. Accordingly, this ground of appeal is dismissed. 15. Next grievance of the revenue relates to deleting 75% of procurement expenses made to I-Bank. We have already dealt with this issue while deciding ground No.2 in assessee s appeal (i.e. ITA No.3767/Mum/2007). Following the same reasoning, we confirm the action of CIT(A) and direct the AO to allow 100% of procurement expenses. 16. Last grievance of revenue relates to CIT(A) s conclusion that the transaction between the assessee company and ICICI Securities INC was at arm s length and in accordance with provisions of TP rules. 17. We have considered rival contentions and found that the AO has disallowed client s introduction fee paid to the ICICI (INC) (ISI) amounting to ₹ 98,42,28,828/- on the plea that expenditure was not incurred for the purpose of assessee s business. By the impugned order CIT(A) deleted the addition after having following observation :- 5.2 I have considered the submissions made by the appellant and perused the assessment order. ISI is an entity based in USA and the appellant rendered the services abroad to clients developed by IS!. The AO made the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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