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TMI Blog2014 (9) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... l expenses for earning this dividend income. We find that this issue has been decided by the Hon ble Bombay High Court in the case of Reliance Industries Ltd. [ 2009 (4) TMI 516 - BOMBAY HIGH COURT] . Considering all we direct the AO to delete the addition-. Ground No. 3 is accordingly allowed. Disallowance on upgradation of application software - HELD THAT:- As carefully perused the orders of the authorities below. Hon ble Madras High Court in the case of CIT Vs Sundaram Clayton Ltd. [ 2008 (6) TMI 327 - MADRAS HIGH COURT] , following the decision in the case of Southern Roadways [ 2006 (10) TMI 82 - MADRAS HIGH COURT] has held that upgradation of computers thereby enhancing the configuration of the computers for improving their efficiency, but without making any structural alterations is not change of an enduring nature. The expenditure incurred by the assessee had to be treated as revenue expenditure . In the case in hand, it is the upgradation of software already installed for the smooth and efficient working therefore following the ratio laid down by the Hon ble Madras High Court (supra), we direct the AO to delete the addition and allow the claim of upgradation of soft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer and Fuel expenses - reallocating the expenditure and estimated the disallowance - HELD THAT:- We find that the assessee has filed complete details of unit-wise power consumption for every unit. The assessee has also filed complete month-wise consumption of power for every unit. This is also evident from the reply filed by the assessee during the course of the assessment proceedings which is exhibited hereinabove. The AO has not pointed out any defect in the independent records nor he has given any adverse findings in the details of the power consumption filed by the assessee. It is also not a case of the revenue that the assessee has shown exorbitant profit from the units which are eligible for deduction u/s. 10(B) of the Act. It is also not the case of the Revenue that there is a diversion of expenditure from exempt unit to taxable unit. The reallocation has been made purely on surmises and conjectures. The reallocation has been made on the basis of respective turnovers of eligible and non eligible units which, in our considered opinion, is unwarranted. We, accordingly set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition - I.T.A. No.4453, 3481/Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly perused the contents of the affidavit. Undoubtedly under Rule 45(2), the form of appeal to Ld. CIT(A) is to be signed and verified by the person who is authorized to sign the return of income. However, u/s. 140(c) of the Act if for any unavoidable reason such Managing Director is not able to sign and verify the return, then the same can be signed any Director thereof . As the Managing Director was travelling, the appeal memo was signed and verified by the Executive Director (Finance), the same is in accordance with law. We, therefore, do not find any merit in the additional ground taken by the Revenue and is dismissed accordingly. 9. In the result, the appeal filed by the Revenue is dismissed. ITA No. 3481/M/2011 A.Y. 2008-09 10. Ground No. 1 2 are of general in nature and therefore need no separate adjudication. 11. Ground No. 3 relates to the disallowance of ₹ 4166/- u/s. 14A of the Act. 11.1 It is the claim of the assessee that the assessee has received dividend from Union Bank of India. The dividend was directly credited to the bank account of the assessee without any effort on the part of t he assessee and therefore the assessee has incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an enduring nature. The expenditure incurred by the assessee had to be treated as revenue expenditure . In the case in hand, it is the upgradation of software already installed for the smooth and efficient working therefore following the ratio laid down by the Hon ble Madras High Court (supra), we direct the AO to delete the addition of ₹ 6,57,550/- and allow the claim of upgradation of software as revenue expenditure. The AO is also directed to withdraw the depreciation allowed by him while treating the expenditure as capital expenditure. Ground No. 4 with its sub-grounds are accordingly allowed. 13. Ground No. 5 relates to the disallowance of interest being attributable to capital work-in-progress. 13.1. This issue has been discussed by the AO at para-7 of his order. While analyzing the balance sheet of the assessee, the AO found that an amount of ₹ 6,45,20,948/- was shown as Capital work-in-progress at cost . The assessee was asked to explain whether any interest was capitalized on this capital work-in-progress. The assessee explained vide its letter dt. 19.10.2010 that no interest was capitalized in capital work-inprogress. The assessee was then asked to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect the AO to delete the addition of ₹ 56 lakhs. Ground No. 5 is accordingly allowed. 14. Ground No. 6 relates to the disallowance of ₹ 1,61,57,002/- incurred by the assessee on current repairs of buildings. 14.1. The AO has discussed this issue at para-8 of his order. The AO noticed that under the head Repairs and Maintenance Building. The assessee has claimed expenditure amounting to ₹ 1,62,25,655/- which comprises to various expenditures like changing of flooring, plastering of walls, ceiling, painting, electrical fittings, wash rooms, cabins etc. The AO was of the opinion that the expenditures are of capital in nature and accordingly asked the assessee to justify its claim. It was explained that the Corporate office of the assessee was constructed in 1996-97 therefore after 10 years it required certain major repairs due to wear and tear, leakages etc. It was further explained that wherever the expenditure incurred for making cabins, replacing furniture etc, the same has been capitalized under the head Furniture and Fixtures and the remaining has been claimed as revenue expenditure. The AO did not accept the submission of the assessee and treated the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly, direct the AO. However, the AO is directed to withdraw depreciation which was allowed by him while treating the expenditure as capital in nature. Ground No. 6 is allowed. 15. Ground No. 7 relates to the estimated disallowance of Power and Fuel expenses. 15.1. The AO has discussed this disallowance at para-9 of his order. The AO noticed that the assessee has debited ₹ 12.41 crores under the head Power and Fuel out of which ₹ 5.01 crores is claimed towards EOU unit eligible for exemption u/s. 10B and the balance amount is claimed towards non-EOU unit. The assessee was asked to justify the claim of expenditure. The assessee filed a detailed reply as under: 4. Power Fuel : ₹ 12.41 Crores out of which EOU ₹ 5.01 crores. In your letter referred above, you have compared the expenditure on Power Fuelo for EOU unit and Non-EOU units asked us to explain with evidences as to why the expenditure on Power Fuel for EOU is less as compared to Non-EOU units put together whereas the turnover of the EOU is more than the Non-EOU units. In this respect, we wish to submit as under: The assessee has maintained accounting records giving unit wise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t documentary evidence brought on record before us. It is not in dispute that the assessee is maintaining separate books of account for all its eligible unit. We find that the assessee has filed complete details of unit-wise power consumption for every unit. The assessee has also filed complete month-wise consumption of power for every unit. This is also evident from the reply filed by the assessee during the course of the assessment proceedings which is exhibited hereinabove. The AO has not pointed out any defect in the independent records nor he has given any adverse findings in the details of the power consumption filed by the assessee. It is also not a case of the revenue that the assessee has shown exorbitant profit from the units which are eligible for deduction u/s. 10(B) of the Act. It is also not the case of the Revenue that there is a diversion of expenditure from exempt unit to taxable unit. The reallocation has been made purely on surmises and conjectures. The reallocation has been made on the basis of respective turnovers of eligible and non eligible units which, in our considered opinion, is unwarranted. We, accordingly set aside the findings of the Ld. CIT(A) and dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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