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TMI Blog2022 (5) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... ed relief on the ground that no payment was made to assessee - HELD THAT:- Addition made by the AO is based on the survey conducted in the case of M/s Windsor Realty Pvt. Ltd and not based on any material found during the search conducted in the premises of the assessee. The addition made in the case of Windsor Realty Pvt Ltd was deleted subsequently on further appeal by the assessee and revenue respectfully by the Ld CIT(A) and ITAT with the finding that there was no such payments were ever made in order to invoke the provisions of section 69A. Therefore, the basis of addition made itself was deleted by the appellate authorities in the case of Windsor Realty Pvt Ltd, the same addition cannot be made in the case of the assessee without their being any corroborative evidence and also addition is not made based on the incriminating material found during search. Therefore, this addition made in the assessment passed u/s 153A also deserves to be deleted. Accordingly, grounds raised by the revenue are dismissed. Set off of brought forward long term capital loss on sale of listed equity shares against long term capital gain of current year - HELD THAT:- We observe that this issue al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular year has not earned any exempt income. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to treat the expenses on Software renewal license as revenue expenses, which is a capital asset 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by the AO Rs. 9,50,00,000/- as u/s 69A of the Income Tax Act, 1961 as unaccounted receipts which is bad in law. 4. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A), erred in deleting the addition made by the AO of Rs. 9,50,00,000/- u/s 69A of the Income Tax Act, 1961 as unaccounted receipts which is based on the incriminating maternal found and seized during the course of search action clearly mentioning the said transactions 5. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A), is justified in allowing the assessee s claim of set off of Long Term Capital Gains arises on sale of equity shares of unlisted company against the carry forward Long Term Capital loss arises on sale of equity shares of listed companies on which STT has been paid and such Lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.03.2016 (Pg nos 6-12 of P.B.). The Ld. CIT(A) granted part relief to the assessee by directing the Assessing Officer to exclude foreign investments while computing disallowance u/s 14A r.w. Rule 8D of the Act since dividend from the same is taxable. This was in line with the order passed by his predecessor in an appeal against order passed u/s 143(3) of the Act. Ld.CIT(A) observed as below: - 5.1.8 I am of the view that, all the assets which either yielded exempted income or could yield exempted income should to be considered for working out the disallowance under rule 8D. However, in the present case the assessee has made investments in foreign securities and income from which is taxable income. The constitutional validity of the rule 8D has been upheld by the Hon ble Bombay High Court in the case of Godrej and Boyce manufacturing Company Limited, later upheld by the Hon ble Supreme Court in the same case. The disallowance is to be worked at an amount equal to 0.5% of the annual average value of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income. 5.1.9 I feel, what the assessee is contending a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment has filed an appeal before the Hon'ble Tribunal (Pg nos 1-4 of P.B.) wherein they have challenged the decision of the CIT(A) in granting part relief to the assessee. It is submitted that the merits of the disallowance u/s 14A of the Act would be decided by the Hon'ble Tribunal while deciding that appeal. In fact, in the present assessment order, the Assessing Officer has not even mentioned about the merits of disallowance u/s 14A of the Act. He has made the disallowance merely because the same was made in the original assessment proceedings (Pg no 3, 6 of assessment order). In the present case, since no incriminating material is found during the course of search in respect of the said disallowance, the same is not in accordance with the law. In view of the same, it is humbly prayed that disallowance made u/s 14A of the Act is bad in law. 8. Considered the rival submissions and material placed on record. We observe that the Assessing Officer made the disallowance u/s 14A, which was already made in the original assessment, these additions were general additions which is not based on the material found during the search. It is fact on record that there is no incrimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or renewal of licence. The time period of the software which gives profit to the capital asset ultimately to the business is the important part while deciding the issue whether expenditure is capital or revenue expenditure. Since the assessee has paid this charges towards renewal of software firstly, the ownership of software remained with the software selling Company. The assessee has to necessarily renew the license period for using the same in the business. Merely because the assessee is using software as operating software in its system, it does not mean that software is the capital asset in the hands of the assessee. This expenditure is for upgrading the existing software license or renewal of licence, which the assessee has to pay on term basis. In view of above, the AO is directed to allow the renewal of software license expenditure amounting to Rs. 5,00,000/-. It is also seen that the CIT(A) Pune has also directed to delete this addition vide order dated 31.10.2019, while deciding the appeal of the assesse in respect of original assessment order made u/s. 143(3). Further, no fresh evidence has been found during the course of search, on this issue to take a decision otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd, addition has been made u/s 69 of the Act on account of alleged payments made to assessee. Based on that, the Assessing Officer, in the present case, has added the similar amount u/s 69A of the Act as unexplained cash credit. The Ld.CIT(A) has discussed this issue from pg nos 29-47 of his order. The CIT(A) has deleted the addition following the order passed by CIT(A) in the case of M/s Windsor Realty Pvt. Ltd. For the sake of brevity, the observation of the Ld.CIT(A) is reproduced below:- 8.2.3 I am in agreement with my Ld. colleague, Ld.CIT(A)-21, Mumbai. It appears that these were the future payments to be made by the assessee but were not made. In fact, the director of M/s. Windsor Realty Pvt. Ltd., Shri Akshay Raheja has clearly stated in his statement on oath that the said amount of Rs.9.50 crs. was to be paid on the dates mentioned on page no.27 but remained unpaid and were yet to be paid. The issue was probed further by the authorised officer at the time of search but Shri Raheja, even after consultation with Shri Gopal Narang mentioned that no such payment was made. For clarity, the relevant part of the statement of Shri Akshay Raheja is reproduced as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been made or sustained in the present case. Therefore, respectfully, following the findings of Ld. CIT(A)-21, Mumbai, in the case of Windsor Realty Pvt. Ltd, vide his order dated 27.12.2016, the addition of Rs.9.50 crs. made in the hands of the assessee is directed to be deleted. 13. Ld. AR of the assessee submitted that the assessee relies on the submissions made in para nos 5 and 6 herein above. It is further submitted that the incriminating material, on the basis of which addition is made, has to be found during the course of search conducted in the premises of assessee. In the present case, admittedly the document on the basis of which addition made is not found during the course of search conducted in the premises of assessee. The Assessing Officer himself admits in the order that the loose paper, on the basis of which addition is made, was found during the course of survey conducted in the case of M/s Windsor Realty Pvt. Ltd on 09.05.2014 (as against the search conducted in the case of the assessee on 21.07.2017). In view of the same, it is submitted that the addition is bad in law since the same is not based on any incriminating material found during the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Principal Commissioner of Income-tax v. Gaurav Arora [2021] 133 taxmann.com 293 (SC) 4 Commissioner of Income-tax-II v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 64 taxmann.com 34 (SC) 15. Considered the rival submissions and material placed on record, we observe from the submissions that the addition made by the Assessing Officer is based on the survey conducted in the case of M/s Windsor Realty Pvt. Ltd and not based on any material found during the search conducted in the premises of the assessee. The addition made in the case of Windsor Realty Pvt Ltd was deleted subsequently on further appeal by the assessee and revenue respectfully by the Ld CIT(A) and ITAT with the finding that there was no such payments were ever made in order to invoke the provisions of section 69A. Therefore, the basis of addition made itself was deleted by the appellate authorities in the case of Windsor Realty Pvt Ltd, the same addition cannot be made in the case of the assessee without their being any corroborative evidence and also addition is not made based on the incriminating material found durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of search in respect of the said disallowance, the same is not in accordance with the law. In view of the same, it is humbly prayed that the order passed by Ld.CIT(A) may be upheld. 18. Considered the rival submissions and material placed on record. We observe that this issue also not coming out of the search proceedings but Assessing Officer made the similar additions made in the original assessment. This issue under consideration is under challenge by the department in the original proceedings before ITAT, which the respective bench will take the appropriate decision. The issue under consideration is whether the Assessing Officer made the addition in the unabated year based on the incriminating material which was found during search, can he merely repeat the additions made in the original assessment. This issue is also addressed by the Ld.CIT(A) in his order and we are inclined to accept the findings of Ld CIT(A) in this regard that Assessing Officer has no jurisdiction. Therefore, we dismiss the grounds raised by the revenue. 19. In the result, appeal filed by the revenue is dismissed. Order pronounced in the open court on 07.04.2022. - - TaxTMI - TM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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