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TMI Blog2016 (10) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 2010-11 [ 2016 (3) TMI 1486 - ITAT CHENNAI] and thereafter decide the same in accordance with law after giving a reasonable opportunity to the assessee. Addition of guarantee commission - HELD THAT:- It is not known for the earlier assessment year, namely, assessment year 2010-11, in the case of Redington (India) Ltd. [ 2014 (10) TMI 669 - ITAT CHENNAI] whether the assessee has paid actual commission to bank or not. If the assessee has paid commission actually to the bank, then the matter would stand differently. Therefore, as rightly observed by the DRP, the matter needs to be verified whether in the case of Redington (India) Limited (supra), the assessee has paid the commission actually for availing the facility from the bank. Since the exact factual situation is not available on the record, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the AO. Accordingly, the order of the lower authority is modified and the AO is directed to refer the matter to TPO once again to find out the actual facts with regard to payment of commission to bank and thereafter decide the issue afresh in accordance with law after giving a reasonable opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T:- Tribunal is of the considered opinion that the matter needs to be re-examined by the AO. Accordingly, the orders of both the authorities below are set aside and the issue of disallowance made by the AO u/s 40(a)(ia) of the Act is remitted back to the file of the AO. AO shall re-examine the issue afresh in the light of the provisions of Income-tax Act after considering the withdrawal of circular issued by CBDT and the judgment of Faizan shoes Pvt. Ltd. [ 2014 (8) TMI 170 - MADRAS HIGH COURT] and thereafter decide the issue in accordance with law after giving a reasonable opportunity to the assessee. Additional depreciation u/s 32(1)(iia) - HELD THAT:- Tribunal is of the considered opinion that the matter needs to be reconsidered in the light of the decision of this Tribunal in the assessee s own case for assessment year 2010-11. Accordingly, the orders of the authorities below are set aside the issue of additional depreciation is remitted back to the file of the AO. AO shall re-examine the matter afresh in the light of the decision of this Tribunal for assessment year 2010-11 and thereafter decide the issue afresh in accordance with law after giving a reasonable opportunity to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as diverted to the foreign company. Merely because the UK company was said to be 100% subsidiary company of the assessee that cannot be a reason to reduce the taxable liability in India by shifting the taxable income to a foreign jurisdiction. Since the issue was remitted back to the file of the Assessing Officer for the assessment year 2010-11, the Ld. D.R. submitted that for the year under consideration also, the matter may be remitted back to the file of the Assessing Officer. 5. We have considered the rival submissions on either side and perused the relevant material available on record. For the assessment year 2010-11 also, the assessee-company advanced interest free loan to its wholly owned subsidiary company at UK. While considering the addition made by the Assessing Officer on the direction of the DRP, this Tribunal found that the matter needs to be re-examined by the DRP and verify the availability of surplus funds with the assessee for the purpose of advancing loan to Associate Enterprise in UK. Since factual situation arises during the year under consideration is similar as that of assessment year 2010-11, this Tribunal is of the considered opinion that the matter needs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission to bank for availing bank guarantee from the bank. It is not known for the earlier assessment year, namely, assessment year 2010-11, in the case of Redington (India) Ltd., whether the assessee has paid actual commission to bank or not. If the assessee has paid commission actually to the bank, then the matter would stand differently. Therefore, as rightly observed by the DRP, the matter needs to be verified whether in the case of Redington (India) Limited (supra), the assessee has paid the commission actually for availing the facility from the bank. Since the exact factual situation is not available on the record, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer. Accordingly, the order of the lower authority is modified and the Assessing Officer is directed to refer the matter to TPO once again to find out the actual facts with regard to payment of commission to bank and thereafter decide the issue afresh in accordance with law after giving a reasonable opportunity to the assessee. 10. The next ground of appeal is with regard to disallowance under Section 14A of the Act. 11. Sh. Vikram Vijayaraghavan, the Ld.c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and thereafter compute the disallowance stipulated under Rule 8D(2) of the Income-tax Rules, 1962. 13. The next issue arises for consideration is interest free loans granted to subsidiary companies. 14. Sh. Vikram Vijayaraghavan, the Ld.counsel for the assessee, submitted that the assessee advanced interest free loans to sister concens / subsidiary companies. During the assessment year 2010-11, the DRP itself allowed the claim of the assessee. No disallowance was made in the case of loans advanced to subsidiary companies. According to the Ld. counsel, the assessee had sufficient surplus funds by way of reserves and paid up capital. Therefore, there cannot be any disallowance. The Ld.counsel also placed his reliance in the judgment of Apex Court in S.A. Builders Ltd. v. CIT (2007) 288 ITR 1. 15. On the contrary, Dr. Milind Madhukar Bhusari, the Ld. Departmental Representative, submitted that the case of the assessee for the assessment year 2011-12 is totally different from the assessment year 2010-11. Therefore, the order of the DRP cannot be relied upon during the year under deduction. During this year, the assessee claims that capital and reserves are available with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be treated as revenue expenditure. However, if the application software is for a longer period, then it will have enduring benefit, therefore, it has to be capitalized. Since the facts need to be verified. This Tribunal is of the considered opinion that the matter can be verified by the Assessing Officer. Accordingly, the orders of the authorities below are set aside and the Assessing Officer is directed to verify the nature of expenditure and thereafter decide the issue in accordance with law after giving a reasonable opportunity to the assessee. 20. The next issue is with regard to disallowance of export commission. 21. Sh. Vikram Vijayaraghavan, the Ld.counsel for the assessee, submitted that in the assessee's own case for assessment year 2010-11, the DRP allowed the claim of the assessee by placing reliance on the judgment of Madras High Court in CIT v. Faizan Shoes Pvt. Ltd. (367 ITR 155), therefore, there is no reason for disallowing the issue during the year under consideration. 22. On the contrary, Dr. Milind Madhukar Bhusari, the Ld. Departmental Representative, submitted that the DRP for the assessment year 2010-11, has allowed the claim of the assessee by placi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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