Rane Holdings Limited, CHENNAI V. DCIT, CHENNAI

ITA 1113/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5978 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Keywords: Capital asset; Deemed dividend; Revenue expenditure
• Section: 14A; 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.1089 & 1090/MDS/2017 & C.O. NOS.98 & 99/MDS/2017 (IN I.T.A. NOS.1089 & 1090/MDS/2017) ( )( / ASSESSMENT YEARS : 2008-09 & 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 5(1), CHENNAI - 600 034. V. M/S RANE HOLDINGS LTD., MAITHRI, NO.132, CATHEDRAL ROAD, CHENNAI - 600 086. PAN : AABCR 5136 J (+,/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) ./ ITA NO.1113/MDS/2017 ( )( / ASSESSMENT YEAR : 2008-09 M/S RANE HOLDINGS LTD., MAITHRI, NO.132, CATHEDRAL ROAD, CHENNAI - 600 086. V. THE DEPUTY COMMISSIONER OF INCOME TAX. COMPANY CIRCLE V(3), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) / 0 1 /REVENUE BY : MS. S. VIJAYAPRABHA, JCIT (23 0 1 /ASSESSEE BY : SH. VIKRAM VIJAYARAGHAVAN, ADVO CATE 4 0 3% / DATE OF HEARING : 26.09.2017 5') 0 3% / DATE OF PRONOUNCEMENT : 27.10.2017 2 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE REVENUE AND ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE COMMISSIONER OF INC OME TAX (APPEALS) -3, CHENNAI, DATED 31.01.2017 FOR ASSESSM ENT YEARS 2008-09 AND 2012-13. FOR ASSESSMENT YEAR 2008-09, THE ASSESSEE HAS FILED THE APPEAL. APART FROM THAT, THE ASSESSE E FILED CROSS- OBJECTIONS FOR BOTH THE ASSESSMENT YEARS. THEREFOR E, WE HEARD ALL THE APPEALS OF THE REVENUE AND THE ASSESSEE AND THE CROSS- OBJECTIONS OF THE ASSESSEE TOGETHER AND DISPOSING O F THE SAME BY THIS COMMON ORDER. 2. FOR BOTH THE ASSESSMENT YEARS 2008-09 & 2012-13 IN THE REVENUES APPEALS, THE ONLY ISSUE ARISES FOR CONSID ERATION IS DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. MS. S. VIJAYAPRABHA, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED BEFORE THE ASSE SSING OFFICER THAT NO EXPENDITURE WAS INCURRED FOR EARNING THE EX EMPTED INCOME. ACCORDING TO THE LD. D.R., THE ASSESSEE DECLARED AN INCOME OF 3 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 ` 11,60,79,395/- AS DEEMED DIVIDEND INCOME, THEREFORE , THE ASSESSING OFFICER FOUND THAT IT WAS HARD TO BELIEVE THAT NO EXPENDITURE WAS INCURRED TO EARN INCOME OF ` 11,60,79,395/-. THE INVESTMENT MADE BY THE ASSESSEE YIELDED DIVIDEND IN COME OF ` 11.61 CRORES. THEREFORE, ACCORDING TO THE LD. D.R. , THE ASSESSEE HAS TO NATURALLY INCUR CERTAIN EXPENDITURE FOR GENE RAL ADVICE FROM FINANCIAL EXPERTS. WITHOUT ENGAGING THE SERVICE OF FINANCIAL EXPERTS, THE ASSESSEE WOULD NOT HAVE EARNED THIS MUCH OF DIV IDEND INCOME. THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER, AFTER REFERRING TO RULE 8D OF INCOME-TAX RULES, 1962, FOU ND THAT THE ASSESSEE HAS NOT INCURRED ANY DIRECT EXPENDITURE. THE ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEE BORROWED LOAN FOR THE PURPOSE OF BUSINESS. SINCE THE EXPENDITURE INCURRED BY THE ASSESSEE COULD NOT BE ASCERTAINED, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER APPLIED RULE 8D(2)(II). 4. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT THE ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEE MADE INVESTMENT DURING THE YEAR UNDER CONSIDERATION. AC CORDINGLY, HE DISALLOWED 0.5% OF AVERAGE INVESTMENT MADE DURING T HE YEAR UNDER CONSIDERATION. WHILE COMPUTING, ACCORDING TO THE L D. D.R., THE 4 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 ASSESSING OFFICER FOUND THAT THE EXPENDITURE TO THE EXTENT OF ` 2,57,06,601/- HAS TO BE DISALLOWED UNDER SECTION 14 A OF THE ACT READ WITH RULE 8D(II) OF THE INCOME-TAX RULES, 1962 . HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) FOUND THAT THE INVESTMENT WAS MADE FOR ACQUIRING SHARES OF THE ASSESSEES SIS TER CONCERN. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEA LS) BY PLACING RELIANCE ON THE DECISION OF THIS BENCH OF THE TRIBU NAL IN EIH ASSOCIATED HOTELS LIMITED V. DCIT (2013) 9 TMI 604, FOUND THAT THERE CANNOT BE ANY DISALLOWANCE. ACCORDING TO THE LD. D.R., THE REVENUE HAS ALREADY FILED APPEAL AGAINST THE ORDER OF THIS TRIBUNAL IN EIH ASSOCIATED HOTELS LTD. BEFORE THE HIGH COURT AND THE SAME IS PENDING FOR DISPOSAL, THEREFORE, THE CIT(APPEALS) I S NOT CORRECT IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER . 5. ON THE CONTRARY, SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE INVES TED THE FUNDS FOR THE PURPOSE OF BUSINESS IN THE SISTER CONCERNS. TH IS IS NOT IN DISPUTE. ACCORDING TO THE LD. COUNSEL, WHEN THE AS SESSEE INVESTED THE FUNDS IN THE SUBSIDIARY COMPANIES FOR THE PURPO SE OF CARRYING ON THE BUSINESS EFFECTIVELY, EARNING OF DIVIDEND INCOM E IS ONLY INCIDENTAL, THEREFORE, THERE CANNOT BE ANY DISALLOW ANCE OF 5 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 EXPENDITURE UNDER RULE 8D(II) OF THE INCOME-TAX RUL ES, 1962. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CIT(A PPEALS) BY PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN E IH ASSOCIATED HOTELS LTD. (SUPRA), FOUND THAT THERE CANNOT BE ANY DISALLOWANCE WHEN THE ASSESSEE INVESTED THE FUNDS ONLY IN THE SI STER CONCERNS. IN FACT, ACCORDING TO THE LD. COUNSEL, THE CIT(APPE ALS) DIRECTED THE ASSESSING OFFICER TO FOLLOW THE DIRECTION OF THIS T RIBUNAL. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE INVESTMENT WAS MADE BY THE ASSESSE E IN ITS SISTER CONCERNS. THIS TRIBUNAL EXAMINED THE ISSUE IN EIH ASSOCIATED HOTELS LTD. (SUPRA) AND FOUND THAT WHEN THE INVESTM ENT WAS MADE IN THE SUBSIDIARY COMPANIES, SUCH INVESTMENTS ARE F OR THE PURPOSE OF BUSINESS AND NOT FOR THE PURPOSE OF EARNING ANY CAPITAL GAIN OR DIVIDEND INCOME. THE INVESTMENT WAS MADE BY THE AS SESSEE TO PROMOTE THE SUBSIDIARY COMPANIES. ON IDENTICAL CIR CUMSTANCES, THIS TRIBUNAL FOUND THAT NO DISALLOWANCE CAN BE MADE. T HE CIT(APPEALS) SIMPLY FOLLOWED THE ORDER OF THIS TRIB UNAL WHILE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER . NOW THE CONTENTION OF THE REVENUE BEFORE THIS TRIBUNAL IS T HAT THE REVENUE 6 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 HAS FILED APPEAL BEFORE THE HIGH COURT AGAINST THE ORDER OF THIS TRIBUNAL IN EIH ASSOCIATED HOTELS LTD. (SUPRA). TH IS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MERE PENDENCY OF APPEAL BEFORE THE HIGH COURT CANNOT BE A GROUND TO TAKE A CONTRARY VI EW. IT IS NOT THE CASE OF THE REVENUE THAT THE OPERATION OF THE ORDER OF THIS TRIBUNAL WAS STAYED BY THE HIGH COURT. IN THOSE CIRCUMSTANC ES, THE CIT(APPEALS) HAS RIGHTLY FOLLOWED THE ORDER OF THIS TRIBUNAL. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SA ME IS CONFIRMED. 7. NOW COMING TO THE APPEAL IN I.T.A. NO.1113/MDS/2 017, THE ASSESSEE IS CHALLENGING THE ORDER OF THE CIT(APPEAL S) FOR ASSESSMENT YEAR 2008-09. THE FIRST ISSUE ARISES FO R CONSIDERATION IS DISALLOWANCE OF FOREIGN EXCHANGE LOSS DEBITED TO PR OFIT & LOSS ACCOUNT. 8. SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR TH E ASSESSEE, SUBMITTED THAT THE ASSESSEE SUFFERED A LOSS OF ` 13,99,149/- TOWARDS FOREIGN EXCHANGE. ACCORDING TO THE LD. COUNSEL, TH E ASSESSEE IS CONSISTENTLY ADOPTING THE SAME METHOD IN THE BOOKS OF ACCOUNT AS WELL AS THE RETURN FILED BEFORE THE AUTHORITIES IN RESPECT OF FOREIGN 7 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 EXCHANGE LOSS. THE LD.COUNSEL FURTHER SUBMITTED TH AT THE FOREIGN EXCHANGE LOSS IS IN THE NATURE OF REVENUE EXPENDITU RE FOR THE PURPOSE OF BUSINESS, THEREFORE, THE SAME IS ALLOWAB LE UNDER SECTION 37 OF THE ACT. THE LD.COUNSEL FURTHER SUBMITTED TH AT AN AMOUNT OF ` 8,90,585/- WAS HELD BY THE ASSESSING OFFICER AS DIS ALLOWABLE, HENCE, THE SAME AMOUNT WHICH WAS SHOWN AS CREDIT IT EM IN THE IMMEDIATELY SUCCEEDING YEAR SHOULD ALSO BE EXCLUDED FROM TOTAL INCOME. 9. ON THE CONTRARY, MS. S. VIJAYAPRABHA, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSING OFFICE R FOUND THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF ` 13,99,149/- IN THE PROFIT & LOSS ACCOUNT AS FOREIGN EXCHANGE LOSS. ACCORDING T O THE LD. D.R., THE ASSESSING OFFICER FURTHER FOUND THAT THE LOSS C LAIMED BY THE ASSESSEE WAS OCCURRED DUE TO REPAYMENT OF LOAN. SI NCE THE LOAN WAS BORROWED FOR PURCHASING A CAPITAL ASSET, THE FO REIGN EXCHANGE LOSS INCURRED BY THE ASSESSEE IS A CAPITAL LOSS. T HEREFORE, ACCORDING TO THE LD. D.R., BY PLACING RELIANCE ON T HE JUDGMENT OF APEX COURT IN SUTLEJ COTTON MILLS V. CIT (116 ITR 1 ), THE ASSESSING OFFICER FOUND THAT WHEN THE FOREIGN CURRENCY WAS HE LD AS CAPITAL ASSET, SUCH PROFIT OR LOSS CAN BE ON THE CAPITAL NA TURE. BY APPLYING 8 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 THE ABOVE MENTIONED JUDGMENT OF APEX COURT IN SUTLE J COTTON MILLS (SUPRA), ACCORDING TO THE LD. D.R., THE ASSESSING O FFICER FOUND THAT THE FOREIGN EXCHANGE LOSS CANNOT BE ALLOWED, THEREF ORE, THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THERE WAS A FOREIGN EXCHANGE LOSS AROS E ON ACCOUNT OF REPAYMENT OF LOAN AND REINSTATEMENT OF FCNRB LOAN. THE LOAN WAS BORROWED FOR ACQUIRING A CAPITAL ASSET. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER H AS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE BY PLACING REL IANCE ON THE JUDGMENT OF APEX COURT IN SUTLEJ COTTON MILLS (SUPR A). THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRM ED. 11. THE NEXT GROUND OF APPEAL IS WITH REGARD TO PRO VISION FOR DIMINUTION IN VALUE OF INVESTMENT. 12. SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR T HE ASSESSEE, SUBMITTED THAT THE ASSESSEE MADE PROVISION FOR DIMI NUTION IN VALUE 9 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 OF INVESTMENT TO THE EXTENT OF ` 42,06,000/-. ACCORDING TO THE LD. COUNSEL, PROVISION FOR DIMINUTION IN VALUE OF INVES TMENT IS ASCERTAINABLE LIABILITY, THEREFORE, IT HAS TO BE AL LOWED UNDER SECTION 37 OF THE ACT. 13. WE HAVE HEARD MS. S. VIJAYAPRABHA, THE LD. DEPA RTMENTAL REPRESENTATIVE ALSO. THE ASSESSEE ADMITTEDLY DEBIT ED A SUM OF ` 42,06,000/- IN PROFIT & LOSS ACCOUNT TOWARDS DIMINU TION IN VALUE OF INVESTMENT. IT IS ONLY A PROVISION. THE ASSESSING OFFICER BY PLACING RELIANCE ON THE JUDGMENT OF KERALA HIGH COURT IN KE RALA SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD. V. CIT (270 ITR 452), FOUND THAT DIMINUTION IN VALUE OF INVESTMENT IS NOT AN ALLOWABLE EXPENDITURE. THE CIT(APPEALS) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY PLACING RELIANCE ON THE JUDGME NT OF KERALA HIGH COURT IN KERALA SMALL INDUSTRIES DEVELOPMENT C ORPORATION LTD. (SUPRA). NO OTHER CONTRARY JUDGMENT WAS BROUGHT TO THE NOTICE OF THE BENCH. THEREFORE, THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUT HORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 10 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 14. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF INFORMATION SYSTEM INFRASTRUCTURE EXPENSES. 15. SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR T HE ASSESSEE, SUBMITTED THAT THE ASSESSEE INCURRED EXPENDITURE TO WARDS CONNECTIVITY CHARGES, LEASE RENTALS, HARDWARE MAINT ENANCE, CONSUMABLES AND OTHER EXPENSES INCURRED FOR MAINTEN ANCE OF SAP, DATA STORAGE AND MAILING SOLUTIONS. ACCORDING TO T HE LD. COUNSEL, THESE EXPENDITURES ARE REVENUE IN NATURE. THE ASSE SSEE FILED SUPPORTING DOCUMENTS BEFORE THE ASSESSING OFFICER A ND THE CIT(APPEALS). INSPITE OF THAT, THE ASSESSING OFFIC ER AND THE CIT(APPEALS) CONCLUDED THAT THE EXPENDITURE TO THE EXTENT OF ` 1,99,08,716/- WAS UNSUBSTANTIATED. ACCORDING TO TH E LD. COUNSEL, THE ASSESSEE HAS FILED ALL THE MATERIAL BEFORE THE ASSESSING OFFICER, THEREFORE, THE ASSESSING OFFICER MAY RE-EXAMINE THE SAME. 16. ON THE CONTRARY, MS. S. VIJAYAPRABHA, THE LD. D EPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE MAIN FUNCTION OF THE ASSESSEE IS TO PROVIDE INFRASTRUCTURE DEVELOPMENT TO OTHER COMP ANIES. FOR THE PURPOSE OF PROVIDING INFRASTRUCTURE FACILITIES TO O THER COMPANIES, THE SYSTEM PROVIDED BY THE ASSESSEE IS CALLED INFORMATI ON SYSTEM 11 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 RELATING TO INFRASTRUCTURE. THIS IS A BASIC APPARA TUS TO EARN INCOME IN THE ASSESSEES BUSINESS. THEREFORE, ACCORDING T O THE LD. D.R., THE EXPENDITURE INCURRED FOR DEVELOPMENT OF INFORMA TION SYSTEM GIVES ENDURING BENEFIT TO THE ASSESSEE, THEREFORE, THE ASSESSING OFFICER DISALLOWED THE ENTIRE PAYMENT OF ` 4,18,71,000/-. ACCORDING TO THE LD. D.R., ON APPEAL BY THE ASSESSEE, THE CIT (APPEALS) FOUND THAT THE ASSESSEE COULD NOT SUBSTANTIATE PAYMENT TO THE EXTENT OF ` 1,99,08,716/-, THEREFORE, HE CONFIRMED THE DISALLOW ANCE TO THE EXTENT OF ` 1,99,08,716/-. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMED ` 4,18,71,000/- TOWARDS INFORMATION SYSTEM INFRASTRUC TURE EXPENSES. THE ASSESSING OFFICER FOUND THAT THE EXP ENDITURE INCURRED BY THE ASSESSEE WAS IN THE CAPITAL FIELD. THE ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEE HAS NOT DEDUCT ED TAX AT SOURCE, THEREFORE, IT HAS TO BE DISALLOWED UNDER SECTION 40 (A)(IA) OF THE ACT ALSO. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) FOUND THAT THE EXPENDITURE TO THE EXTENT OF ` 1,99,08,716/- WAS NOT SUBSTANTIATED. FROM THE ORDER OF THE CIT(APPEALS) IT APPEARS THAT THE CIT(APPEALS) CALLED FOR REMAND REPORT. THE ASSESSEE HAS ALSO FI LED REJOINEDER. 12 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 THE ASSESSEE HAS FILED A COPY OF REMAND REPORT IN T HE PAPER-BOOK. IN THE REMAND REPORT, THE ASSESSING OFFICER FOUND T HAT THERE WAS NO EVIDENCE FOR TDS TO THE EXTENT OF ` 1,99,08,716/-. BASED UPON IT, THE CIT(APPEALS) RESTRICTED THE DISALLOWANCE TO ` 1,99,08,716/-. 18. THE MAIN REASON FOR DISALLOWANCE IS THAT THE EX PENDITURE INCURRED BY THE ASSESSEE IS IN THE CAPITAL FIELD. THIS ISSUE WAS NOT ADJUDICATED BY THE CIT(APPEALS). THEREFORE, THIS T RIBUNAL IS OF THE CONSIDERED OPINION THAT FIRST OF ALL IT HAS TO BE A SCERTAINED WHETHER THE EXPENDITURE INCURRED BY THE ASSESSEE IS IN THE CAPITAL FIELD OR NOT. EVEN IN THE REMAND REPORT, THE ASSESSING OFFI CER HAS NOT WHISPERED ANYTHING ABOUT THE NATURE OF EXPENDITURE. THEREFORE, THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFF ICER. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BEL OW ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE A SSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE AF RESH AND POINT OUT WHETHER THE EXPENDITURE INCURRED BY THE ASSESSE E FOR INFORMATION SYSTEM INFRASTRUCTURE IS CAPITAL EXPEND ITURE OR REVENUE EXPENDITURE AND THEREAFTER DECIDE THE SAME IN ACCOR DANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESS EE. 13 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 19. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF PROFESSIONAL CHARGES. 20. SH. VIKRAM VIJAYARAGHAVAN, THE LD.COUNSEL FOR T HE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED A S UM OF ` 3,37,27,000/- TOWARDS PROFESSIONAL CHARGES UNDER SE CTION 40(A)(IA) OF THE ACT. THE ASSESSEE, ACCORDING TO THE LD. COU NSEL, DEDUCTED TDS AND PAID THE SAME AS PER LAW, THEREFORE, THERE CANNOT BE ANY DISALLOWANCE. THE LD.COUNSEL FURTHER SUBMITTED THA T THE MATTER MAY BE VERIFIED BY THE ASSESSING OFFICER. 21. WE HAVE HEARD MS. S. VIJAYAPRABHA, THE LD. D.R. ALSO. THE ASSESSEE CLAIMED THAT IT DEDUCTED TAX AT SOURCE WHI LE MAKING PAYMENT OF ` 3,37,27,000/- TOWARDS PROFESSIONAL CHARGES. THEREFORE, THIS FACT NEEDS TO BE VERIFIED BY THE AS SESSEE. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BEL OW ARE SET ASIDE AND THE ISSUE OF DISALLOWANCE UNDER SECTION 40(A)(I A) IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASS ESSING OFFICER SHALL RE-EXAMINE THE ISSUE AFRESH IN ACCORDANCE WIT H LAW AND THEREAFTER DECIDE THE SAME AFTER GIVING A REASONABL E OPPORTUNITY TO THE ASSESSEE. 14 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 22. NOW COMING TO CROSS-OBJECTIONS IN C.O. NOS.98 & 99/MDS/2017. 23. THE ASSESSEE FILED CROSS-OBJECTIONS FOR ASSESSM ENT YEARS 2008-09 AND 2012-13 ONLY TO SUPPORT THE ORDERS OF T HE CIT(APPEALS). THEREFORE, THE CROSS-OBJECTIONS ARE INFRUCTUOUS AND ACCORDINGLY STAND DISMISSED. 24. IN THE RESULT, REVENUES APPEAL IN I.T.A. NOS.1 089 & 1090/MDS/2017 ARE DISMISSED, ASSESSEES APPEAL IN I .T.A. NO.1113/MDS/2017 IS ALLOWED FOR STATISTICAL PURPOSE S AND THE C.O. NOS.98 & 99/MDS/2017 ARE DISMISSED. ORDER PRONOUNCED ON 27 TH OCTOBER, 2017 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 27 TH OCTOBER, 2017. KRI. 15 I.T.A. NOS.1089 & 1090/MDS/17 I.T.A. NO.113/MDS/17 C.O. NOS.98 & 99/MDS/17 0 -389 :9)3 /COPY TO: 1. (23 /ASSESSEE 2. -.+, /RESPONDENT 3. 4 ;3 () /CIT(A)-3, CHENNAI-34 4. PRINCIPAL CIT-5, CHENNAI. 5. 9< -3 /DR 6. ( = /GF.