Expenditures on dies/moulds, software, lease premiums revenue in nature sans enduring benefit; s.14A disallowance invalid without AO's recorded dissatisfaction on assessee's suo motu workings; bad debt provisions, foreign taxes allowable if substantiated.

ORDER 

Per Arun Khodpia, AM:

The captioned appeal is filed by the revenue against the order of Commissioner of Income Tax (Appeals)/ National Faceless Appeal Centre (NFAC), Delhi [in short “Ld. CIT(A)”] dated 13.03.2025, relevant to Assessment Year (AY) 2020-21. The impugned appellate order was passed in appeal against the order u/s 143(3) of the Income Tax Act, 1961 (“the Act”) dated 29.09.2023, by the Assessment Unit, Income Tax Department. The grounds of appeal raised by the revenue are as under:

i) “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that expenditures on dies and moulds are revenue expenditure and not capital expenditure, ignoring the fact that dies & moulds deliver benefits of enduring nature and therefore is in the nature of capital expenditure.

ii) Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the deduction in respect of Interest expenditure in relation to the exempt income earned from investment in shares/tax free income u/s 14A of the Act?

iii) "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the claim of deduction in respect of proportionate premium paid on leasehold land without appreciating the fact that the same constitutes capital expenditure?

iv) "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was erred in deleting the deduction in respect of software expenses without appreciating the fact that the same constitutes capital in nature?

v) Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was erred in in allowing the deduction of Rs. 22,01, 18,580/- claimed by the assessee during the course of assessment proceedings as "Provision for Bad and Doubtful Debts and Advances", despite the same not having been claimed in the original return of income and in the absence of actual write-off of individual debtor balances as mandated under Section 36(1)(vii) of the Income-tax Act, 1961?

vi) "Whether, on the facts and in the circumstances of the case and in law, the Ld. was erred in directing the Assessing Officer to verify and allow the claim of deduction c Rs. 15,17,027/- towards income tax paid in Chile, despite the fact that the said claim was not made by the assessee in the original return of income or by way of a revised return, and was raised only during the course of assessment proceedings.”

2. Briefly stated, the assessee company is engaged in the business of development, manufacturing and distribution of automobiles such as motorcycles, commercial vehicles etc., and part thereof. Assessee company sells its products in India as well as in various other global markets. The original return was filed by the assessee on 15.02.2021 declaring total income of Rs.61,18,37,14,340/-. The case of the assessee was selected for scrutiny under CASS on account of various issues as described in the assessment order. During the assessment proceedings, certain issues were raised by the Assessing Officer (AO), which were responded by the assessee, however, the ld. AO was not convinced with the contentions and explanations furnished by the assessee. Therefore, he made certain additions and enhanced the assessed income of assessee to Rs.63,60,07,60,742/-. Ld. AO recomputed the assessed income of assessee with the variations made, the same is extracted as un