Visual Graphics Computing Services India Private Limited, CHENNAI V. DCIT, CHENNAI

ITA 1082/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7642 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 28-04-2014
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , ! ' # , $ %& ' [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD , JUDICIAL MEMBER ] ./ I.T.A.NO.1082/MDS/2014 / ASSESSMENT YEAR : 2005-06 M/S VISUAL GRAPHICS COMPUTING SERVICES INDIA PVT. LTD UNIT I-4, 10 TH FLOOR, ZENITH ASCENDAS INTERNATIONAL TECH PARK CSIR ROAD, TARAMANI CHENNAI 600 113 VS. THE DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE III(4) CHENNAI [PAN AAACV 3342 H ] ( () / APPELLANT) ( #*() /RESPONDENT) ./ I.T.A.NO.927/MDS/2014 / ASSESSMENT YEAR : 2005-06 THE DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE III(4) CHENNAI VS. M/S VISUAL GRAPHICS COMPUTING SERVICES INDIA PVT. LTD UNIT I-4, 10 TH FLOOR, ZENITH ASCENDAS INTERNATIONAL TECH PARK CSIR ROAD, TARAMANI CHENNAI 600 113 ( () / APPELLANT) ( #*() /RESPONDENT) ASSESSEE BY : SHRI R.VIJAYARAGHAVAN, ADVOCATE DEPARTMENT BY : DR. B. NISCHAL, JCIT / DATE OF HEARING : 24 - 03 - 2016 / DATE OF PRONOUNCEMENT : 30 - 0 3 - 2016 ITA NO. 1082 & 927/14 :- 2 -: + / O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AN D THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, CHENNAI, DATED 31.12.2013, FOR ASSES SMENT YEAR 2005-06. 2. THE FIRST ISSUE IN THE APPEAL OF THE ASSESSEE IS T HAT THE CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSI NG OFFICER IN DISALLOWING SOFTWARE EXPENDITURE AMOUNTING TO ` 16,69,612/- AND TREATING THE SAME AS CAPITAL EXPENDITURE ELIGIBLE F OR DEPRECIATION @ 60%. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 IN I.T.A.NO. 6 17/MDS/2011 DATED 29.5.2015, AT PARA 16 TO 18. A COPY OF THE O RDER IS PLACED ON RECORD. RESPECTFULLY FOLLOWING THE SAID ORDER, WE U PHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. 4. THE NEXT ISSUE IN THE APPEAL OF THE ASSESSEE IS T HAT THE CIT(A) ERRED IN UPHOLDING THE ORDER OF THE ASSESSIN G OFFICER IN SETTING OFF THE BROUGHT FORWARD BUSINESS LOSS AND UNABSORBE D DEPRECIATION ITA NO. 1082 & 927/14 :- 3 -: FROM PROFITS OF THE UNDERTAKING BEFORE ALLOWING DE DUCTION U/S 10A OF THE ACT. 5. THE LD. COUNSEL SUBMITS THAT THIS ISSUE IS ALSO DEC IDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN ASSESSEE S OWN CASE IN I.T.A.NO.617/MDS/2011 FOR ASSESSMENT YEAR 2006-07, DATED 29.5.2015. RESPECTFULLY FOLLOWING THE SAID DECISIO N, WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. 6. NOW COMING TO THE REVENUES APPEAL, THE ONLY ISSUE FOR ADJUDICATION IS THAT THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION AT 100% ON LEASE HOLD IMPROVE MENTS. 7. THE LD. COUNSEL SUBMITS THAT THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CA SE FOR ASSESSMENT YEARS 2004-05 AND 2006-07 IN I.T.A.NOS.697 & 698/MD S/2011 DATED 29.5.2015 BY DISMISSING THE REVENUES APPEALS. THE LD. COUNSEL SUBMITS THAT DURING THE ASSESSMENT YEAR 2005-06, TH E ASSESSEE CLAIMED ` 6,85,478/- AND ` 30,86,643/- BEING THE EXPENDITURE INCURRED TOWARDS IMPROVEMENT ON LEASEHOLD PREMISES AND CLAIMED AS REVENUE EXPENDITURE. SINCE THE FACTS AND CIRCUMST ANCES BEING IDENTICAL, HE SUBMITS THAT THE ABOVE ORDER OF THE T RIBUNAL MAY BE FOLLOWED. ITA NO. 1082 & 927/14 :- 4 -: 8. THE LD. DR SUBMITS THAT THE NATURE OF EXPENDITURE I NCURRED BY THE ASSESSEE WAS NOT EXAMINED BY THE ASSESSING OFFICER. NOWHERE IT IS MENTIONED IN THE ASSESSMENT ORDER THAT THE EX PENDITURE INCURRED IS IN THE NATURE OF REVENUE BUT IT WAS HELD TO BE C APITAL EXPENDITURE FOR THE REASON THAT THE ASSESSEE IS GETTING ENDURI NG BENEFIT BY INCURRING SUCH EXPENDITURE. EVEN THE CIT(A) HAS NOT EXAMINED THE NATURE OF EXPENDITURE. IT IS THE SUBMISSION OF THE ASSESSEE BEFORE THE CIT(A) THAT THE EXPENDITURE WAS INCURRED TOWARDS T EMPORARY ERECTIONS SUCH AS WOODEN STRUCTURES. THE LOWER AUTHORITIES H AVE NOT EXAMINED THE NATURE OF EXPENDITURE. THEREFORE, HE SUBMITS T HAT THE MATTER MAY BE RESTORED TO THE ASSESSING OFFICER FOR FRESH EXAM INATION. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE ASSESSING OFFICER, W HILE COMPLETING THE ASSESSMENT, DISALLOWED THE EXPENDITURE CLAIMED BY T HE ASSESSEE ON IMPROVEMENT OF LEASEHOLD BUILDINGS TREATING THE SAM E AS CAPITAL EXPENDITURE. ON A READING OF THE ORDERS OF THE AUT HORITIES BELOW, WE FIND THAT NOWHERE THE NATURE OF EXPENDITURE WAS EXA MINED. THUS, IN OUR CONSIDERED VIEW, THIS MATTER HAS TO BE RE-EXAMI NED AFRESH BY THE ASSESSING OFFICER. WE, THEREFORE, RESTORE THIS ISS UE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMINATION AND ADJUDIC ATION IN ACCORDANCE WITH LAW. ITA NO. 1082 & 927/14 :- 5 -: 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED AND THAT OF THE REVENUE IS ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) !' / ACCOUNTANT MEMBER ( $ % & '! ) (CHALLA NAGENDRA PRASAD) & !' / JUDICIAL MEMBER & / CHENNAI (! / DATED: 30 TH MARCH, 2016 RD ! ) ' *+ , + / COPY TO: 1 . -. / APPELLANT 4. / / CIT 2. '0-. / RESPONDENT 5. +1% ' 2 / DR 3. / () / CIT(A) 6. %4 5 / GF