ACIT, Ludhiana V. M/s Abhishek Industries Limited, Ludhiana

ITA 1173/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73533 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 18-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1173 /CHD/2013 ASSESSMENT YEAR : 2000-01 THE A.C.I.T., VS. M/S ABHISHEK INDUSTRIES LIM ITED, CIRCLE I, 84, INDUSTRIAL AREA A, LUDHIANA. LUDHIANA PAN: AABCA4139J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA, DR RESPONDENT BY : SHRI ASHWANI KUMAR DATE OF HEARING : 19.02.2014 DATE OF PRONOUNCEMENT : 25.02.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, LUDHIANA D ATED 17.10.2013 RELATING TO ASSESSMENT YEAR 2000-01 AGAINST THE ORD ER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER: 1 THAT THE LD. CIT(A) HAS ERRED IN LAW AND FACTS I N DELETING THE ADDITION OF RS.15,96,000/- MADE BY THE AO IN RESPE CT OF SOFTWARE EXPENSES WHICH WERE RIGHTLY TREATED AS CAP ITAL EXPENDITURE AS AGAINST REVENUE EXPENDITURE CLAIMED BY THE ASSESSEE. 2. THAT THE ORDER OF THE LD.CIT(A) BE SET-ASIDE AND THAT OF A.O. BE RESTORED AS THE HON'BLE ITAT HAS ALREADY SET-ASI DE THE SAME ISSUE IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009-10. 3. THE ONLY ISSUE RAISED IN THE APPEAL IS AGAINST T HE DELETION OF ADDITION OF RS.15,96,000/-. THE BRIEF FACTS RELATI NG TO THE ISSUE ARE THAT 2 DURING THE YEAR THE ASSESSEE HAD CLAIMED COMPUTER SOFTWARE EXPENSES AT RS.29,52,000/-. THE ASSESSING OFFICER HELD THAT TH E EXPENDITURE INCURRED BY THE ASSESSEE WAS OF ENDURING NATURE AND HENCE WAS CAPITAL EXPENDITURE. THE ASSESSING OFFICER, HOWEVER, ALLOW ED DEPRECIATION @ 60% ON THE SAID EXPENDITURE AND MADE ADDITION OF RS .15,96,000/-. THE CIT (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE. THE TRIBUNAL IN THE APPEAL FILED BY THE ASSESSEE IN ITA NO.245/CHD/2006 VIDE ORDER DATED 24.8.2007 RESTORED THE ISSUE BACK TO THE FILE OF TH E CIT (APPEALS) TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. TH E CIT (APPEALS) IN THE SECOND ROUND OF PROCEEDINGS CONSIDERED THE SUBM ISSIONS OF THE ASSESSEE AND OBSERVED THAT IT IS APPARENT THAT THE PAYMENTS WERE MADE FOR SERVICES RENDERED BY TICL TO THE APPELLANT COMP ANY IN ACCORDANCE WITH THE AGREEMENT SIGNED WITH THEM. THE APPELLANT DID NOT GET ANY ENDURING BENEFIT NOR WAS ANY CAPITAL ASSET ACQUIRED BY THE APPELLANT . THE CIT (APPEALS) APPLYING THE RATIO LAID DOWN IN M /S HERO CYCLES LTD. FOR ASSESSMENT YEAR 1998-99 IN ITA NO.313/CHD/2013, VIDE ORDER DATED 10.7.2013 HELD THE EXPENDITURE CLAIMED BY THE ASSES SEE TO BE REVENUE EXPENDITURE. 4. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT (APPEALS) AND HENCE THE PRESENT APPEAL. 5. SHRI AKHILESH GUPTA, DR PUT IN APPEARANCE ON BEH ALF OF THE REVENUE AND SHRI ASHWANI KUMAR APPEARED FOR THE ASS ESSEE AND PUT FORWARD THEIR CONTENTIONS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE YEAR UNDER CONSIDERATION BEFORE US IS ASSESSMENT YE AR 2000-01 AND THE CLAIM OF THE ASSESSEE IN THE CAPTIONED APPEAL IS IN RELATION TO THE EXPENDITURE INCURRED ON COMPUTER SOFTWARE TOTALING RS.29,52,000/-. THE 3 ASSESSEE HAD CLAIMED THE SAID EXPENDITURE TO BE REV ENUE IN NATURE, WHICH WAS HELD TO BE CAPITAL IN NATURE BY THE ASSESSING O FFICER AND DEPRECIATION @ 60% WAS ALLOWED ON THE SAME AND ADDI TION OF RS.15,96,000/- WAS MADE IN THE HANDS OF THE ASSESSE E. THE EXPENDITURE INCURRED BY THE ASSESSEE IS ON THE ACQUISITION IN T HE FIELD OF COMPUTER SOFTWARE WHERE SERVICES WERE PROVIDED BY TICL IN AC CORDANCE WITH AN AGREEMENT SIGNED BETWEEN THE ASSESSEE AND TICL. I N THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE UPHOLD THE ORDER OF THE CIT (APPEALS) IN ALLOWING THE CLAIM OF THE ASSESSEE ON ACCOUNT OF CO MPUTER SOFTWARE AS DURING THE YEAR UNDER CONSIDERATION THE DEFINITION OF COMPUTER HAD NOT BEEN ENLARGED TO INCLUDE COMPUTER SOFTWARE. UPHOLD ING THE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUNDS OF APPEAL RAIS ED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF FEBRUARY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25 TH FEBRUARY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 4