Mr. DCIT, New Delhi V. M/s. Bharti Airtel Ltd., New Delhi

ITA 1338/DEL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4119 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-08-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: J C BHALLA
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion; Capital expenditure
• Section: 143(3); 115JB; 147; 148

Judgement Text

1 ITA NO. 1338/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUN AL DELHI BENCH: A NEW DELHI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.-1338/DEL/2013 (ASSESS MENT YEAR 2002-03) DCIT CIRCLE-2(1), ROOM NO. 398D C. R. BUILDING NEW DELHI (APPELLANT) VS BHARTI AIRTEL LTD. (FORMERLY BHARTI CELLULAR LTD.) NO.1, ARAVALI CRESCENT, NELSON MANDELA ROAD, VASANT KUNJ, PHASE-III NEW DELHI AAACB2894G (RESPONDENT) APPELLANT BY SH. S. K. JAIN, SR. DR RESPONDENT BY SH. J. C. BHALLA, CA ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 03/12/2012 PASSED BY CIT(A)-V, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS:- DATE OF HEARING 04.08.2016 DATE OF PRONOUNCEMENT 10.08.2016 2 ITA NO. 1338/DEL/2013 1. WHETHER THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN CANCELLING THE ASSESSMENT ORDER PASSED U/ 148/143(3 ) OF THE IT ACT IGNORING THE FACT THAT: (A) THE TIME HAS NOT ELAPSED AS PER SECTION 149(1) (B) NOT MORE THAN SIX YEARS HAVE ELAPSED FROM THE END OF TH E RELEVANT ASSESSMENT YEAR. (B) THE LD HAS IGNORED VARIOUS JUDICIAL PRONOUNCEME NTS RELIANCE BY THE A.O DISCUSSED IN THE ASSESSMENT ORD ER, WHEREIN IT WAS HELD THAT AUDIT REPORT REGARDING OMI SSION BY A.O-SUBSEQUENT CORRESPONDENCE WITH ASSESSEE AND REOPENING OF THE CASE U/S 147 OF THE IT ACT IS VALI D. 2. WHETHER THE LD HAS ERRED ON FACTS AND IN LAW IN DELETING THE DISALLOWANCE MADE ON ACCOUNT OF BILLING & SOFTW ARE EXPENSES AMOUNTING TO RS.54464480/- IGNORING THE FA CT THAT THE CASE WAS RE-VISITED AFTER CAG AUDIT OBJECT ION ON THE ISSUE OF BILLING & SOFTWARE EXPENSES BEING CAPI TAL IN NATURE. 3. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2002-03 DECLARING NIL INCOME WAS FILED ON 30/10/2002 AND THE SAME W AS ASSESSED AT RS.7,14,81,708/- UNDER NORMAL PROVISIONS OF INCOME TAX ACT AND AT BOOK PROFIT OF RS.105,53,29,112/- U/S 115JB OF THE INCOME-TAX ACT VIDE ORDER U/S 143(3) OF THE INCOME-TAX ACT, 1961 D ATED 31/3/2005. THE ASSESSING OFFICER OBSERVED FROM THE RECORD THAT AN AMOUNT OF RS.5,54,64,418/- DEBITED TO THE PROFIT AN D LOSS ACCOUNT AND ON ACCOUNT OF DEALING AND SOFTWARE EXPENSES UND ER THE HEAD ADMINISTRATIVE AND OTHER EXPENDITURE. THE ASSESSIN G OFFICER OBSERVED THAT THE SOFTWARE EXPENSES BEING CAPITAL I N NATURE SHOULD HAVE BEEN CAPITALIZED AFTER ALLOWING 60% DEPRECIATI ON SINCE THE AMOUNT OF RS.5,44,64,480/- ON ACCOUNT OF SOFTWARE E XPENSES HAS ESCAPED ASSESSMENT AND THIS ISSUE WAS NOT IN FOCUS DURING THE 3 ITA NO. 1338/DEL/2013 COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEA R 2002-03. NOTICE U/S 148 OF THE ACT WAS ISSUED ON 2/3/2009 AF TER DULY RECORDING THE REASONS THEREWITH U/S 147 OF THE ACT. NOTICE U/S 143(2) OF THE ACT WAS ALSO ISSUED. IN RESPONSE TO THE ABOVE NOTICE THE ASSESSEES REPRESENTATIVE ATTENDED THE REASSESS MENT PROCEEDINGS AND FILED REPLY DATED 17/11/2009 WHEREI N IT HAS BEEN STATED THAT ON THE SIMILAR ISSUE IN ASSESSEES CASE FOR ASSESSMENT YEAR 1997-98 THE ITAT VIDE ORDER IN ITA NO. 2437/DE L/2007 DATED 8/8/2008 HELD THESE EXPENDITURE REVENUE IN NATURE. THE AR CONTENDED BEFORE THE ASSESSING OFFICER OBSERVED THA T:- ..THE ISSUE HAS BEEN CONSIDERED BY THE LEARNED A.O WHILE FRAMING THE ASSESSMENT ORDER U/S 143(3) DATED 31/3/2005 AND THAT A MERE CHANGE OF OPINION BY THE LEARNED A.O IS NOT A VALID GROUND FOR REOPENING OF ASSESSMENT U/S 147/148 OF THE ACT. WE DRAW YOUR REFERENCE TO THE FULL BNECH DECISION O F THE HONBLE DELHI HIGH COURT REPORTED IN 256 ITR 1 AS CIT(A) VS. KELVINATOR OF INDIA LTD. THE AR OF THE ASSESSEE COMPANY ALSO RELIED UPON THE JUDGMENT IN THE CASE OF JINDAL PHOTO FILMS LTD. VS. DCIT 234 IT R 170 AND GARDEN SILK MILLS LTD. VS. DCIT (GUJRAT) 22 2 ITR 6. 4. AFTER CONSIDERING THE REPLY OF THE ASSESSEE COMP ANY, ASSESSING OFFICER HELD THAT THE ORDER MENTIONED BY THE ASSESS EE THAT OF TRIBUNAL WAS CHALLENGED BEFORE THE HON'BLE HIGH COU RT OF DELHI WHICH IS STILL PENDING FOR ADJUDICATION, AND THEREF ORE, TREATED THE SAID EXPENDITURE AS CAPITAL EXPENDITURE. 4 ITA NO. 1338/DEL/2013 5. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND HELD T HAT THERE IS CHANGE OF OPINION AND TIME BARRING OF SECTION 148 N OTICE. 6. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER RIGHTLY REJECTED THE CONTENTION OF THE ASSESSEE AS THE ORDE R PASSED BY ITAT IS CHALLENGED BEFORE THE HON'BLE HIGH COURT. WHEN THE QUERY WAS PUT UP AS TO WHETHER THE MATTER IS PENDING OR FINAL IZED, THE LD. DR WAS NOT IN A POSITION TO REPLY THE SAME. 7. THE LD. AR SUBMITTED THAT THE SAID ORDER IS PURE LY A CHANGE OF OPINION AS QUESTION NO. 13 SPECIFICALLY DISCUSSED A BOUT THE EXPENSES AND IT WAS PROPERLY REPLIED WITH DOCUMENTA RY PROVES AT THE RELEVANT ASSESSMENT PROCEEDING. THUS, THE CIT( A) IS RIGHTLY ARRIVED AT THE CONCLUSION. 8. WE HAVE PERUSED ALL THE RECORDS AND HEARD BOTH T HE PARTIES. IT IS CLEAR THAT THE ITAT IN ASSESSESES OWN CASE HAS CONFIRMED THE SAME EXPENSES AS REVENUE RECEIPT FOR THE EARLIER AS SESSMENT YEAR. QUESTION NO. 13 IN THE ORIGINAL ASSESSMENT PROCEEDI NGS HAS CLEARLY INDICATED EARLIER BEFORE RAISING IT IN THE RE-ASSES SMENT PROCEEDINGS. AT THE RELEVANT TIME DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE SUPPLIED THE DOCUMENTS AND THERE WAS NOTHI NG CONTRARY WHICH WAS SUPPLIED OR IN ADDITION THERETO DURING TH E RE-ASSESSMENT PROCEEDINGS. THEREFORE, IN OUR VIEW THIS IS CLEARL Y A CHANGE OF OPINION WHICH IS NOT PERMISSIBLE UNDER THE PROVISIO NS OF RE- ASSESSMENT. THE CIT(A) HAS RIGHTLY ALLOWED THE APP EAL OF THE ASSESSEE. 5 ITA NO. 1338/DEL/2013 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 11 TH OF AUGUST, 2016. SD/- SD/- (R.S. SYAL) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11/08/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 08.08.2016 PS 2. DRAFT PLACED BEFORE AUTHOR 08.08.2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 1 1 .08.2016 PS/PS 6 ITA NO. 1338/DEL/2013 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 1 1 .08.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.