CDK Global (India) Private Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-1(2), Hyderabad

ITA 1405/Hyd/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2460 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 30-09-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 13-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Question of law
• Section: 143(3); 201; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD. BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO. 1405 /HYD/20 19 (ASSESSMENT YEAR : 20 15 - 16 ) M/S. CDK GLOBAL (INDIA) PVT. LTD., HYDERABAD. PAN AAGCR 9879K ..APPELLANT. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(2), HYDERABAD. ..RESPONDENT. APPELLANT BY : SHRI H. SRINIVASU LU. (A.R.) RESPONDENT BY : SHRI ASHOK KARDAM. (D.R.) DATE OF HEARING : 30.09 . 2021. DATE OF PRONOUNCEMENT : 28 . 10 .2021. O R D E R PER SHRI S.S. GODARA, J.M. : THIS ASSESSEES APPEAL FOR ASST. YEAR 201 5 - 16 ARISES FROM THE COMMISSIONER OF INCOME TAX (APPEALS) - 1, HYDERABAD S ORDER DT. 12.07.2019 PASSED IN CASE NO. 10072/2018 - 19/DCIT 1(2)/CIT(A) - 1/HYD / 2019 - 20 IN 2 ITA NO. 1405/HYD/2019 PROCEEDINGS UNDER SECTION 143(3) OF INCOME TAX ACT, 1961 (THE ACT). HEARD BOTH THE PAR TIES . C ASE FILE PERUSED. 2. COMING TO THE ASSESSEE'S FIRST AND FOREMOST SIX SUBSTANTIVE GROUNDS SEEKING TO CHALLENGE CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION DISALLOWANCE DEPRECIATION ON GOODWILL INVOLVING AN AMOUNT OF RS.202,51,54,355 BEING IN THE NATURE OF AN INTERNALLY GENERATED ASSET , L EARNED COUNSEL HAS FILED BEFORE US A PETITION DT.28.09.2021 PLACING ITS UNILATERALLY ADVANCE PRICING AGREEMENT U/S. 92CC OF THE ACT DT.18.08.2021 EXCLUDING IT FROM OPERATING EXPENSES UNDER CLAUSE (1)(B)(II) THEREOF. 3. THE REVENUE, ON THE OTHER HAND, STA TES THAT THE FOREGOING CLINCHING FACT REQUIRE THE ASSESSING OFFICER AFRESH FACTUAL VERIFICATION. WE, THEREFORE, ACCEPT THE ASSESSEE'S FOREGOING PETITION QUA IN THE INSTANT FIRST AND FOREMOST SUBSTANTIVE GROUND AND RESTORE THE SAME BACK TO THE ASSESSING OF FICER FOR HIS NECESSARY VERIFICATION OF THE UNILATERAL ADVANCE PRICING AGREEMENT AND THE 3 ITA NO. 1405/HYD/2019 CORRESPONDING TERMS INCORPORATED THEREIN. THE ASSESSEE'S FORMER SIX SUBSTANTIVE GROUNDS RAISING THE INSTANT ISSUE ARE ACCEPTED IN ABOVE TERMS. 4. NEXT COMES THE A SSESSEE'S SEVENTH SUBSTANTIVE GROUND SEEKING TO DELETE U/S. 234C INTEREST OF RS.10,24,079 ON THE GROUND THAT IT HAD STARTED ITS BUSINESS ACTIVITY AFTER GETTING INCORPORATED IN INDIA ON 8.8.2014 FOLLOWED BY THE COMMENCEMENT OF BUSINESS AS ON 25.9.2014 I.E. BEYOND THE FORMER TWO QUARTERS OF FINANCIAL YEAR 2014 - 15. LEARNED COUNSEL VEHEMENTLY CONTENDED THAT THE ASSESSEE COULD NOT BE TERMED AS HAVING DEFAULTED FOR ADVANCE TAX IN THE SE FORMER TWIN QUARTERS ONCE IT HAD NOT DERIVED ANY BUSINESS INCOME SO AS TO CRE ATE LIABILITY OF ADVANCE TAX. THE FACTS ALSO REMAINS THAT NEITHER THE ASSESSING OFFICER NOR THE CIT(A) HAVE DEALT WITH THE INSTANT FACTUAL POSITION IN THEIR RESPECTIVE ORDERS. WE THEREFORE ACCEPT THE INSTANT SIGNIFICANT ISSUE AS WELL FOR STATISTICAL PURP OSES AND LEAVE IT OPEN FOR THE ASSESSING OFFICER NOT TO INCLUDE THE ASSESSEE'S ADVANCE TAX UPTO 25.09.2014 AS PER LAW. ORDERED ACCORDINGLY. 4 ITA NO. 1405/HYD/2019 5. LASTLY COMES THE ASSESSEE'S PETITION DT.06.10.2020 SEEKING TO CLAIM EDUCATION CESS LIABILITY OF RS.5,77,56 5 AS AN ALLOWABLE DEDUCTION BY WAY OF ADDITIONAL GROUND . CASE LAW ALLCARGO GLOBAL LOGISTICS LTD. VS. DCIT 137 ITD 2 1 7 (BOM) (SB) AFTER CONSIDERING NATIONAL THERMAL POWRE CO. LTD. VS. CIT 229 ITR 383 (SC) HOLDS THAT WE CAN VERY WELL ENTERTAIN SUCH A PURE QUESTION OF LAW SO AS TO DETERMINE CORRECT TAX LIABILITY OF AN ASSESSEE PROVIDED ALL FACTS RELEVANT THERETO ARE ALREADY ON RECORD. WE THEREFORE REJECT REVENUES TECHNICAL ASPECTS AGAINST THE ASSESSEE'S FOREGOING PETITION IN VERY TERMS. 6. COMING N EXT TO MERITS OF EDUCATION CESS DISALLOWANCE, CASE LAW SESA GOA LTD. VS. JCIT (2020) 117 TAXMANN.COM 96 (BOM), CHAMBAL FERTILISERS AND CHEMICALS LTD. VS. CIT ITA 52/2018 (RAJ) HOLD SUCH AN EDUCATION CESS AS AN ALLOWANCE DEDUCTION IN LIGHT OF CBDT CUIRCUL AR DT.18.05.1967. WE THEREFORE ACCEPT ADDITIONAL SUBSTANTIVE GROUND AND DIRECT THE ASSESSING OFFICER TO TREAT THE IMPUGNED EDUCATION CESS AS AN ALLOWABLE EXPENDITURE TO BE FOLLOWED BY HIS CONSEQUENTIAL COMPUTATION AS PER LAW . 5 ITA NO. 1405/HYD/2019 NO OTHER GROUND HAS BE EN PRESSED BEFORE US. 7 . THIS ASSESSEE'S APPEAL IS PARTLY ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH OCT . , 2021. SD/ - SD/ - (A.MOHAN ALANKAMONY) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 2 8 . 10 .2021. * REDDY GP COPY TO : 1. M/S. CDK GLOBAL (INDIA) PVT. LTD., 401 & 501, BUILDING 12B,RAHEJA MINDSPACE, HITEC CITY, MADHAPUR, HYDERABAD - 500 081 2. DCIT, CIRCLE 1(2), HYDERABAD. 3. PR. C I T - 1 , HYDERABAD. 4. CIT(APPEALS) - 1, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.