HBL GLOBAL P. LTD, MUMBAI V. ASST CIT RG 6(3), MUMBAI

ITA 1673/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8045 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 30-09-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 28-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK A PERAMPURNA
• Keywords: Depreciation; Opportunity of being heard; Capital expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BE NCH, MUMBAI ! , ' #$ , % & ' , #$ ) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I .T.A. NO. 1673/MUM/2011 ( * * * * / ASSESSMENT YEAR : 2004-05 M/S. HBL GLOBAL PVT. LTD., TRADE WORLD A-WING, BASEMENT, KAMALA MILLS COMPOUND, S.B. MARG, LOWER PAREL, MUMBAI-400 013 / VS. THE ACIT, RANGE 6(3), MUMBAI $+ ' ./ ,- ./ PAN/GIR NO. : AABCH 0171P ( +. / APPELLANT ) .. ( /0+. / RESPONDENT ) +. 1 / APPELLANT BY: SHRI AJAY THAKORE SHRI CHANDRASHEKHAR /0+. 2 1 / RESPONDENT BY: SHRI VIVEK A PERAMPURNA 2 %3' / DATE OF HEARING : 30.09.2014 45* 2 %3' / DATE OF PRONOUNCEMENT :10.10.2014 #& / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF THE LD. CIT(A)-12, MUMBAI DT.11.11.2010 PERTAINING TO A .Y.2004-05. ITA NO. 1673/M/2011 2 2. THE ASSESSEE HAS RAISED 5 SUBSTANTIVE GROUNDS OF APPEAL. GROUND NO. 1 RELATES TO THE UPHOLDING OF THE ADDITION OF R S. 62,900/- ON ACCOUNT OF SOFTWARE EXPENSES BY CONSIDERING IT AS A CAPITAL EXPENDITURE. 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLA IMED SOFTWARE EXPENDITURE AMOUNTING TO RS. 82,471/-. THE AO WAS OF THE OPINION THAT THE EXPENDITURE IS OF CAPITAL IN NATURE. THE AO AL SO NOTICED THAT THE EXPENDITURE ON CUSTOMIZATION OF PAYROLL SOFTWARE AM OUNTING TO RS. 50,000/-, THE BILL IS NOT IN THE NAME OF THE ASSESS EE. ACCORDINGLY, HE DID NOT ALLOW ANY DEPRECIATION ON RS. 50,000/- AND ON T HE BALANCE DEPRECIATION @ 60% WAS ALLOWED. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE INVOICE RELATING TO THE PAYROLL SOFTWARE WHICH IS PLACED AT PAGE-41 OF THE PAPER BOOK AND POINTED OUT THAT ERRONEOUSLY THE VENDOR HAS MENTIONED M/S. HBL GLOBAL LTD INSTEAD OF M/S. HBL G LOBAL PVT. LTD. IN SUPPORT, CERTIFICATE FROM THE VENDOR IS ALSO PLACED ON RECORD AT PAGE-5 OF THE PAPER BOOK. 6. WE HAVE CAREFULLY PERUSED THE DOCUMENTS RELIED U PON BY THE ASSESSEE. WE FIND THAT THE DISALLOWANCE IS ONLY BE CAUSE THE BILL DOES NOT MENTION THE CORRECT NAME OF THE ASSESSEE. IN THE I NTEREST OF JUSTICE, WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO. THE AO IS DIRECTED TO VERIFY THE CERTIFICATE FURNISHED BY THE VENDOR AND IF FOUND CO RRECT, ALLOW DEPRECIATION AS PER THE PROVISIONS OF THE LAW. GRO UND NO. 1 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 1673/M/2011 3 7. GROUND NO. 2 HAS NOT BEEN PRESSED AND IS ACCORDI NGLY DISMISSED AS NOT PRESSED. 8. GROUND NO. 3 RELATES TO THE UPHOLDING OF THE ADD ITION OF RS. 1,94,44,765/- ON ACCOUNT OF CASH SUBVENTION EXPENSE S DEBITED TO PROFIT & LOSS ACCOUNT. 8.1. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSE E STATED THAT THE ISSUE INVOLVED IN THIS GROUND HAS BEEN DECIDED BY THE TRI BUNAL IN A.Y. 2003-04 IN ASSESSEES OWN CASE. 8.2. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CON CEDED TO THIS. 8.3. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AU THORITIES BELOW. THE LD. CIT(A) HAS CONSIDERED THIS ISSUE AT PARA-8 OF H IS ORDER AND AT PARA- 8.1HAS OBSERVED THAT AN IDENTICAL ISSUE WAS CONSIDE RED IN ASSESSMENT YEAR 2003-04 AND FOLLOWING THE FINDINGS GIVEN IN A.Y. 20 03-04, THE ADDITION WAS CONFIRMED. THE TRIBUNAL HAS CONSIDERED THIS IS SUE IN A.Y. 2003- 04 IN ITA NO. 1687/M/07 AND AT PARA-8 OF ITS ORDER DELETED THE DISALLOWANCE ON ACCOUNT OF CASH SUBVENTION EXPENSES . AS NO DISTINGUISHING FACTS HAVE BEEN BROUGHT BEFORE US, R ESPECTFULLY FOLLOWING THE FINDINGS OF THE CO ORDINATE BENCH IN A.Y. 2003- 04, THE ADDITION ON ACCOUNT OF CASH SUBVENTION EXPENSES ARE DIRECTED TO BE DELETED. THIS GROUND OF THE ASSESSEE IS ALLOWED. 9. GROUND NO. 4 RELATES TO THE ADDITION OF RS. 31,6 0,984/- ON ACCOUNT OF TDS INSTEAD OF RECONCILING THE SAME WITH THE INC OME RECEIVED. 9.1. DURING THE COURSE OF THE ASSESSMENT PROCEEDING S, THE ASSESSEE STATED THAT AN AMOUNT OF RS. 18,30,684/- SHOWN AS I NCOME FROM HDFC ITA NO. 1673/M/2011 4 HAS BEEN REVERSED AS THE SAID INCOME HAS BECOME BAD . THE AO FOUND THAT THERE IS NO SEPARATE CLAIM OF BAD DEBT AND THE RE IS NO EVIDENCE THAT THE INCOME HAS BEEN OFFERED IN EARLIER YEARS. 9.2. THE NEXT ITEM RELATES TO CONTEST CLAIM OF RS. 52,450/- AND THE AMOUNT WRONGLY SHOWN AT RS. 3,150/-. AS NO DETAILS WERE FILED, THE AO ADDED RS. 55,600/-. IT IS THE CLAIM OF THE ASSESSE E THAT HDFC SECURITIES LTD. HAS WRONGLY SHOWN THE CONTEST CLAIM OF RS. 52, 450/- AS PAID TO THE ASSESSEE ON WHICH TDS IS MADE AT RS. 3,150/-. 9.3. THE NEXT ITEM IS COMMISSION OF RS. 5,47,789/-. THE CLAIM OF THE ASSESSEE IS THAT IT HAS BEEN TAXED IN THE EARLIER Y EAR THOUGH TDS CERTIFICATE IN RESPECT OF THE SAME WAS RECEIVED DURING THE YEAR . 9.4. THE NEXT ITEM IS INCOME OF RS. 7,26,851/- RECE IVED FROM HDFC CHUBB GIC. IT IS THE CLAIM OF THE ASSESSEE THAT IN COME HAS BEEN TAXED IN EARLIER YEAR THOUGH THE TDS CERTIFICATE WAS RECEIVE D DURING THE YEAR. 9.5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ALL THE FOUR ISSU ES REFERRED HEREINABOVE NEED TO BE VERIFIED BY THE AO AFRESH. WE, THEREFOR E, RESTORE THESE FOUR ITEMS TO THE FILE OF THE AO. THE AO IS DIRECTED TO EXAMINE WHETHER THESE ITEMS HAVE ALREADY BEEN TAXED IN EARLIER YEARS. FU RTHER, THE AO IS DIRECTED TO VERIFY WHETHER INCOME OF RS. 18,30,684/ - WAS TAXED IN EARLIER YEAR WHICH HAS BEEN CLAIMED AS A LOSS DURING THE YE AR UNDER CONSIDERATION. THE AO IS FURTHER DIRECTED TO VERIF Y THE EXPENDITURE OF CONTEST CLAIM AND WHETHER THE SAME IS REIMBURSEMENT OF EXPENSES AFTER GIVING SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO. 4 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 1673/M/2011 5 10. GROUND NO. 5 HAS NOT BEEN PRESSED AND IS ACCORD INGLY DISMISSED AS NOT PRESSED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED IN PART FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH OCTOBER, 2014 SD/- SD/- (AMIT SHUKLA ) (N.K. BILLAIYA) #$ / JUDICIAL MEMBER ' #$ / ACCOUNTANT MEMBER MUMBAI; 6# DATED : 10 TH OCTOBER, 2014 . . ./ RJ , SR. PS #& #& #& #& 2 22 2 /% /% /% /% 7*% 7*% 7*% 7*% / COPY OF THE ORDER FORWARDED TO : 1. +. / THE APPELLANT 2. /0+. / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 9: /% , , / DR, ITAT, MUMBAI 6. :; < / GUARD FILE. #& #& #& #& / BY ORDER, 0% /% //TRUE COPY// = == = / > > > > , , , , (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI