The ACIT,(OSD)-I Circle-4, Ahmedabad V. Mastek Limited, Ahmedabad

ITA 1688/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1165 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-06-2016
• Assessment Year: 1996-1997
• Appeal Filed On: 22-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 143(3); 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO. 1688/AHD/2011 / ASSESSMENT YEAR : 1996-97 ACIT (OSD)-I, CIRCLE-4, AHMEDABAD VS M/S. MASTEK LTD., 804/805, PRESIDENT HOUSE, OPP CN VIDHYALAY, AMBAWADI, AHMEDABAD -6 PAN: AAACM 9908 Q / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI K MADHUSUDAN, SR.DR ASSESSEE BY : SHRI S N SOPARKAR, AR / DATE OF HEARING : 15/06/2016 / DATE OF PRONOUNCEMENT: 07/07/2016 / O R D E R PER ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, AHMEDABAD DATED 29.03.2000 FOR ASSESSMENT YEAR 1996-97. 2. FACTS AS CULLED OUT FROM THE MATERIAL ON RECOR D ARE AS UNDER:- 2.1. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF DEVELOPMENT OF SOFTWARE AND PACKAGED SOFTWARE PRODU CTS. IT FILED ITS RETURN OF INCOME FOR AY 1996-1997 ON 22.11.96 DECLARING TOTAL INCOME AT RS NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSES SMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 31.3.1999 AND THE TOTA L INCOME WAS DETERMINED AT RS.5,45,70,442/-. AGGRIEVED BY THE ORDER OF ASSESSI NG OFFICER (AO), ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 29.3.2000 (IN APPEAL NO.CIT(A) IV/WD.7(2)/85/99-2000) GRANTED PAR TIAL RELIEF TO THE ITA NO. 1688/AHD/2011 ACIT VS. MASTEK LTD AY : 1996-97 2 ASSESSEE. THEREAFTER AN APPLICATION WAS FILED BY TH E ASSESSEE U/S.154 BEFORE CIT(A) WHEREIN IT WAS CONTENDED THAT SOME OF THE GR OUNDS HAVE NOT BEEN ADJUDICATED BY CIT(A) WHILE DECIDING THE APPEAL AND IN RESPONSE TO WHICH CIT(A) VIDE ORDER DATED 10.4.2000 DECIDED THE GROUN DS IN FAVOUR OF THE ASSESSEE BY FOLLOWING ITATS DECISION IN ASSESSEE S OWN CASE FOR EARLIER YEARS. AGGRIEVED BY THE ORDER OF CIT(A) PASSED U/S 154 OF THE ACT, REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLO WING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE DISALLOWANCE OF RS.1,85,36,581/- BEING RESEARCH AND DEVELOPMENT EXPENDITURE, MADE BY THE AO, WITHOUT PROPERLY APPRECIATING THE FATS OF TH E CASE AND THE MATERIALS BROUGHT ON RECORD BY THE ASSESSING OFFICER . 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE BY WAY OF AN ORDER U/S 154 BASED ONLY ON THE FACT THAT THE ITAT HAD ALLOWED THE ASSESSEES APPEAL ON A SIMILAR ISSUE FOR A DIFF ERENT ASSESSMENT YEAR. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE DISALLOWANCE OF 1/6 TH OF THE ROYALTY EXPENDITURE OF RS.3,23,28,158/- WIT HOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL S BROUGHT ON RECORD BY THE ASSESSING OFFICER. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE DISALLOWANCE OF RS.97,798/- OUT OF MOTOR CAR EXPENSES, RS.35,690 /- OUT OF MOTOR CAR DEPRECIATION AND RS.87,000/- OUT OF TELEPHONE EXPEN SES, WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL S BROUGHT ON RECORD BY THE ASSESSING OFFICER. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE DECISION OF THE ASSESSING OFFICER. 6. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. C IT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EXTENT. 3. AT THE OUTSET, LD DR INFORMED THAT THERE IS DEL AY OF 4013 DAYS (ABOUT 11 YEARS) IN FILING THE APPEAL AND THAT THE DELAY BE C ONDONED AND THE APPEAL BE ADMITTED FOR HEARING AND IN SUPPORT OF WHICH HE SUB MITTED THAT A CONDONATION APPLICATION ALONGWITH THE AFFIDAVIT HAS BEEN FILED. LD AR ON THE OTHER HAND ITA NO. 1688/AHD/2011 ACIT VS. MASTEK LTD AY : 1996-97 3 SUBMITTED THAT THE CONDONATION APPLICATION FILED BY THE REVENUE BE DISMISSED ON ACCOUNT OF INORDINATE DELAY IN FILING THE APPEAL AND FURTHER SUBMITTED THAT THE APPEAL OF THE REVENUE ALSO NEEDS TO BE DISMISSE D IN VIEW OF THE FOLLOWING FACTS:- 3.1.1. ASSESSEE HAD FILED RETURN OF INCOME ON 22. 11.96. THE ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 31.3.1999. AGGRI EVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 29.3.2000 GRANTED PARTIAL RELIEF TO THE ASSESSEE. THEREAFTER AN APPLICATION WAS MADE U/S 154 BY THE ASSESSEE BEFORE CIT(A) WHEREIN IT WAS CO NTENDED THAT SOME OF THE GROUNDS HAVE NOT BEEN ADJUDICATED BY CIT(A). CIT(A) VIDE ORDER DATED 10.4.2000 PASSED U/S 154 OF THE ACT, DECIDED THE GR OUNDS IN FAVOUR OF THE ASSESSEE BY FOLLOWING ITATS DECISION IN ASSESSEE S OWN CASE FOR EARLIER YEARS (COPY OF THE ITAT ORDER IS PLACED AT PAGE 16 & 17 OF THE PAPER BOOK). AGAINST THE ORDER OF CIT(A), REVENUE CARRIED THE M ATTER BEFORE TRIBUNAL. TRIBUNAL VIDE CONSOLIDATED ORDER FOR AY 1996-97, 19 97-98 & 1998-99 (IN ITA NOS. 1530/AHD/2000, 1867/AHD/2001 & 368/AHD/200 1) ORDER DATED 7 TH AUGUST-2007 DISMISSED THE APPEALS OF REVENUE FOR AL L THE YEARS (COPY OF THE ORDER PLACED AT PAGE NOS.20 TO 58 OF THE PAPER BOOK ). THEREAFTER, A MISCELLANEOUS APPLICATION WAS MOVED BY ASSESSEE BEF ORE HONBLE TRIBUNAL, WHEREIN IT WAS CONTENDED THAT THE GROUND OF APPEAL RAISED BY THE REVENUE FOR GRANTING RELIEF BY CIT(A) TO ASSESSEE WITH RESPECT TO DISALLOWANCE OF RESEARCH AND DEVELOPMENT EXPENDITURE AS WELL AS ROY ALTY PAYMENT WAS FACTUALLY INCORRECT AND WAS NOT SUBJECT MATTER OF T HE IMPUGNED ORDER BUT WAS ADJUDICATED IN ORDER PASSED BY CIT(A) U/S 154 OF TH E ACT. IT WAS THEREFORE CONTENDED THAT THE ORDER OF TRIBUNAL BE RECTIFIED. THE HONBLE TRIBUNAL VIDE ORDER DATED 4.4.2008 AGREED WITH THE SUBMISSIONS OF THE ASSESSEE AND HELD THAT TRIBUNAL HAD MISTAKENLY DECIDED ON THE ISSUE O F RESEARCH AND DEVELOPMENT EXPENSES AND DISALLOWANCE OF ROYALTY EX PENSES AND HENCE THE GROUNDS OF REVENUE IN RESPECT OF R&D EXPENSES AND R OYALTY EXPENSES FOR AY ITA NO. 1688/AHD/2011 ACIT VS. MASTEK LTD AY : 1996-97 4 1996-97 WAS DISMISSED ON ACCOUNT OF IT NOT BEING AR ISING OUT OF CIT(A)S ORDER. THE COPY OF THE TRIBUNAL ORDER IS PLACED AT PAGE 59 TO 63 OF THE PAPER BOOK. AGGRIEVED BY THE ORDER OF TRIBUNAL DATED 4.4. 2008, REVENUE CARRIED THE MATTER BEFORE HONBLE HIGH COURT IN TAX APPEAL NO 1 979 OF 2009, WHEREIN IT WAS CONTENDED BY THE REVENUE THAT THE ALLOWING THE MISCELLANEOUS APPLICATION BY THE TRIBUNAL AMOUNTS TO REVIEW OF TH E ORDER WHICH IS NOT PERMISSIBLE AS PER LAW. THE HONBLE HIGH COURT VIDE ORDER DATED 19.4.2011 DISMISSED THE APPEAL OF THE REVENUE. LD AR SUBMITTE D THAT SINCE THE ISSUE HAS BEEN DECIDED ON MERITS, BY THE TRIBUNAL AND BY FOLL OWING EARLIER YEARS ORDER OF HONBLE ITAT, THE ISSUE STANDS CONCLUDED AND THE REFORE THE APPEAL OF REVENUE BE DISMISSED. LD.SR.DR, ON THE OTHER HAND, SUPPORTED THE ORDER OF REVENUE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. IN THE PRESENT CASE ON THE MERITS OF THE CASE, REVE NUE IS AGGRIEVED BY THE DELETING OF DISALLOWANCE OF R&D EXPENSES AND ROYALT Y EXPENSES. IN VIEW OF THE FACTUAL POSITION NARRATED HEREINABOVE BY THE LD AR AND WHICH HAS NOT BEEN CONTROVERTED BY REVENUE, WE FIND FORCE IN THE ARGUMENTS OF LD AR THAT THE ISSUE STANDS CONCLUDED BY THE DECISION OF HONB LE ITAT WHEREIN THE ORDER OF EARLIER YEAR IN ASSESSEES OWN CASE HAS BEEN FO LLOWED. IN VIEW OF THE SAME, THE GROUNDS RAISED BY REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 7 TH JULY, 2016 AT AHMEDABAD. SD/- SD/- R.P. TOLANI (JUDICIAL MEMBER) ANIL CHATURVEDI (ACCOUNTANT MEMBER) AHMEDABAD; DATED 07 /07/2016 .., . ../ T.C. NAIR, SR. PS ITA NO. 1688/AHD/2011 ACIT VS. MASTEK LTD AY : 1996-97 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - IV, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION- .. (WORD PROCESSED BY HONBLE AM IN HIS COMPUTER) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 22.6.16 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. - .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT ... 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .8.7.16 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER