BMC Software India Pvt.Ltd,(as Successor Of KineticGlue Online Communities Pvt.Ltd), Pune V. Deputy Commissioner of Income-tax, Circle - 1(1), Pune

ITA 1722/PUN/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2953 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 14-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Capital asset; Depreciation; Question of law; Capital Gains
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO. 1 722 /PUN/20 1 7 / ASSESSMENT YEAR : 20 1 4 - 1 5 BMC SOFTWARE INDIA PVT. LTD. (AS SUCCESSOR OF KINETICGLUE ONLINE COMMUNITIES PVT. LTD.) TOWER B, 9 TH FLOOR, BUSINESS BAY WING, AIRPORT ROAD, YERWADA, PUNE 411006 PAN: A ABCB6110E ....... / APPELLANT / V/S. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PUNE / RESPONDENT A SSESSEE BY : SHRI FARROKH V. IRANI REVENUE BY : SHRI S.P. WALIMBE / DATE OF HEARING : 1 2 .0 3 .2020 / DATE OF PRONOUNCEMENT : 12 .0 3 .2020 / ORDER PER D. KARUNAKARA RAO , A M : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , PUNE , DATED 30 . 0 5 .201 7 FOR THE ASSESSMENT YEAR 20 1 4 - 1 5 . 2 ITA NO. 1722 /PUN/20 1 7 BMC SOFTWARE INDIA PVT. LTD. 2. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND SALES AND SUPPORT SERVICES. THE ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 28.11.2014 DECLARING TOTAL INCOME OF RS.9,18,09,050/ - . THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT ORDER WAS PASSED AT THE TOTAL INCOME OF RS. 9,18,09,050/ - IN WH ICH SHORT TERM CAPITAL GAIN COMPUTED U/S 50 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS TAXED AT 30% AS AGAINST 20% CLAIMED BY THE ASSESSEE. 3. IN THE FIRST APPELLATE PROCEEDINGS, THE LD. CIT(A) , AFTER CONSIDERING THE SUBMISSION S MADE BY THE ASSESSEE, UPHELD THE ORDER OF ASSESSING OFFICER. 4 . AGGRIEVED WITH THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A): 1 . GROUND NO.1 APPLICATION OF HIGHER TAX RATE ON CAPITAL GAINS ERRED IN CON SIDERING TAX RATE AT 30% INSTEAD OF 20% ON LONG TERM CAPITAL GAINS EARNED BY THE APPELLANT ON SALE OF INTANGIBLE PROPERTY. 2 . GROUND NO.2 PASSING ASSESSMENT ORDER O N NON - EXISTENT PERMANENT ACCOUNT NUMBER (PAN) ERRED IN PASSING THE ASSESSMENT ORDER WITH PAN OF NON - EXISTENT PREDECESSOR ENTITY I.E. KINETICGLUE ONLINE COMMUNITIES PRIVATE LIMITED. 3 . GROUND NO.3 LEVY OF INTEREST UNDER SECTION 234B AND 234C ERRED ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW IN LEVYING INTEREST UNDER SECTION 234B AND SECTION 234C OF THE ACT. 5. AT THE OUTSET, LD. COUNSEL SUBMITTED THAT THE GROUND 2 IS NOT PRESSED. ACCORDINGLY, THE SAME IS DISMISSED AS NOT PRESSED. REFERRING TO GROUND 3, LD. COUNSEL MENTIONED THAT SO FAR AS ISSUE RELATING TO THE LEVY OF INTEREST U/S 3 ITA NO. 1722 /PUN/20 1 7 BMC SOFTWARE INDIA PVT. LTD. 234B OF THE ACT IS CONCERNED, HE MENTIONED THAT THE MISTAKE STANDS NOW RECTIFIED BY THE ASSESSING OFFICER. THEREFORE, NO GRIEVANCE IS BEFORE THE TRIBUNAL. ACCORDINGLY, RELEVANT PART OF THE GROUND IS DISMISSED. REFERRING TO OTHER PART OF GROUND 3 RELATING TO THE LEVY OF INTEREST U/S 234C OF THE ACT, LD. COUNSEL SEEKS DIRECTION FOR EARLY DISPOSAL OF THE SAME. 6. THE LD. DR ON THE OTHER HAND, RELIED ON THE OR DERS OF ASSESSING OFFICER AND CIT(A). 7. AFTER HEARING BOTH THE SIDES ON THIS ISSUE, WE DIRECT THE ASSESSING OFFICER TO TAKE ACTION ON THE RECTIFICATION APPLICATION AND DISPOSE OF THE MATTER WITHIN THREE (3) MONTHS FROM THE DATE OF RECEIPT OF THIS ORDER. 8. THAT LEAVES GROUND 1 FOR ADJUDICATION BEFORE THE TRIBUNAL . IN THIS REGARD, LD. COUNSEL SUBMITTED THAT THE SAID GROUND RELATES TO THE APPLICABLE RATE OF TAXATION TO LONG TERM CAPITAL ASSET WHICH IS BUSINESS ASSET, WHERE DEPRECIATION IS CLAIMED. LD. CO UNSEL SUBMITTED THAT SO LONG AS THE ASSET INVOLVED IS HELD BY THE ASSESSEE FOR MORE THAN 3 YEARS, THAT IS LONG TERM CAPITAL ASSET AND IN THAT CASE, THE APPLICABLE RATE OF TAXATION IS 20% AND NOT 30% AS APPLIED BY THE AO . IN THIS REGARD, LD. COUNSEL BROUGH T OUR ATTENTION TO THE DECISION OF TRIBUNAL IN THE CASE OF M/S. VELVET HOLDINGS PVT. LTD. VS. ACIT IN ITA NO.6810/MUM / 2008 , FOR A.Y. 2004 - 05 , ORDER DATED 26.06.2014 ( PAGE 9 OF THE PAPER BOOK ) , WHICH IS RELEVANT IN THIS REGARD. THE FACT THAT THE SAID DECISION WAS TAKEN BY THE TRIBUNAL IN THE LIGHT OF ANOTHER DECISION IN THE CASE OF M/S. SMIT A CONDUCTORS LTD. VS. DCIT IN ITA NO.4004/MUM/2011, FOR A.Y. 2006 - 07, ORDER DATED 17.09.2013 AND P ARA 4 OF THE SAID DECISION IS 4 ITA NO. 1722 /PUN/20 1 7 BMC SOFTWARE INDIA PVT. LTD. RELEVANT (PAGE 10 OF PAPER BOOK). THE RELEVANT LINES WERE READ OUT IN THE COURT. MENTIONING THAT THE SAID DECISION IS APPROVED BY THE HONBLE JURISDICTIONAL HIGH COURT, LD. COUNSEL BROUGHT OUR ATTENTION TO PAGE 12 OF PAPER BOOK AND DEMO NSTRATED THAT THE WAY THE REVENUES APPEAL WAS DISMISSED BY THE HONBLE HIGH COURT IN I NCOME TAX APPEAL NO.165 OF 2015 IN THE CASE OF M/S. VELVET HOLDINGS PVT. LTD. VIDE ORDER DATED 10.07.2017. THE RELEVANT PARA 1 OF THE SAID JUDGMENT OF HONBLE HIGH COUR T IS EXTRACTED AS UNDER: - 1. HEARD THE LEARNED COUNSEL FOR THE APPELLANT AND THE LEARNED COUNSEL FOR THE RESPONDENT. IT IS FAIRLY CONCEDED THAT THE TRIBUNAL HAS RELIED UPON THE JUDGMENT OF THIS COURT IN CASE OF CIT VS. ACE BUILDERS PVT. LTD. REPORTED IN [2006] 281 ITR 210 . THE SAID JUDGMENT HAS BEEN APPROVED BY THE APEX COURT IN THE CASE OF CIT, PANJI VS. V.S. DEMPO COMPANY LTD. REPORTED IN [2016] 74 TAXMANN.COM 15 (SC). AS THE ISSUE RAISED IN THE PRESENT APPEAL IS ALREADY COVERED BY THE ABOVE REFERRED JUDGMENT, NO SUBSTANTIAL QUESTION OF LAW ARISES. 9. AFTER HEARING BOTH THE SIDES ON THIS LEGAL ISSUE, WE FIND THAT THE ISSUE RAISED IN THE PRESENT GROUND HAS ALREADY BEEN SETTLED BY THE HONBLE SUPREME COURT (SUPRA) IN FAVOUR OF ASSESSEE . IN VIEW OF THE SETTLED POSITION OF THE LAW, THIS GROUND STANDS ALLOWED. THUS, GROUND NO.1 RAISED BY ASSESSEE IS ALLOWED. 10 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MARCH , 2020. SD/ - SD/ - PARTHA SARATHI CHAUDHURY D. KARUNAKARA RAO JUDICIAL MEMBER ACCOUNTANT MEMBER / PUNE; / DATED : 12 TH MARCH , 2020. GCVSR 5 ITA NO. 1722 /PUN/20 1 7 BMC SOFTWARE INDIA PVT. LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT 3. THE CIT (APPEALS) - 1, PUNE . 4. THE PR. CIT - 1 , PUNE . 5. , , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // // TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE