Infres Methodex Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 1801/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5655 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 06-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: AMIT WHORRA
• Keywords: Opportunity of being heard; Capital expenditure

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 1801/DEL/2016 ASSESSMENT YEAR: 2012-13 INFRES METHODEX PVT. LTD., PLOT NO. D - 7, BLOCK B-1, MOHAN COOPERATIVE INDL. AREA, MATHURA ROAD, NEW DELHI. PAN: AABCL1964R (APPELLANT) VS. DCIT, CIRCLE 12(1), NEW DELHI. (RESPONDENT) APPELLANT BY SH. AMIT WHORRA, C.A. RESPONDENT BY SH. SURENDER PAL, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-4, NEW DELHI DATED 09.02.2016 FOR THE ASSESSMENT YEAR 2012-13 ON THE FOLLOWING GROUND : THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE P ETITIONER-COMPANYS CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) IS WRONG IN UPHOLDING THE DISALLOWANCE OF RS.21,94,041 FOR ERP SOFTWARE EXPENSES DISALLOWED BY THE ASSESSING OFFICER CONSIDERING THE SAME AS CAPITAL EXPENDITURE / PRIOR PERIOD EXPENDITURE. 2. IN THIS CASE, THE ISSUE INVOLVED IS WHETHER THE ERP (ENTERPRISES RESOURCE PLANNING) SOFTWARE EXPENSES OF RS.21,94,04 1/- CLAIMED BY THE DATE OF HEARING 29.01.2019 DATE OF PRONOUNCEMENT 31.01.2019 ITA NO. 1801/DEL/2016 2 ASSESSEE ARE CAPITAL IN NATURE OR REVENUE IN NATURE . THE ASSESSEE CLAIMED THESE EXPENDITURES AS REVENUE EXPENSES LIABLE TO BE DEDUCTED AS PER LAW IN VIEW OF VARIOUS DECISIONS RELIED BEFORE THE AUTHORI TIES BELOW. HOWEVER, THE ASSESSING OFFICER TREATED THESE EXPENDITURE AS CAPI TAL IN NATURE AFTER RELYING OTHER MANY DECISIONS, AS MENTIONED IN THE ASSESSMEN T ORDER AND AFTER REJECTING THE CLAIM OF ASSESSEE, ADDED A SUM OF RS. 21,94,041/- TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE CARRIED THE MA TER IN APPEAL BEFORE THE LD. CIT(A) WHO ENDORSED THE ACTION OF THE AO VIDE IMPUG NED ORDER. THE RELEVANT PART OF THE IMPUGNED ORDER READS AS UNDER : THE GROUND NO. 2 IS AGAINST THE CAPITALIZATION OF SO FTWARE EXPENSES OF RS 21,94,041/-. THE AO HAS ARGUED AT LENGTH THAT THE SO FTWARE EXPENSES HAVE TO BE CAPITALIZED BECAUSE OF THE ENDURING NATURE OF THE ASSETS. THE AO HAS ALSO MENTIONED THAT THERE IS ONE BILL AMOUNTING TO RS 21,440/- WHICH PERTAINS TO THIS ASSESSMENT YEAR AND REMAINING BILL S TOTALING TO RS 21,72,601/- ARE W.R.T. THE PRIOR PERIOD AND THEREFO RE ADDED AN AMOUNT OF RS 21,94,041/- ON ACCOUNT OF SOFTWARE EXPENSES AFTE R CAPITALIZING THE SAME. KEEPING IN MIND ELABORATE DISCUSSION MADE BY THE AO, AND THE ARGUMENT PUT FORTH BY THE APPELLANT, I AGREE WITH T HE AO IN HOLDING THAT THE SOFTWARE EXPENSES ARE TO BE CAPITALIZED. THIS AD DITION IS UPHELD. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL. 3. HAVING GONE THROUGH THE FACTS OF THE CASE, ORDER S OF THE AUTHORITIES BELOW AND THE CONTENTIONS OF ASSESSEE MADE BEFORE T HE AUTHORITIES BELOW, WE FIND THAT THE LD. CIT(A) HAS PASSED THE IMPUGNED OR DER IN A VERY SLIP-SHOD MANNER. HE HAS NOT ASSIGNED EVEN ANY REASON FOR HIS DECISION NOR MENTIONED THE POINTS FOR DETERMINATION. BUT STRAIGHTWAY WENT ON TO ENDORSE THE ACTION OF ITA NO. 1801/DEL/2016 3 THE ASSESSING OFFICER. AS PER PROVISIONS OF SECTION 250(6) OF THE IT ACT, THE LD. CIT(A) IS REQUIRED TO GIVE THE POINTS FOR DETERMINA TION, DECISION THEREON AND THE REASON FOR SUCH DECISION, WHICH IS COMPLETELY L ACKING IN THE PRESENT CASE. THEREFORE, FOR WANT OF SPEAKING FINDINGS OF THE LD. CIT(A), WE THINK IT APPROPRIATE TO REMIT THE MATTER BACK TO THE FILE OF THE LD. CIT(A) FOR DECIDING THE SAME AFRESH BY WAY OF SPEAKING ORDER ON EACH AN D EVERY ASPECT OF THE CASE. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. 4. ACCORDINGLY, THE APPEAL IS ALLOWED FOR STATISTIC AL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.01.2019. SD/- SD/- (H.S. SIDHU) (L.P. SA HU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31.01.2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI