Triveni Engineering & Industries Ltd., Noida V. ACIT, New Delhi

ITA 1959/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9095 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 11-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRITUNJAY BARNAWAL
• Keywords: Capital asset; Business income; Depreciation; Principle of natural justice; Earning of tax free income; Question of law; Bad and doubtful debts; Revenue expenditure; Capital expenditure; Rule 8D; Set aside
• Section: 142(1); 14A; 115JB; 143(1); 143(2); 10(33); 10(33); 13; 153; 28

Judgement Text

1 ITA NOS. 1955 TO 1959/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 1955/DEL/2016 ( A.Y 2001-02) TRIVENI ENGINEE RING & INDUSTRIES LTD. 8 TH FLOOR EXPRESS TRADE TOWER, 15-16, SECTOR-16A NOIDA AABCT6370L (APPELLANT) VS ADDL. CIT(A) RANGE-16 NEW DELHI (RESPONDENT) ITA NO. 1956 TO 1959/DEL/2016 ( A.Y 2002-03 TO 20 05-06) TRIVENI ENGINEERING & INDUSTRIES LTD. 8 TH FLOOR EXPRESS TRADE TOWER, 15-16, SECTOR-16A NOIDA AABCT6370L (APPELLANT) VS ACIT CIRCLE-16(1) NEW DELHI (RESPONDENT) APPELLANT BY SH. ROHIT JAIN, ADV, MS. TEJASVI JAIN, CA, MS. SOMYA JAIN, CA RESPONDENT BY SH. MRITUNJAY BARNAWAL, SR. DR ORDER PER SUCHITRA KAMBLE, JM THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST ORD ERS DATED 27/01/2016 FOR A.YS. 2001-02 TO 2005-06 PASSED BY THE COMMISSI ONER OF INCOME TAX (APPEALS)- 1, NOIDA. DATE OF HEARING 01.07.2020 DATE OF PRONOUNCEMENT 06.08.2020 2 ITA NOS. 1955 TO 1959/DEL/2016 3. THE GROUNDS OF APPEAL ARE AS FOLLOWS: ITA NO. 1955/DEL/2016 (A.Y. 2001-02) 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1,16,60,400/- BEING EXPENSES INCURRED ON ENTERPRISE RESOURCE PLANNING (ERP) AND SOFTWARE E XPENSES, HOLDING THE SAME AS CAPITAL EXPENDITURE. 2. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN UPH OLDING THE DISALLOWANCE TO THE EXTENT OF RS. 86,398/- UNDER SECTION 14A OF THE ACT. ITA NO. 1956/DEL/2016 (A.Y. 2002-03) 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1,94,03,906/- BEI NG EXPENSES INCURRED ON ENTERPRISE RESOURCE PLANNING (ERP) AND SOFTWARE E XPENSES, HOLDING THE SAME AS CAPITAL EXPENDITURE. ITA NO. 1957/DEL/2016 (A.Y. 2003-04) 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 34,44,637/- BEIN G EXPENSES INCURRED ON ENTERPRISE RESOURCE PLANNING (ERP) AND SOFTWARE E XPENSES, HOLDING THE SAME AS CAPITAL EXPENDITURE. ITA NO. 1958/DEL/2016 (A.Y. 2004-05) 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO ALL OW DEDUCTION OF RS.2,87,484, BEING EXPENSES RELATABLE TO THE RELEVANT ASSESSMENT YEAR BUT DEBITED IN THE PROFIT & LOSS ACCOUNT OF THE SUBSEQUENT ASSESSMENT YEAR(S). 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO ALL OW DEPRECIATION OF RS.35,89,089, BASED ON THE REVISED DEPRECIATION CHA RT FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 3 ITA NOS. 1955 TO 1959/DEL/2016 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT(A) ERRED IN NOT ADJUDICATING THE AFORESAID GROUNDS NEC ESSARY TO COMPUTE THE CORRECT TAXABLE INCOME OF THE APPELLANT UNDER THE P ROVISIONS OF THE INCOME TAX ACT, 1961. ITA NO. 1959/DEL/2016 (A.Y. 2005-06) 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO A LLOW FURTHER DEPRECIATION OF RS. 5,64,852/- BASED ON REVISED DEPRECIATION CHART FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. THE CIT (A) ERRED ON FACTS AND IN LAW IN NOT ADJ UDICATING THE AFORESAID GROUND RAISED IN THE MEMORANDUM OF APPEAL (REFER GR OUND NO. 2 IN FORM NO. 35.) 3. FIRSTLY, WE ARE TAKING UP THE FACTS OF ITA NO. 1 955/DEL/2016 FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2001-02. THE ASSESSEE COMPANY IS IN THE BUSINESS OF MANUFACTURE AND SALE OF SUGAR, TURBINES , GEAR AND GEAR BOXES AND PROJECT RELATED ACTIVITIES IN THE FIELD OF SETT LING UP OF SUGAR PLANTS, WATER TREATMENT PLANTS AND MINI HYDEL POWER PROJECTS. APA RT FROM THESE ACTIVITIES, VARIOUS SALE OF SPARES AND SERVICING AND ENGINEERIN G SERVICES ARE ALSO BEING UNDERTAKEN BY THE COMPANY. THE BUSINESS ACTIVITIES ARE BEING UNDERTAKEN AT DIVERSE LOCATIONS THROUGH VARIOUS DIVISIONS/UNITS O F THE COMPANY. TRIVENI ENGINEERING AND INDUSTRIES LTD. I.E. ASSESSEE COMPA NY FILED ITS RETURN OF INCOME ON 31.10.2001 DECLARING BUSINESS INCOME OF RS. 13,3 8,43,652/- WHICH WAS ENTIRELY SET OFF AGAINST BROUGHT FORWARD LOSSES/ALL OWANCES. THE ASSESSEE ALSO CLAIMED LONG TERM CAPITAL LOSS OF RS. 1,27,04,048 W HICH HAS BEEN CARRIED FORWARD TO SUBSEQUENT YEAR. BOOK PROFIT OF RS. 6,86 ,74,133/- WAS DECLARED U/S 115JB OF THE INCOME TAX ACT, 1961 AND TAXES WERE PA ID THEREUPON BY THE ASSESSEE. THE RETURN WAS PROCESSED U/S 143(1) ON 24 .02.2003 AND SELECTED FOR SCRUTINY. NOTICE U/S 143(2) DATED 18.10.2002 WAS IS SUED AND DULY SERVED UPON THE ASSESSEE. NOTICE U/S 143(2) AND 142(1) DATED 12 .12.2002 ALONG WITH A QUESTIONNAIRE WAS ISSUED THEREBY CALLING FOR VARIOU S DETAILS. IN RESPONSE TO THE NOTICE, CA AND SR. MANAGER TAXATION APPEARED ON BEH ALF OF THE COMPANY FROM 4 ITA NOS. 1955 TO 1959/DEL/2016 TIME TO TIME AND FILED THE DETAILS BEFORE THE ASSES SING OFFICER. AFTER GOING THROUGH THE DETAILS AND THE REPLY/SUBMISSIONS OF TH E ASSESSEE, THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 19.03.2004, ASS ESSED THE BUSINESS INCOME OF THE ASSESSEE AT RS. 14,71,34,801/-, WHICH WAS S ET-OFF AGAINST AVAILABLE BROUGHT FORWARD LOSSES / ALLOWANCES. LONG TERM CAPI TAL LOSS OF RS. 1,27,04,048/- FOR THE YEAR AS CLAIMED BY THE ASSESS EE WAS ALLOWED TO BE CARRIED FORWARD TO SUBSEQUENT YEARS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 74 OF THE INCOME TAX ACT, 1961. THE BOOK PROFITS IN TERMS OF SECTION 115JB WAS ASSESSED AT RS. 5,92,24,133/- AND THE TAX DUE THER EON WAS FULLY ADJUSTED AGAINST THE TAXES ALREADY PAID BY THE ASSESSEE. TH US, THE SUMMARY OF THE ADDITIONS / DISALLOWANCES MADE BY THE ASSESSING OFF ICER ARE AS FOLLOWS: I) INTEREST ON SDF LOAN: ADDITION OF RS.63,90,848/ - (II) ERP, SOFTWARE & DESIGN DEVELOPMENT & BPR EXPE NSES: ADDITION OF RS. 81,62,280/- (III) SHORT CHARGING OF INTEREST ON LOAN/ADVANCE T O CARVANSERAI LTD.: ADDITION OF RS. 90,95,883/- IV) BAD DEBTS WRITTEN OFF: ADDITION OF RS. 5,83,35 2/- V) COMMISSION: ADDITION OF RS. 91,834/- VI) DIVIDEND INCOME: ADDITION OF RS. 3,00,000/- 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AS REGARDS TO GROUND NO. 1 RELATING TO ERP AND S OFTWARE RELATED EXPENSES AMOUNTING TO RS. 1,16,60,400/-, THE LD. AR SUBMITTED THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF TURBINE, GEAR AND GEAR BOXES, SUGAR PLA NTS, WATER TREATMENT PLANTS, MINI HYDEL POWER PROJECTS, ETC. THE ASSESSE E HAD, DURING THE RELEVANT PREVIOUS YEAR, INTER ALIA, INCURRED THE FOLLOWING E XPENDITURE AGGREGATING TO RS. 1,16,60,400 ON IMPLEMENTATION OF NEW ERP PACKAGE WH ICH WAS TREATED AS DEFERRED REVENUE EXPENDITURE IN THE BOOKS OF ACCOUN TS: 5 ITA NOS. 1955 TO 1959/DEL/2016 I) RS.66,29,773/- ON ENTERPRISE RESOURCE PLANNING (ER P) PACKAGE; II) RS.50,30,627/- ON DESIGN, DEVELOPMENT, CONSULTANCY AND OTHER SOFTWARE RELATED EXPENSES. THE LD. AR SUBMITTED THAT THOUGH IN THE BOOKS OF AC COUNT, THE AFORESAID EXPENSES WERE TREATED AS DEFERRED REVENUE EXPENDITU RE, THE AFORESAID EXPENSES, BEING REVENUE IN NATURE, WERE CLAIMED AS DEDUCTION IN THE RETURN OF INCOME. THE ASSESSING OFFICER HOWEVER, DISALLOWED THE AFORE SAID EXPENSES HOLDING THE SAME TO BE CAPITAL EXPENDITURE ON THE GROUND THAT T HE SAME RESULTED IN ENDURING BENEFIT TO THE ASSESSEE, AND ALLOWED DEPRE CIATION @ 60% ON THE SAME. ACCORDINGLY, THE ASSESSING OFFICER MADE DISALLOWANC E OF RS.81,62,280 (RS. 1,16,60,440 - RS.34,98,120), AFTER ALLOWING DEPRECI ATION OF RS.34,98,120 [@ 30% SINCE INSTALLED AFTER 30 TH SEPTEMBER, 2000]. ON FURTHER APPEAL, THE CIT(A), DESPITE AGREEING THAT EXPENDITURE WAS INCURRED TO I MPROVE THE EFFICIENCY AND PRODUCTIVITY OF THE ASSESSEE, CONFIRMED THE ACTION OF THE ASSESSING OFFICER, HOLDING THAT SUCH EFFICIENCY AND PRODUCTIVITY IS A LONG-TERM ENDURING BENEFIT, GOING BEYOND THE YEAR UNDER CONSIDERATION. THE LD. AR SUBMITTED THAT THE AFORESAID ACTION OF THE ASSESSING OFFICER/CIT(A) IS WITHOUT JUDICIOUS APPRECIATION OF THE FACTS OF THE CASE AND THE POSIT ION IN LAW. DURING THE RELEVANT ASSESSMENT YEAR 2001-02, THE ASSESSEE ENTE RED INTO A LICENSE AGREEMENT DATED 20.9.2000 WITH SAP INDIA SYSTEMS LT D. FOR INTRODUCTION OF ERP PACKAGE AT THE BENGALURU UNIT. THE LD. AR SUBM ITTED THAT ERP IS A GENERAL PURPOSE SOFTWARE WHICH IS USED TO LINK THE WORK OF EACH DEPARTMENT WITHIN THE ORGANIZATION SO THAT RESOURCES OF AN ORG ANIZATION CAN BE POOLED TO SHARE INFORMATION AS WELL AS GENERATE REPORTS AND T O CHECK STATUS OF EACH ACTIVITY. ERP/SAP SOFTWARE IS ONE OF THE MOST ROBUS T AND HIGHLY ACCLAIMED SOFTWARE THROUGHOUT THE WORLD AND HAS ITS APPLICATI ON IN PROCESSING AND DOCUMENTING BUSINESS DATA. THE SAP SOFTWARE IS DIVI DED INTO SUB-MODULES LIKE WORK-FLOW MANAGEMENT, HUMAN RESOURCES, FINANCE AND ACCOUNTING, LOGISTICS, PRODUCTION, ETC. THE SOFTWARE PROVIDES CAPABILITY T O SURPASS THE BOUNDARIES BETWEEN DEPARTMENTS IN AN ORGANIZATION AND THE INTE GRATED MODULES WORK TOGETHER AND SUPPORT THE INDIVIDUAL DEPARTMENTS. THE LD. AR SUBMITTED THAT 6 ITA NOS. 1955 TO 1959/DEL/2016 THE ASSESSING OFFICER FAILED TO APPRECIATE THAT AFO RESAID EXPENSES INCURRED MERELY FACILITATED THE DAY-TO-DAY BUSINESS OPERATIO NS AND DID NOT RESULT IN ANY ENDURING BENEFIT IN THE CAPITAL FIELD, IGNORING TH E FOLLOWING FACTS: I) ERP IS A STANDARDIZED SOFTWARE AND NOT A CUSTOMI ZED SOFTWARE. FURTHER, ERP IS AN APPLICATION SOFTWARE AND NOT AN OPERATING SOFTWARE; II) THE SOFTWARE DOES NOT INVOLVE TRANSFER OF A NY TECHNOLOGY FOR THE PRODUCTION OF ANY PARTICULAR PRODUCT NOR IT IS AN INTEGRAL PART OF ANY PARTICULAR MACHINERY USED IN MANUFACTURE OF FINISHED PRODUCTS BY THE ASSESSEE; III) THE ASSESSEE ONLY HAD THE LIMITED RIGHT TO USE THE SOFTWARE FOR THE PURPOSE OF BUSINESS; THE ASSESSEE CANNOT COPY, TRAN SLATE, DISASSEMBLE, ETC., THE SOFTWARE; IV) THE ASSESSEE HAS A NON-EXCLUSIVE LICENSE TO USE THE SOFTWARE AND PROPRIETARY INFORMATION; V) THE OWNERSHIP AND TITLE IN ALL THE INTELLECTUAL PROPERTY RIGHTS, INCLUDING PATENT, TRADEMARKS, SERVICE MARK, COPYRIGHT AND TRA DE SECRETS IN THE SAP PROPRIETARY INFORMATION SHALL CONTINUE TO VEST WITH THE LICENSOR OF THE SOFTWARE; VI) THERE WAS NO OUTRIGHT SALE OF THE AFORESAID SOF TWARE BY SAP TO THE ASSESSEE AND THE AFORESAID EXPENDITURE DID NOT RESULT IN ACQ UISITION/CREATION OF AN ASSET IN THE CAPITAL FIELD AS THE ASSESSEE DID NOT ACQUIR E ANY OWNERSHIP RIGHTS IN THE SAID SOFTWARE; VII) THE ASSESSEE WAS PROHIBITED FROM MAKING COPIES OF THE AFORESAID SOFTWARE FOR COMMERCIAL EXPLOITATION. FURTHER, THE USE WAS L IMITED IN TIME AND THE RIGHT TO USE THE SOFTWARE WERE TO LAPSE AFTER EXPIRY OF T HE LICENSE. ACCORDINGLY, SINCE NO OWNERSHIP OF ANY SOFTWARE IS ACQUIRED BY THE ASSESSEE AS A CONSEQUENCE OF THE IMPUGNED EXPENDITURE AND IT IS ONLY THE LIMITED RIGHT TO USE THE CONCERNED SOFTWARE PRODUCT WHICH THE ASSESS EE ACQUIRES WITHOUT ACQUIRING THE RIGHT OF TRANSFERRING THE IMPUGNED SO FTWARE, NO BENEFIT OF AN 7 ITA NOS. 1955 TO 1959/DEL/2016 ENDURING NATURE HAS BEEN DERIVED BY THE ASSESSEE AS RESULT OF IMPUGNED EXPENDITURE. THE SAID EXPENDITURE HAS BEEN INCURRED ONLY FOR SMOOTH WORKING AND FOR IMPROVING THE FUNCTIONING OF THE ORGANIZATI ON. THAT APART, IN THE MODERN ERA OF FAST CHANGING TECHNOLOGY, WHERE SOFTW ARE BECOMES OBSOLETE QUITE FAST AND NEEDS TO BE REPLACED / UPGRADED BY AN ASSE SSEE, THE SOFTWARE, IN ANY, CASE CANNOT ALSO BE SAID TO RESULT IN ANY ENDURING BENEFIT TO THE ASSESSEE TO BE CONSIDERED AS CAPITAL EXPENDITURE. THE LD. AR POI NTED OUT DETAILS OF THE EXPENDITURE, WHICH COMPRISED OF THE FOLLOWING : (A) SAP IMPLEMENTATION COSTS; (B) DEVELOPMENT AND CREATION OF TURBINE FRAME (C) MAINTENANCE OF SAP SOFTWARE (D) CLUSTER SOFTWARE CHARGES (E) CONSULTANCY CHARGES (F) ANNUAL MAINTENANCE CHARGES (G) SOFTWARE FOR TORSIONAL ANALYSIS THE LD. AR FURTHER SUBMITTED THAT ON THESE EXPENSES INCURRED ARE FUNDAMENTALLY REVENUE EXPENSES LIKE CONSULTANCY CHA RGES, AMC, ANALYSIS CHARGES, MAINTENANCE CHARGES, ETC., APART FROM SAP IMPLEMENTATION COSTS. THE LD. AR SUBMITTED THAT NONE OF THE AFORESAID EXPENDI TURE, RESULTED IN ANY ENDURING BENEFIT IN CAPITAL FIELD OR CREATION OF A CAPITAL ASSET AND THEREFORE, THE ENTIRE EXPENDITURE IS ALLOWABLE REVENUE EXPENDITURE . THE HONBLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO LTD VS CIT: 124 ITR L LAID DOWN THE TEST FOR DETERMINING AS TO WHAT CONSTITUTES CAPITAL EXPENDIT URE. THE RATIO DECIDENDI LAID DOWN IN THE FORE SAID JUDGMENT HAS BEEN REITER ATED IN THE FOLLOWING DECISIONS: CIT VS ASSOCIATED CEMENT COMPANIES LTD: 172 ITR 257 (SC) ALEMBIC CHEMICAL WORKS CO. LTD VS CIT: 177 ITR 377 (SC) THE AFORESAID EXPENDITURE ON COMPUTER SOFTWARE TOO, IT IS SUBMITTED, DID NOT RESULT IN AN ENDURING BENEFIT IN THE CAPITAL FIELD AND, THEREFORE, THE SAME IS NOT IN THE NATURE OF CAPITAL EXPENDITURE. THE HONBLE D ELHI HIGH COURT IN THE CASE 8 ITA NOS. 1955 TO 1959/DEL/2016 OF CIT VS K & CO. 181 CTR 378 UPHELD THAT THE ORDER OF THE TRIBUNAL HOLDING THAT EXPENDITURE INCURRED BY ASSESSEE ON MAINTENANC E OF COMPUTER AND THEIR UPGRADATION INCLUDING DEVELOPMENT OF SOFTWARE WAS I N THE NATURE OF REVENUE EXPENDITURE AND DID NOT GIVE RISE TO ANY SUBSTANTIA L QUESTION OF LAW. THE LD. AR RELIED ON THE DECISION OF HONBLE DELHI HIGH COU RT IN THE CASE OF CIT VS GE CAPITAL SERVICES LTD. 300 ITR 420 (DEL) WHEREIN PUR CHASE OF MS OFFICE SOFTWARE WAS HELD TO BE OF REVENUE NATURE SINCE IT WAS NOT C USTOM BUILT AND WOULD HAVE REQUIRED ALTERATIONS. THE LD. AR ALSO RELIED UPON T HE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ASAHI INDIA SAFETY GLASS LTD. 346 ITR 329. REVENUES APPEAL AGAINST THE AFORESAID DECISIO N WAS DISMISSED BY THE HONBLE SUPREME COURT VIDE ORDER DATED 05.07.2012 I N SLP (C) CC 10108/2012. THE LD. AR FURTHER RELIED UPON THE DE CISION OF THE DELHI TRIBUNAL IN CASE OF DCIT VS. EICHER MOTORS LTD. 37 ITR (T) 427. IN THIS REGARD, THE LD. AR ALSO RELIED ON THE FOLLOWING DECISIONS W HEREIN THE EXPENSES INCURRED TOWARDS ERP SOFTWARE/ SAP HAS BEEN HELD TO BE ALLOW ABLE AS REVENUE DEDUCTION: CIT V. RAYCHEM RFG LTD.: 346 ITR 138 (BOM.) CIT V. SOUTHERN ROADWAYS LTD: 304 ITR 84 (MAD.) ACIT V. TORRENT PHARMACEUTICALS LTD.: 137 ITD 301 ( AHD.) DCIT V. BOSCH LTD.: 167 ITD 650 (BANG. TRIB.) ' THE LD. AR FURTHER RELIED UPON DECISION OF THE MUMB AI BENCH OF THE TRIBUNAL IN THE CASE OF GLENMARK PHARMACEUTICALS LTD . V. DCIT: ITA NO.1110, 1221 , 4434/MUM/2007 , WHEREIN ON SIMILAR FACTS, THE TRIBUNAL ALLOWED THE EXPENDITURE INCURRED BY THE ASSESSEE ON ERP IMPLEME NTATION, AFTER ANALYZING THE VARIOUS CLAUSES OF LICENSE AGREEMENT ENTERED IN TO BY THE ASSESSEE. FURTHER, THE LD. AR RELIED UPON THE FOLLOWING DECISIONS WHER EIN EXPENDITURE TOWARDS DEVELOPMENT OF SOFTWARE HAS BEEN HELD TO BE ALLOWAB LE AS REVENUE DEDUCTION: CIT(A) VS. ACL WIRELESS LTD: 361 ITR 210 (DEL) 9 ITA NOS. 1955 TO 1959/DEL/2016 CIT V. TECHNOVATE E SOLUTIONS P. LTD: 254 ITR 110 ( DEL.) CIT V. VARINDRA AGRO CHEMICALS: 309 ITR 272 (P&H) CIT VS KOTAK SECURITIES LTD (NO. 1): 346 ITR 349 (B OM) CIT V. UHDE INDIA P. LTD: 358 ITR 395 (BOM) CIT V. IBM INDIA LTD: 357 ITR 88 (KAR.) CIT V. LAKSHMI VILAS BANK LTD. 97 TAXMANN.COM 105(M AD) CIT V. SHRI RENUGA TEXTILES MILLS LTD.: 366 ITR 649 (MAD) CIT V. SOUTHERN ROADWAYS LTD: 282 ITR 379 (MAD.) CIT V. KARUR VYSYA BANK LTD: 229 TAXMAN 396 (MAD) CIT V SOUTHERN ROADWAYS LTD.:288 ITR 15 (MAD) CIT V. HARPER COLLINS PUBLISHERS INDIA LTD.: 166 TT J 152 (DEL. TRIB.) ITO V. SPICE COMMUNICATIONS LTD: 35 SOT 78 (DEL TRI B.) GUJARAT GUARDIAN LTD V. DCIT: 35 ITR(T) 217 (DEL TR IB.) MEDIA VIDEO LTD V. JCIT: 122 TAXMAN 28 (DEL TRIB.) ST MICROELECTRONICS PRIVATE LTD V. CIT: 145 TTJ 553 (DEL TRIB.) BANK OF PUNJAB LTD V. JCIT: 122 TAXMAN 235 (CHD TRI B.) BUSINESS INFORMATION PROCESSING SERVICES V. ACIT: 7 3 ITD 304 (JAIPUR TRIB.) ITC CLASSIC FINANCE LTD V. DCIT: 112 TAXMAN 155 (KO L TRIB.) ACIT V. SRA SYSTESM LTD.: 153 ITD 338 (CHENNAI TRIB .) NIMBUS COMMUNICATION LTD. V. ADDL. CIT 149 ITD 508 (MUM. TRIB.) 10 ITA NOS. 1955 TO 1959/DEL/2016 SANGHVI SAVLA STOCK BROKERS LTD: 152 ITD 820 (MUM T RIB.) IN VIEW OF THE ABOVE, THE LD. AR SUBMITTED THAT EXP ENDITURE INCURRED BY THE ASSESSEE TOWARDS IMPLEMENTATION OF ERP SYSTEM IN TH E BUSINESS, IN THE PRESENT MODERN ERA OF FAST CHANGING TECHNOLOGY, CAN NOT BE SAID TO RESULT IN ACQUISITION OF ANY CAPITAL ASSET NOR CAN BE SAID TO HAVE RESULTED IN ANY BENEFIT OF ENDURING NATURE, TO BE REGARDED AS CAPITAL EXPEN DITURE. FURTHER, SINCE THE RIGHT TO USE THE UNDERLYING SOFTWARE IS ACQUIRED BY THE ASSESSEE TO INTEGRATE THE FUNCTIONING OF THE BUSINESS AS A WHOLE, NO REVENUE PER-SE WAS GENERATED BY THE ASSESSEE FROM ANY OF SUCH LICENSED SOFTWARE. THE SA ME MERELY RESULTED IN THE BUSINESS OPERATIONS BEING CARRIED OUT MORE EFFICIEN TLY AND SMOOTHLY. IN FAIRNESS, THE LD. AR POINTED OUT THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2000-01 VIDE ORDER DATED 08.08. 2008 IN ITA NO.2848/DEL/2004 HAD SET ASIDE THE AFORESAID ISSUE TO THE FILE OF THE ASSESSING OFFICER, FOLLOWING THE DECISION OF THE SPECIAL BENC H IN THE CASE OF AMWAY INDIA ENTERPRISES 111 ITD 112 (DEL) (SB) (SUPRA). THE LD. AR SUBMITTED THAT HOWEVER, AFTER THE SAID DECISION, THERE ARE DIRECT DECISIONS OF THE HIGH COURTS AND THE TRIBUNAL REFERRED SUPRA, WHEREIN SIMILAR EX PENDITURE INCURRED HAS BEEN HELD TO BE ALLOWABLE AS REVENUE EXPENDITURE. T HUS, IN VIEW OF THE ABOVE, THE LD. AR SUBMITTED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE CANNOT BE SAID TO RESULT IN AN ENDURING BENEFIT IN THE CAPITA L FIELD TO BE REGARDED AS CAPITAL EXPENDITURE AND MUST BE DIRECTED TO BE ALLO WED AS A REVENUE EXPENDITURE. 6. THE LD. DR SUBMITTED THAT THE EXPENDITURE ON ERP AS POINTED OUT BY ASSESSING OFFICER CLEARLY IS LINKED TO ACQUIRING SA P SOFTWARE AND ITS IMPLEMENTATION. THE BENEFIT DERIVED BY ACQUIRING S UCH SOFTWARE IS NOT LIMITED TO THE CURRENT YEAR BUT BRINGS TO THE ASSESSEE AN A DVANTAGE OF ENDURING NATURE. THE BENEFITS ASSOCIATED WITH THE SOFTWARE WOULD ACCRUE OVER A PROTRACTED PERIOD OF TIME. THE BENEFITS DERIVED TH ROUGH OTHER EXPENSES ON SOFTWARE & DESIGN DEVELOPMENT, SIMILARLY CONFER LON G TERM BENEFITS TO ASSESSEE. HENCE SUCH EXPENDITURE IS IN THE CAPITAL FIELD AND RIGHTLY DISALLOWED BY THE ASSESSING OFFICER. IN ASSESSMENT YEAR 2000-01 THE ASSESSING OFFICER 11 ITA NOS. 1955 TO 1959/DEL/2016 DISALLOWED AND HELD THAT THE EXPENSES ARE CAPITAL I N NATURE AND ALLOWED DEPRECIATION BENEFITS. THUS THE ASSESSING OFFICER AS WELL AS CIT(A) WAS RIGHT IN HOLDING THAT THESE EXPENSES ARE CAPITAL IN NATURES . THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT N O OWNERSHIP OF ANY SOFTWARE IS ACQUIRED BY THE ASSESSEE AS A CONSEQUENCE OF THE ER P EXPENDITURE. THIS FACT WAS NOT DISPUTED BY THE ASSESSING OFFICER. THE ASSE SSEE HAS ONLY LIMITED RIGHT TO USE THE CONCERNED SOFTWARE PRODUCT WHICH THE ASS ESSEE ACQUIRED WITHOUT ACQUIRING THE RIGHT OF TRANSFERRING THE SAID SOFTWA RE. THUS, FROM THE PERUSAL OF THE MATERIAL ON RECORD IT CAN BE SEEN THAT NO BENEF IT OF AN ENDURING NATURE HAS BEEN DERIVED BY THE ASSESSEE AS RESULT OF SAID EXPE NDITURE. THE SAID EXPENDITURE HAS BEEN INCURRED ONLY FOR SMOOTH WORKI NG AND FOR IMPROVING THE FUNCTIONING OF THE ORGANIZATION. THE ASSESSING OFFI CER IGNORED THE FACT THAT IN TODAYS FAST CHANGING TECHNOLOGY WHERE SOFTWARE BEC OMES OBSOLETE FOR SMOOTH FUNCTIONING OF THE BUSINESS, THE SOFTWARE NEEDS TO BE REPLACED / UPGRADED BY AN ASSESSEE FROM TIME TO TIME, THE SOFTWARE, IN ANY , CASE CANNOT ALSO BE SAID TO RESULT IN ANY ENDURING BENEFIT TO THE ASSESSEE TO B E CONSIDERED AND THUS, IT CANNOT BE HELD AS CAPITAL EXPENDITURE. THE CASE LAW S REFERRED BY THE LD. AR SUPPORTS THE CONTENTIONS OF THE ASSESSEE AS EXPENDI TURE INCURRED ON COMPUTER SOFTWARE DOES NOT CONSTITUTE ENDURING BENEFIT TO TE RM THE SAME AS CAPITAL IN NATURE. THUS, THE ASSESSING OFFICER AS WELL AS THE CIT(A) FAILED TO TAKE COGNIZANCE OF THE DECISIONS OF THE VARIOUS HIGH COU RT AND THE APEX COURT AS WELL AS THE NATURE OF THE EXPENDITURE INCURRED BY T HE ASSESSEE. HENCE, GROUND NO. 1 OF ASSESSEES APPEAL IS ALLOWED. 8. AS REGARDS TO GROUND NO. 2 RELATING TO DISALLOWA NCE UNDER SECTION 14A OF THE ACT TO THE EXTENT OF RS. 86,398/-, THE LD. AR S UBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE EARNED DIVIDEND I NCOME AGGREGATING TO RS. 17,27,950 FROM INVESTMENT IN VARIOUS EQUITY SHARES, WHICH WAS CLAIMED AS EXEMPT UNDER SECTION 10(33) OF THE ACT. THE INVESTM ENT IN THE SHARES WHICH YIELDED ABOVE EXEMPT DIVIDEND INCOME, HAD BEEN MADE OUT OF SURPLUS FUNDS 12 ITA NOS. 1955 TO 1959/DEL/2016 AVAILABLE IN EARLIER YEARS. SINCE NO EXPENDITURE WA S INCURRED BY THE ASSESSEE IN RELATION TO EXEMPT DIVIDEND INCOME, NO DISALLOWANCE UNDER SECTION 14A OF THE ACT WAS SUO MOTO OFFERED BY THE ASSESSEE. IN THE AS SESSMENT ORDER, THE ASSESSING OFFICER MADE AD-HOC DISALLOWANCE OF EXPEN SES OF RS.3,00,000 ON THE GROUND THAT SOME MANPOWER/MAN HOURS ALONGWITH THE E XPENSES ON OTHER CLERICAL STAFF / MANAGERIAL STAFF AND EXPENSES FOR PORTFOLIO MANAGEMENT MUST HAVE BEEN INCURRED TOWARDS EARNING OF AFORESAID EXE MPT DIVIDEND INCOME. THE CIT(A) HOWEVER, RESTRICTED THE DISALLOWANCE TO 5% O F THE DIVIDEND INCOME EARNED BY THE ASSESSEE DURING THE RELEVANT ASSESSME NT YEAR. ASSESSEE HAS CHALLENGED THE ACTION OF THE CIT(A) IN RESTRICTING THE DISALLOWANCE MADE UNDER SECTION 14A TO 5% OF DIVIDEND INCOME RECEIVED. THE LD. AR SUBMITTED THAT THE AFORESAID ACTION OF THE ASSESSING OFFICER IS, NOT BASED ON CORRECT APPRECIATION OF FACTS AND LAW. IN TERMS OF THE PROVISIONS OF SE CTION 14A OF THE ACT, ONLY EXPENDITURE INCURRED, HAVING RELATION WITH EARNING OF EXEMPT INCOME, IS NOT AN ALLOWABLE DEDUCTION UNDER THE PROVISIONS OF THE ACT . THE PHRASE EXPENDITURE INCURRED USED IN THE AFORESAID SECTION REFERS TO A CTUAL EXPENDITURE, WHICH HAS PROXIMATE NEXUS WITH EXEMPT INCOME, AND NOT SOME IM AGINARY OR NOTIONAL EXPENSES, FOR THE PURPOSES OF DISALLOWANCE UNDER TH AT SECTION. THE PROVISIONS OF SECTION 14A ARE APPLICABLE IF AND ONLY IF THE AS SESSING OFFICER, AT THE FIRST PLACE, FINDS THAT THE ASSESSEE HAS ACTUALLY INCURRE D EXPENSES, WHICH HAVE PROXIMATE NEXUS WITH EARNING OF EXEMPT DIVIDEND INC OME AND NOT OTHERWISE. IN OTHER WORDS, THE ONUS IS ON THE ASSESSING OFFICER T O FIND PROXIMATE NEXUS OF EXPENSES WITH EARNING OF EXEMPT INCOME, BEFORE COMP UTING ANY DISALLOWANCE UNDER SECTION 14A OF THE ACT. THE LD. AR SUBMITTED THAT IN THE ABSENCE OF SUCH NEXUS BEING ESTABLISHED, IT IS NOT OPEN TO THE ASSESSING OFFICER TO DISALLOW ANY PART OF THE EXPENDITURE ON PROPORTIONA TE BASIS. THUS, THE PRE- REQUISITE CONDITION FOR APPLYING THE PROVISIONS OF SECTION 14A OF THE ACT IS THAT SOME EXPENDITURE MUST BE INCURRED IN RELATION TO THE EARNING OF EXEMPT INCOME. THE SAID EXPRESSION IN RELATION TO HAS BE EN JUDICIOUSLY EXPLAINED IN VARIOUS DECISIONS TO MEAN SOME REAL, DOMINANT AND I MMEDIATE RELATIONSHIP. IN THIS REGARD, THE LD. AR POINTED OUT THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. WALFORT SHARE & STOCK BROKERS: 233 CTR 42, WHEREIN IT HAS 13 ITA NOS. 1955 TO 1959/DEL/2016 BEEN HELD THAT THERE MUST BE A PROXIMATE RELATIONSH IP OF EXPENDITURE WITH EXEMPT INCOME, FOR THE PURPOSES OF MAKING DISALLOWA NCE OF SAME UNDER SECTION 14A OF THE ACT. IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. V. DCIT 328 ITR 81, THE HONBLE BOMBAY HIGH COURT, WHILE DECIDING THE I SSUE OF DISALLOWANCE UNDER SECTION 14A OF THE ACT, FOLLOWING THE AFORESAID THE HONBLE SUPREME COURT DECISION IN WALFORT SHARES & STOCK BROKERS (SUPRA), OBSERVED THAT DISALLOWANCE UNDER SECTION 14A CAN BE EFFECTED ONLY WHEN A PROX IMATE CAUSE FOR DISALLOWANCE IS ESTABLISHED, STATING THE RELATIONSH IP OF THE EXPENDITURE WITH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME . THE LD. AR ALSO RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT I N CASE OF MAXOPP INVESTMENT LTD. 203 TAXMAN 364 WHEREIN THE HONBLE HIGH COURT, WHILE APPROVING THE CONTENTION RAISED BY THE ASSESSEE HEL D THAT THE TERM EXPENDITURE INCURRED APPEARING IN SECTION 14A(1) OF THE ACT WOULD MEAN ACTUAL EXPENDITURE INCURRED, HELD THAT NO DISALLO WANCE COULD BE MADE UNDER THE SAID SECTION WHERE NO EXPENDITURE HAS 'ACTUALLY ' BEEN INCURRED BY THE ASSESSEE IN RELATION TO EARNING OF THE EXEMPT INCOM E. PERTINENTLY, THE HONBLE SUPREME COURT WHILE AFFIRMING THE AFORESAID DECISIO NS OF THE HONBLE BOMBAY AND THE DELHI HIGH COURT HAVE REPEATEDLY EMPHASIZED ON THE REQUIREMENT OF RECORDING SATISFACTION. THE HONBLE SUPREME COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD VS DCIT, 394 ITR 449 (S C), WHILE AFFIRMING THE AFORESAID DECISION, HELD THAT RECORDING OF SATISFAC TION UNDER SECTION 14A(2) IS OF PARAMOUNT IMPORTANCE, FAILING WHICH THE PROVISIONS OF RULE 8D, APPLICABLE FROM ASSESSMENT YEAR 2008-09 OR A BEST JUDGMENT DET ERMINATION, AS EARLIER PREVAILING TILL ASSESSMENT YEAR 2007-08, CANNOT BE APPLIED. IT WAS HELD, LIKEWISE, BY THE HONBLE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENT LTD VS CIT: 402 ITR. THUS THE LD. AR SUBMITTED THAT ON PERUSAL OF THE AFORESAID DECISIONS, IT CAN BE SEEN THAT THE DISALLOWANCE UND ER SECTION 14A OF THE ACT CANNOT BE MADE UNLESS THERE IS DIRECT OR INDIRECT C ONNECTION BETWEEN THE EXEMPT INCOME AND THE ACTUAL EXPENDITURE INCURRED. IN ORDER TO JUSTIFY DISALLOWANCE OF ANY PART OF THE EXPENDITURE UNDER T HE SAID SECTION, THE ONUS IS ON THE REVENUE TO BRING ON RECORD NEXUS BETWEEN THE EXPENDITURE AND THE EXEMPT INCOME. THE DECISION OF THE HONBLE KERALA H IGH COURT IN THE CASE OF 14 ITA NOS. 1955 TO 1959/DEL/2016 CIT(A) VS. CATHOLIC SYRIAN BANK LTD AND ORS 330 ITR 556/237 CTR 164. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE KERA LA HIGH COURT IN CASE OF CATHOLIC SYRIAN BANK (SUPRA), THE DECISION OF AHMED ABAD BENCH OF TRIBUNAL IN CASE OF ACIT VS. TORRENT PHARMACEUTICALS LTD 137 IT D 301 AS WELL AS THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN CASE OF SIL INVESTMENT LTD. VS. ACIT: 148 TTJ 213 (DEL.), WHEREIN THE TRIBUNAL HELD THAT NO DISALLOWA NCE COULD BE MADE UNDER SECTION 14A OF THE ACT OUT OF AUDIT F EES, NORMAL TRAVELLING EXPENSES, ETC. THE LD. AR ALSO REFERRED THE DECIS ION OF AMRITSAR BENCH OF THE TRIBUNAL IN CASE OF DCIT V. JAMMU AND KASHMIR BANK LTD. 152 TTJ 522. IN THE LIGHT OF THE AFORESAID, THE LD. AR SUBMITTED TH AT THERE IS NO RATIONALE/JUSTIFICATION AS TO HOW RS.3 LAC OF ADMIN ISTRATIVE EXPENDITURE COULD BE ASSUMED TO BE INCURRED FOR EARNING EXEMPT INCOME , WHICH IS RECEIVED AUTOMATICALLY BY DIRECT TRANSFER TO THE BANK ACCOUN T OF THE ASSESSEE. IN THIS REGARD, THE LD. AR POINTED OUT THAT IN THE SUBSEQU ENT ASSESSMENT YEAR, I.E., 2002-03, EVEN THOUGH THE ASSESSEE EARNED DIVIDEND I NCOME AMOUNTING TO RS.7,52,875, NO DISALLOWANCE UNDER SECTION 14A OF T HE ACT WAS MADE BY THE ASSESSING OFFICER. THUS, THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER ACCEPTED THE CONTENTION OF THE ASSESSEE THAT NO EXP ENDITURE HAS BEEN INCURRED FOR EARNING THE DIVIDEND INCOME AND THEREFORE NO DI SALLOWANCE UNDER SECTION 14A WAS CALLED FOR. ACCORDINGLY, THE ASSESSING OFFI CER ERRED IN DISALLOWING, ON AN AD-HOC BASIS RS.3 LACS UNDER SECTION 14A OF THE ACT, WITHOUT APPRECIATING THAT NO EXPENDITURE WAS ACTUALLY INCURRED FOR EARNI NG DIVIDEND INCOME AND WITHOUT BRINGING ANY EVIDENCE ON RECORD TO ESTABLIS H NEXUS BETWEEN THE EXPENDITURE AND EARNING OF DIVIDEND INCOME. 9. THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF RECORDS, I T CAN BE SEEN THAT THE ASSESSING OFFICER ACCEPTED THE CONTENTION OF THE AS SESSEE THAT NO EXPENDITURE HAS BEEN INCURRED FOR EARNING THE DIVIDEND INCOME A ND THEREFORE NO DISALLOWANCE UNDER SECTION 14A WAS CALLED FOR. WITH OUT APPRECIATING THIS ASPECT, THE ASSESSING OFFICER DISALLOWED RS.3 LACS UNDER SECTION 14A OF THE ACT 15 ITA NOS. 1955 TO 1959/DEL/2016 ON AN AD-HOC BASIS, AND WHILE DOING SO THE ASSESSIN G OFFICER HAS NOT ESTABLISHED ANY NEXUS BETWEEN THE EXPENDITURE AND E ARNING OF DIVIDEND INCOME. THE CIT(A) ALSO FAILED TO LOOK INTO THIS AS PECT. THUS, GROUND NO. 2 IS ALLOWED. 11. IN RESULT, THE APPEAL BEING ITA NO. 1955/DEL/20 16 FILED BY THE ASSESSEE FOR A.Y. 2001-02 IS ALLOWED. 12. AS REGARDS ASSESSMENT YEAR 2002-03 & 2003-04, B OTH THESE APPEALS ARE IDENTICAL TO GROUND NO. 1 OF ASSESSMENT YEAR 2001-0 2. THUS, ITA NO. 1956/DEL/2016 AND ITA NO. 1957/DEL/2016 FOR A.Y. 20 02-03 AND 2003-04 RESPECTIVELY ARE ALLOWED. 13. IN RESULT, THE APPEAL BEING ITA NO. 1956/DEL/20 16 AND ITA NO. 1957/DEL/2016 FILED BY THE ASSESSEE FOR A.Y. 2002-0 3 AND 2003-04 RESPECTIVELY ARE ALLOWED. 14. AS REGARDS ASSESSMENT YEAR 2004-05, GROUND NO. 1 IS RELATED TO PRIOR PERIOD EXPENSES, THE LD. AR SUBMITTED THAT THE CIT( A) HAS NOT TAKEN COGNIZANCE OF ALL THE CONTENTIONS OF THE ASSESSEE, THEREFORE, THE SAME SHOULD BE REMANDED BACK TO THE FILE OF THE CIT(A). THUS, WE A RE REMANDING BACK THIS ISSUE TO THE FILE OF CIT(A) FOR PROPER ADJUDICATION AFTER TAKING COGNIZANCE OF ALL THE RELEVANT EVIDENCES PRODUCED BY THE ASSESSEE. NE EDLESS TO SAY, THE ASSESSEE BE GIVEN PROPER OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. GROUND NO. 1 IS PARTLY ALLOWED FOR STATIS TICAL PURPOSE. AS REGARDS TO GROUND NO. 2 & 3, THE LD. AR SUBMITTED THAT THE SAM E ARE REQUIRES TO BE VERIFIED AND THE SAME MAY BE SET ASIDE TO THE FILE OF THE CIT(A). THUS, WE ARE REMANDING BACK THIS ISSUE TO THE FILE OF CIT(A) FOR PROPER ADJUDICATION AFTER TAKING COGNIZANCE OF ALL THE RELEVANT EVIDENCES PRO DUCED BY THE ASSESSEE. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN PROPER OPPOR TUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. GROUND NO . 2 AND 3 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. 15. IN RESULT, ITA NO. 1958/DEL/2016 FILED BY THE A SSESSEE FOR A.Y. 2004-05 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 16 ITA NOS. 1955 TO 1959/DEL/2016 16. AS REGARDS ASSESSMENT YEAR 2005-06, THE SAME IS IDENTICAL TO GROUND NO. 2 TO ASSESSMENT YEAR 2004-05 AND SAME NEEDS TO BE SET ASIDE TO THE FILE OF THE CIT(A). THUS, WE ARE REMANDING BACK THIS ISSUE TO THE FILE OF CIT(A) FOR PROPER ADJUDICATION AFTER TAKING COGNIZANCE OF ALL THE RELEVANT EVIDENCES PRODUCED BY THE ASSESSEE. NEEDLESS TO SAY, THE ASSE SSEE BE GIVEN PROPER OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF N ATURAL JUSTICE. GROUND NO. 1 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. AS REGAR DS GROUND NO. 2, SINCE THE AMOUNT IS LESS, THE LD. AR IS NOT PRESSING THE SAME AT THIS JUNCTURE BUT RESERVES ITS RIGHT TO CONTEST THE SAID ISSUE AT THE PROPER TIME IN SUBSEQUENT YEARS. THEREFORE, GROUND NO. 2 IS DISMISSED. 17. IN RESULT, ITA NO. 1959/DEL/2016 FILED BY THE ASSESSEE FOR A.Y. 2005-06 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 18. IN RESULT, ITA NO. 1955/DEL/2016, ITA NO. 1956/ DEL/2016 AND ITA NO. 1957/DEL/2016 FILED BY THE ASSESSEE FOR A.Y. 2001-0 2, A.Y. 2002-03 AND 2003- 04 RESPECTIVELY ARE ALLOWED AND ITA NO. 1958/DEL/20 16 & ITA NO. 1959/DEL/2016 FILED BY THE ASSESSEE FOR A.Y. 2004-0 5 AND A.Y. 2005-06 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH AUGUST, 2020. SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 06/08/2020 R. NAHEED 17 ITA NOS. 1955 TO 1959/DEL/2016 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI