Rockman Cycle Industries Ltd., Ludhiana V. ACIT, Ludhiana

ITA 213/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64053 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-10-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 04-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTA
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 213/CHD/2011 (ASSESSMENT YEAR : 2003-04) ROCKMAN CYCLE INDUSTRIES LTD., VS. THE A.C.I.T., G.T. ROAD, CIRCLE-V, LUDHIANA. LUDHIANA. PAN: AAACR 7866E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH AGGARWAL RESPONDENT BY : SHRI AKHILESH GUPTA, DR DATE OF HEARING : 04.10.2012 DATE OF PRONOUNCEMENT : 29.11.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, LUDHIANA D ATED 05.01. 2011 RELATING TO ASSESSMENT YEAR 2003-04 AGAINST THE ORD ER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT). 2. THE ONLY GROUND OF APPEAL RAISED BY THE ASSESSEE READS AS UNDER: 1. THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE A.O. CAPITALIZING THE SOFTWARE EXPENSES RS.8,58,000/-. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE DISALLOWANCE OF SOFTWARE EXPENSES. THE LEARNED A.R . FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE STANDS COVERE D IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CIT VS. 2 AMWAY INDIA ENTERPRISES [(2012) 346 ITR 341 (DEL)] AND VARIOUS OTHER DECISIONS. 4. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANC E ON THE ORDER OF THE CIT (APPEALS). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE IN THE PRESENT APPEAL IS IN RELATION TO THE C LAIM OF EXPENDITURE ON ACCOUNT OF SOFTWARE EXPENDITURE AMOUNTING TO RS.8,5 8,000/-. THE SAID ISSUE WAS REMITTED BACK TO THE ASSESSING OFFICER BY THE TRIBUNAL VIDE ORDER DATED 15.5.2008 IN ITA NO.88/CHD/2008 TO DECI DE THE SAME IN LINE WITH THE RATIO LAID DOWN BY THE SPECIAL BENCH OF MU MBAI TRIBUNAL IN AMWAY INDIA ENTERPRISES VS. DCIT REPORTED IN 21SOT 1 (SB)(DEL). THE AUTHORITIES BELOW HELD THE SAID EXPENDITURE NOT ALL OWABLE IN VIEW OF THE FUNCTIONAL TEST AS LAID DOWN BY THE SPECIAL BENCH O F THE TRIBUNAL IN THE CASE OF AMWAY INDIA ENTERPRISES VS. DCIT (SUPRA). THE LEARNED A.R. FOR THE ASSESSEE STATED THAT THE SAID DECISION OF T HE SPECIAL BENCH HAS BEEN REVERSED BY THE HON'BLE DELHI HIGH COURT IN CI T VS. AMWAY INDIA ENTERPRISES REPORTED IN (2012) 346 ITR 341 (DEL). THE LEARNED A.R. FOR THE ASSESSEE HAD ALSO PLACED RELIANCE ON THE OTHER DECISIONS. 6. WE FIND THAT THE RATIO LAID DOWN BY THE SPECIAL BENCH OF THE TRIBUNAL IN AMWAY INDIA ENTERPRISES (SUPRA) HAS BEE N REVERSED BY THE HON'BLE DELHI HIGH COURT IN CIT VS. AMWAY INDIA ENT ERPRISES (SUPRA). HOWEVER THE DEFINITION OF COMPUTER HAS BEEN ENLARGE D TO INCLUDE COMPUTER SOFTWARE W.E.F. 1.4.2003. THE OLD APPENDI X I APPLICABLE FOR ASSESSMENT YEARS 2003-04 TO 2005-06 TABULATES THE R ATES OF DEPARTMENT ADMISSIBLE AS PER PART A-TANGIBLE ASSETS, SUB HEAD III MACHINERY AND PLANT, COL. (5) PROVIDES 60% DEPARTMENT TO COMPUTER S INCLUDING COMPUTER SOFTWARE. NOTE 7 BELOW THE TABLE DEFINES COMPUTER SOFTWARE. 3 7. THE ASSESSING OFFICER FROM THE EXPLANATION OF AS SESSEE DATED 17.9.2009 NOTED THE ASSESSEE TO HAVE PURCHASED ADVA NCED VERSION OF SOFTWARE FOR INCREASING THE EFFICIENCY OF HIS BUSIN ESS. IN VIEW OF THE AMENDED PROVISIONS OF THE ACT, WE HOLD THAT THE ASS ESSEE IS ENTITLED TO 60% DEPRECIATION ON THE AFORESAID COMPUTER SOFTWARE , WHICH HAS BEEN WORKED BY THE ASSESSING OFFICER AND CONFIRMED BY TH E CIT (APPEALS). THUS UPHOLDING THE ORDER OF CIT (APPEALS), WE DISMI SS THE GROUND OF APPEAL RAISED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF NOVEMBER, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH NOVEMBER, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH