KHANDWALA SECURITIES LTD, MUMBAI V. ACIT 4(3), MUMBAI

ITA 2344/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71317 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 25-09-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 23-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: SNEHAL J SHAH
• Keywords: Capital asset; Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI . . , , BEFORE SHRI B. R. MITTAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO. 2344/MUM/2011 ( / ASSESSMENT YEAR: 2004-05) KHANDWALA SECURITIES LTD. GR. FLOOR, VIKAS BLDG., GREEN STREET, FORT, MUMBAI-400 023 / VS. ASST. CIT 4(3), AAYAKAR BHAVAN, MUMBAI-400 020 ! ./' ./PAN/GIR NO. AAACK 2214 P ( !# /APPELLANT ) : ( $!# / RESPONDENT ) !# % / APPELLANT BY : SHRI SNEHAL J. SHAH $!# & % / RESPONDENT BY : SHRI SURENDRA KUMAR ' ()* & + / DATE OF HEARING : 25.09.2013 ,-. & + / DATE OF PRONOUNCEMENT : 25.09.2013 / / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-10, MUMBAI (CIT(A) FOR SH ORT) DATED 22.02.2011, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2004-05 VIDE ORDER DATED 31.07.2006. 2 ITA NO. 2344/MUM/2011 (A.Y. 2004-05) KHANDWALA SECURITIES LTD. VS. ASST. CIT 2. THE ONLY ISSUE ARISING IN THIS APPEAL IS WHETHER THE EXPENDITURE ON SOFTWARE EXPENSES, INCURRED AND CLAIMED IN THE SUM OF RS.18 LACS, IS A CAPITAL EXPENDITURE, AS THE REVENUE CONTENDS, OR REVENUE EXPENDITURE, AS CLAIME D BY THE ASSESSEE. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WHILE NO PROPER DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER (A.O.), THE ISSUE STANDS DISCUSSED AT LENGTH BY THE LD. CIT(A). PLACING RELIANCE ON THE D ECISIONS IN THE CASE OF CIT VS. ARAWALI CONSTRUCTION CO. (P.) LTD. [2003] 259 ITR 30 (RAJ) AND AMWAY INDIA ENTERPRISES VS. DY. CIT [2008] 111 ITD 112 (DELHI), IT STANDS HELD BY HIM THAT THE SOFTWARE UNDER REFERENCE ENABLES THE ASSESSEE-COMPANY, A SHARE BROKERING FIR M, TO TRADE ON NSE, CTCL AND BSE WITH REAL TIME RISK MANAGEMENT AND LIVE WEB BASED S TOCK TRADING, SO THAT IT IS AN EXPENDITURE IN THE CAPITAL FIELD, YIELDING ENDURING BENEFIT TO THE ASSESSEE. ON THESE FINDINGS OF FACT BEING PUT ACROSS TO THE L D. AUTHORIZED REPRESENTATIVE (AR) DURING HEARING, SO THAT THE SOFTWARE UNDER REF ERENCE FORMS A PART OF THE BUSINESS APPARATUS OF THE ASSESSEE (REFER: EMPIRE JUTE CO. LTD. V. CIT [1980] 124 ITR 1 (SC)), THE LD. AR WOULD SUBMIT THAT THE ASSESSEE HAD NO OBJECT ION TO THE IMPUGNED EXPENDITURE BEING CONSIDERED AS A CAPITAL EXPENDITURE. SO, HOWE VER, THE SOFTWARE, BEING RECOGNIZED AS A CAPITAL ASSET, WITH A DEPRECIATION RATE PROVIDED IN ITS RESPECT UNDER THE RELEVANT RULE U/S.32, THE SAME WOULD QUALIFY FOR DEPRECIATION THE REON. THE ARGUMENT ADVANCED BY THE LD. AR IS UNEXCEPTIONAL INASMUCH AS A DEPRECIATION RATE ON SOFTWARE, WHERE REPRESENTING A CAPITAL EXPENDITURE, STANDS SPECIFIED UNDER THE A CT. WE, THEREFORE, WHILE CONFIRMING THE IMPUGNED ORDER, DIRECT THE A.O. TO ALLOW THE ASSESS EE DEPRECIATION AS EXIGIBLE TO IT UNDER THE LAW. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. 0. 1 (230 & / ) 4 & 56 ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 25, 2013 SD/- SD/- (B. R. MITTAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ' * MUMBAI; 7( DATED : 25.09.2013 3 ITA NO. 2344/MUM/2011 (A.Y. 2004-05) KHANDWALA SECURITIES LTD. VS. ASST. CIT ).(../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $!# / THE RESPONDENT 3. ' 8 ( ) / THE CIT(A) 4. ' 8 / CIT CONCERNED 5. ;)<= $ (>2 , + >2. , ' * / DR, ITAT, MUMBAI 6. =?3 @* / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ' * / ITAT, MUMBAI