Swarovski India Pvt. Ltd., New Delhi V. Addl. CIT, Special Range- 8, New Delhi

ITA 2493/DEL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6904 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 20-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 201

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH FRIDAY BENCH : NEW DELHI BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2974/DEL/2018 , 2492, 2493/DEL/2019 (ASSESSMENT YEAR: 2012 - 13 TO 2014 - 15 ) SWAROVSKI INDIA PVT. LTD, DLF BUILDING NO 10, TOWER - C, 1 ST FLOOR, DLF CYBER CITY, PHASE - 2, GURGAON PAN: AAGCS4052D VS. ADDL. CIT, SPECIAL RANGE - 8, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NITESH GUPTA, CA MS. CHETNA THAPAR, CA REVENUE BY: MS. ASHIMA NEB, SR. DR DATE OF HEARING 20/09 / 201 9 DATE OF PRONOUNCEMENT 1 6 / 10 / 2019 O R D E R PER PRASHANT MAHARISHI , A. M. 1 . THESE ARE THE 3 APPEALS FILED BY THE ASSESSEE ON THE COMMON ISSUE WHETHER THE EXPENDITURE INCURRED ON SOFTWARE AND ELECTRONIC DATA PROCESSING CHARGES [E DP ] SERVICES ARE CAPITAL EXPENDITURE OR REVENUE EXPENDITURE FOR ASSESSMENT YEAR 2012 13 TO ASSESSMEN T YEAR 2014 15. THE ASSESSEE HAS FILED AN APPLICATION ON 19/08/2019 STATING THAT ALL THESE 3 APPEALS ARE HAVING ONLY COMMON, INTERRELATED AND COVERED ISSUE BY THE APPELLANT IN ITS OWN CASE AND THEREFORE THEY SHOULD BE CONSOLIDATED AND FIXED FOR HEARING AT AN EARLY DATE. 2 . DURING THE COURSE OF HEARING OF THE PETITION OF THE ASSESSEE FOR EARLY HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE COORDINATE BENCH FOR ASSESSMENT YE AR 2011 12, 2007 08 TO 2009 10 DATED 25/7/2019 WHEREIN THE ISSUE IS ALLOWED HOLDING THAT SUCH EXPENDITURE OF SOFTWARE AND E DP SERVICES ARE REVENUE IN NATURE. THEREFORE, THESE IMPUGNED APPEAL IS MAY BE CONSOLIDATED AND HEARD AT AN EARLY DATE. PAGE | 2 3 . WITH TH E CONSENT OF THE PARTIES , AS NO OTHER ISSUE IS INVOLVED IN THESE APPEALS, AT THE TIME OF HEARING THE APPLICATION OF THE ASSESSEE FOR CONSOLIDATION AND EARLY FIXATION ITSELF , ALL THESE APPEALS WERE TAKEN FOR HEARING ITSELF. 4 . FOR ASSESSMENT YEAR 2012 1 3 ASSESSEE FILED ITS RETURN OF INCOME ON 30/11/2012 DECLARING INCOME OF INR 7 462300/ . ASSESSMENT U/S 143 (3) OF THE ACT WAS PASSED ON 14/3/2016 AT INR 8 5762426/ . THE ASSESSEE CLAIMED AN EXPENDITURE OF INR 15931717/ ON ACCOUNT OF SOFTWARE AND E DP CHAR GES AS REVENUE EXPENDITURE WHICH WAS HELD BY THE LEARNED ASSESSING OFFICER AS CAPITAL EXPENDITURE. HE ALLOWED DEPRECIATION AT THE RATE OF 60% THEREON AND MADE THE NET ADDITION OF INR 6 372687/ . ON APPEAL BEFORE THE LEARNED CIT A ACTION OF THE LEARNED ASSESSING OFFICER WAS CONFIRMED ON ACCOUNT OF THE ORDER OF THE LEARNED CIT A IN ASSESSEES OWN CASE IN EARLIER YEARS CONFIRMING ACTION OF THE LEARNED ASSESSING OFFICER. THUS THE ASSESSEE IS IN APPEAL. 5 . FOR ASSESSMENT YEAR 2013 14 THE ASSESSEE FILED ITS RETURN OF INCOME ON 29/11/2013 DECLARING A LOSS OF RS. 2 828080/ . THE ASSESSMENT U/S 143 (3) OF THE INCOME TAX ACT WAS PASSED ON 18/3/2016 WHEREIN SOFTWARE AND E DP CHARGES OF INR 18471175 WERE CLAIMED A S REVENUE EXPENDITURE BY THE ASSESSEE BUT THE ASSESSING OFFICER CONSIDERED SAME AS CAPITAL EXPENDITURE AND ALLOWED 60% DEPRECIATION THEREON. AFTER ALLOWING D EPRECIATION RS. 7388470/ WERE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL BEFORE THE LEARNED CIT A FOLLOWING THE ORDER OF THE LEARNED CIT A IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007 08, 2008 09 AND 2009 10 HELD THAT SAME ARE CAPITAL IN NATURE. THUS THE ASSESSEE IS IN APPEAL. 6 . FOR ASSESSMENT YEAR 2014 15 ASSESSEE FILED IT S RETURN OF INCOME ON 29/11/2014 DECLARING AN INCOME OF INR 6 9705090/ . ASSESSMENT U/S 143 (3) OF THE ACT WAS PASSED WHEREIN THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT INR 7 9438111/ . DURING THE YEAR THE ASSESSEE HAS INCURRED A N EXPENDITURE OF RS. 2 4332553/ ON ACCOUNT OF E DP CHARGES WHICH WAS CLAIMED BY THE ASSESSEE AS REVENUE EXPENDITURE BUT THE LEARNED ASSESSING OFFICER HELD IT TO BE CAPITAL EXPENDITURE , ALLOWED PAGE | 3 DEPRECIATION AT THE RATE OF 60% AND MADE THE NET ADDITION OF INR 9 733021/ . ON APPEAL BEFORE THE LEARNED CIT A FOLLOWING THE ORDER OF THE LEARNED CIT A IN ASSESSEES OWN CASE FOR EARLIER YEARS CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFICER. THUS THE ASSESSEE IS IN APPEAL. 7 . HEARD THE RIVAL PARTIES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE ISSUE OF ALLOWABILITY OF SOFTWARE AND ELECTRONIC DATA PROCESSING CHARGES HAS BEEN CONSIDERED BY THE COORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NUMBER 1055/ D EL/2016 AND ITA NUMBER 3417 3419/ D EL/2017 FOR ASSESSMENT YEAR 200 7 08 TO 2009 10 AND 2011 12 WHEREIN AS PER PARA NUMBER 26 OF THE ABOVE ORDER, THE COORDINATE BENCH FOLLOWING THE DECISION OF THE HONOURABLE DELHI HIGH COURT IN CASE OF CIT VS ASHAI INDIA SAFETY GLASS LTD (2011) 246 ITR 329 (DELHI) AND THE GUIDELINES LAID DOWN IN THE CASE OF CIT VS JK SYNTHETICS 309 ITR 371 HELD THAT SOFTWARE AND ELECTRONIC DATA PROCESSING CHARGES INCURRED BY THE ASSESSEE ARE REVENUE IN NATURE AND THE ASSESSEE IS ENTITLED TO CLAIM THE SAME AS ALLOWABLE DEDUCTION. THE ISSUE IN THESE A PPEALS IS IDENTICAL TO THE ISSUE DECIDED BY THE COORDINATE BENCH IN ASSESSEES OWN CASE IN EARLIER YEARS. THE LEARNED CIT A HAS ALSO CONFIRMED THE DECISION OF THE ASSESSING OFFICER FOR ALL THESE YEARS FOR THE REASON THAT ISSUE IN EARLIER YEARS IS IDENTI CAL TO THE ISSUE IN IMPUGNED ASSESSMENT YEARS. NO DISTINGUISHING FEATURE IN THE FACTS WAS POINTED OUT BY EITHER OF THE PARTIES. IN VIEW OF THIS, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE IN EARLIER YEARS WE ALSO HOLD THAT SOFTWARE AND ELECTRONIC DATA PROCESSING CHARGES INCURRED BY THE ASSESSEE ARE REVENUE EXPENDITURE. ACCORDINGLY, ALL THE GROUNDS RAISED IN THESE 3 APPEALS RELATING TO ALLOWABILITY OF THE SOFTWARE AND ELECTRONIC DATA PROCESSING CHARGES AS REVENUE EXPENDITURE ARE ALLOWED. 8 . ACCORDINGLY ALL THESE 3 APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 / 10 / 2019 . - SD/ - - SD/ - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 / 10 / 2019 A K KEOT PAGE | 4 COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI