ACIT, New Delhi V. M/s. Amrop International Pvt. Ltd., Gurgaon

ITA 2919/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3622 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 10-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Depreciation; Speculation loss; Corroborative evidences
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D: NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 2919/DEL /2013 ASSESSMENT YEAR: 2009-10 ACIT, CIRCLE-1(1), ROOM NO. 390, C.R. BUILDING, I.P. ESTATE, NEW DELHI-110002 VS AMROP INTERNATIONAL PVT. LTD., 7 TH FLOOR, TOWER B, GLOBAL BUSINESS PARK, M.G. ROAD, GURGAON-122002 (PAN: AAACI4043A) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI S.K. JAIN, SR. DR ASSESSEE BY : NONE DATE OF HEARING: 06.11.2017 DATE OF PRONOUNCEMENT : 31.01.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT AGAINST THE ORDER DATED 8.2.2013 PASSED BY THE LD. CIT(A)-IV, NEW DELHI FOR ASSESSMENT YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF I NCOME WAS FILED DECLARING AN INCOME OF RS. 6,11,00,710/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT W AS ITA NO. 2919/DEL/2013 ASSESSMENT YEAR 2009-10 2 COMPLETED AT AN INCOME OF RS. 6,43,23,750/- AFTER MAKING DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED 'THE ACT') AMOUNTING TO RS . 6,57,366/-, DISALLOWANCE ON ACCOUNT OF CAPITALIZATI ON OF SOFTWARE PURCHASE AMOUNTING TO RS. 17,16,647/- AND DISALLOWANCE ON DEPRECIATION ON LAND AMOUNTING TO R S. 8,49,024/-. THE ASSESSING OFFICER ALSO TREATED THE LOSS OF RS. 1,42,25,618/- ON ACCOUNT OF SALE OF MUTUAL F UNDS REFLECTED AS SHORT TERM CAPITAL LOSS BY THE ASSESSE E AS SPECULATIVE LOSS. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) WHO DELETED THE ADDITION OF RS. 1,42,25,618/- ON ACCOUNT OF SPECULA TIVE LOSS. THE LD. COMMISSIONER OF INCOME TAX (A) ALSO DELETED THE ADDITION OF RS. 17,16,647/- ON ACCOUNT OF CAPITALIZATION OF SOFTWARE EXPENSES. THE LD. COMMISSIONER OF INCOME TAX(A) ALSO DECIDED THE ISSU E IN FAVOUR OF THE ASSESSEE WITH RESPECT TO THE ASSESSEE S GROUND RELATING TO DISALLOWANCE OF DEPRECIATION ON LAND AMOUNTING TO RS. 8,49,024/-. ITA NO. 2919/DEL/2013 ASSESSMENT YEAR 2009-10 3 2.1 NOW, THE DEPARTMENT IS BEFORE THE ITAT CHALLENG ING THE DELETION OF DISALLOWANCES BY THE LD. COMMISSION ER OF INCOME TAX (A). 3. NONE WAS PRESENT FOR THE ASSESSEE NOR WAS ANY APPLICATION FOR ADJOURNMENT FILED ON BEHALF OF THE ASSESSEE. A PERUSAL OF THE ORDER SHEET ENTRIES SHO WS THAT THIS APPEAL WAS LISTED FOR HEARING FOR THE FIRST TI ME ON 1 ST SEPTEMBER, 2014 AND SINCE THEN IT WAS ADJOURNED ON EIGHT OCCASIONS AT THE REQUEST OF THE ASSESSEE. EN TRY IN THE ORDER SHEET ON 15.3.2017 ALSO SHOWS THAT THE ASSESSEE WAS IMPOSED A COST OF RS. 5000/- FOR SEEKI NG UNWARRANTED ADJOURNMENTS. THEREFORE, ON FACTS, IT IS APPARENT THAT THIS APPEAL IS A LOW PRIORITY CASE FO R BOTH THE ASSESSEE AS WELL AS THE LD. AR AND FURTHER THE ASSESSEE IS NOT DESIROUS OF GETTING ITS CASE REPRES ENTED BEFORE THE ITAT. THEREFORE, WE DEEM IT FIT TO PROC EED WITH THE HEARING OF THE APPEAL EX PARTE QUA THE ASSESSEE. 4. LD. SR. DR READ OUT EXTENSIVELY FROM THE ASSESSM ENT ORDER AND SUBMITTED THAT AS FAR AS THE ADDITION PERTAINING TO SPECULATIVE LOSS WAS CONCERNED, THE ASSESSEE HAD NOT SUBMITTED ANY REPLY TO THE SHOW CA USE ITA NO. 2919/DEL/2013 ASSESSMENT YEAR 2009-10 4 GIVEN BY THE ASSESSING OFFICER IN THIS REGARD. IT WAS SUBMITTED THAT NO SUPPORTING EVIDENCES WERE FILED B EFORE THE ASSESSING OFFICER AND, THEREFORE, THE ASSESSING OFFICER HAD NO OPTION BUT TO TREAT THE LOSS AS A SPECULATIVE LOSS. ON THE ISSUE OF ADDITION PERTAIN ING TO CAPITALIZATION OF SOFTWARE EXPENSES, IT WAS SUBMITT ED THAT AN AMOUNT OF RS. 42,91,617/- SHOWN UNDER THE HEAD PROFESSIONAL EXPENSES HAD BEEN MADE FOR PURCHASE OF SOFTWARE. IT WAS FURTHER SUBMITTED THAT PURCHASE O F SOFTWARE BROUGHT INTO EXISTENCE AN ASSET OR AN ADVA NTAGE WHICH WAS OF ENDURING NATURE AND, THEREFORE, THE SA ME WAS CAPITAL IN NATURE AND THE ASSESSING OFFICER HAD RIGHTLY CAPITALISED THE AMOUNT AND ALLOWED DEPRECIA TION @60% THEREON RESULTING IN ADDITION OF RS. 17,16,647 /-. ON THE ISSUE OF DISALLOWANCE OF DEPRECIATION ON LAN D, IT WAS SUBMITTED THAT THE ASSESSEE HAD NOT FURNISHED T HE DETAILS OF THE BUILDING AND DEPRECIATION THEREON EV EN AFTER BEING SPECIFICALLY ASKED TO DO SO BY THE ASSE SSING OFFICER. IT WAS ALSO SUBMITTED THAT IT HAD BEEN AD MITTED BY THE ASSESSEE THAT IT HAS CAPITALISED THE TOTAL V ALUE OF PROPERTY INCLUDING THE VALUE OF BUILDING IN THE ITA NO. 2919/DEL/2013 ASSESSMENT YEAR 2009-10 5 DEPRECIATION CHART AS PER INCOME TAX ACT AND, THERE FORE, THIS DISALLOWANCE WAS ALSO IN ORDER. LD. SR. DR AL SO DREW OUR ATTENTION TO THE RELEVANT PORTIONS OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) AND SUBMITTE D THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAD ALL OWED THE GROUNDS RAISED BY THE ASSESSEE WITHOUT VERIFYIN G THE FACTS AND ALSO WITHOUT CALLING FOR ANY COMMENTS FRO M THE ASSESSING OFFICER. IT WAS SUBMITTED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) DESERVES TO BE S ET ASIDE AND THE ORDER OF THE ASSESSING OFFICER RESTOR ED. 5. WE HAVE HEARD THE LD. SR. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE DEPARTM ENTS GROUND NO.1 CHALLENGING THE DELETION OF ADDITION ON ACCOUNT OF SPECULATIVE LOSS IS CONCERNED, IT IS SEE N THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAS DISCUSSE D THIS ISSUE IN PARAGRAPHS 6, 6.1 AND 6.2 OF THE IMPU GNED ORDER AND WHILE ALLOWING THE ASSESSEES CLAIM, THE LD. COMMISSIONER OF INCOME TAX (A) HAS SIMPLY ACCEPTED THE SUBMISSIONS MADE BEFORE HIM WITHOUT CARRYING OUT AN Y VERIFICATION AT HIS END. THE LD. CIT (A) HAS NOT SP ECIFIED AS TO HOW HE HAS ARRIVED AT THE CONCLUSION THAT THE ITA NO. 2919/DEL/2013 ASSESSMENT YEAR 2009-10 6 IMPUGNED LOSS WAS NOT SPECULATIVE LOSS IN AS MUCH A S THERE IS NO REFERENCE TO ANY DOCUMENTS/EVIDENCES WH ICH WERE EXAMINED BY HIM SO AS TO ARRIVE AT A FINDING. SIMILARLY, THE ISSUE RELATING TO CAPITALIZATION OF SOFTWARE EXPENSES WHICH RELATES TO GROUND NO. 2 OF THE DEPARTMENTS APPEAL HAS BEEN DISCUSSED BY THE LD. COMMISSIONER OF INCOME TAX(A) IN PARA 7, 7.1 AND 7. 2 OF THE IMPUGNED ORDER AND WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE, THE LD. COMMISSIONER OF INC OME TAX(A) HAS SIMPLY OBSERVED THAT THE IMPUGNED PAYMEN T HAD BEEN MADE FOR DATA BASE MANAGEMENT SERVICES UND ER THE HEAD PROFESSIONAL CHARGES AND, THEREFORE, THE PAYMENT WAS REVENUE IN NATURE. HERE ALSO, THE LD. COMMISSIONER OF INCOME TAX (A) HAS NOT CARRIED OUT ANY VERIFICATION BUT HAS SIMPLY ACCEPTED THE SUBMISSION S OF THE ASSESSEE RAISED BEFORE HIM. SIMILARLY, DEPARTM ENTS GROUND NO. 3 PERTAINING TO DISALLOWANCE OF DEPRECIA TION ON LAND HAS BEEN DEALT WITH BY THE LD. COMMISSIONER OF INCOME TAX (A) IN PARA 8, 8.1 AND 8.2 OF THE IMPUGN ED ORDER AND HERE ALSO, THE LD. COMMISSIONER OF INCOME TAX (A), WHILE ALLOWING THE ASSESSEES CLAIM, HAS SIMPL Y ITA NO. 2919/DEL/2013 ASSESSMENT YEAR 2009-10 7 MENTIONED THAT SINCE THE REGISTRATION DOCUMENT DID NOT MENTION ANY SEPARATE COST FOR LAND, THE ASSESSING O FFICER WAS NOT JUSTIFIED IN TREATING 70% COST OF BUILDING AS COST ON LAND. THE LD. COMMISSIONER OF INCOME TAX(A) HAS NOT CONSIDERED THE FACT THAT THE ASSESSEE HAD HIMSELF ACCEPTED BEFORE THE ASSESSING OFFICER THAT THE TOTA L VALUE OF PROPERTY COMPRISED COST OF LAND AS WELL AS BUILD ING. THUS, HERE ALSO, THE LD. COMMISSIONER OF INCOME TAX (A) HAS NOT GIVEN A PROPER CONSIDERATION TO THE ISSUE B EFORE HIM. IN VIEW OF THE INFIRMITIES IN THE ORDER OF TH E LD. COMMISSIONER OF INCOME TAX (A) AS MENTIONED ABOVE, WE DEEM IT EXPEDIENT TO RESTORE ALL THE THREE ISSUES T O THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE THRE E ISSUES AFRESH AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY TO PRESENT ITS CASE AND TO SUBMIT THE RELEVANT DOCUMEN TS/ EVIDENCES IN SUPPORT OF ITS CLAIM. WE ALSO DIRECT THE ASSESSEE TO FULLY COOPERATE WITH THE DEPARTMENT DUR ING THE SECOND ROUND OF ASSESSMENT PROCEEDINGS AND FURN ISH ALL THE NECESSARY DOCUMENTS AND EVIDENCES WHEN CALL ED UPON TO DO SO, FAILING WHICH THE ASSESSING OFFICER SHALL BE AT LIBERTY TO PROCEED EX PARTE IN ACCORDANCE WITH LAW. ITA NO. 2919/DEL/2013 ASSESSMENT YEAR 2009-10 8 6. IN THE FINAL RESULT, THE APPEAL OF THE DEPARTMEN T STANDS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2018. SD/- SD/- (B.P. JAIN) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 ST JANUARY, 2018 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR ITA NO. 2919/DEL/2013 ASSESSMENT YEAR 2009-10 9