APM TERMINALS INDIA P.LTD ( FORMLERLY KNOW AS MAERSK INDIA P. LTD), MUMBAI V. ASST CIT RG 6(3), MUMBAI

ITA 3284/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3355 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D PRABHAKAR REDDY
• Keywords: Earning of tax free income; Revised return
• Section: 143(3); 14A; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B , MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH , JUDICIAL MEMBER ITA NO. 3072/MUM/2013 : (A.Y : 200 7 - 0 8 ) ACIT, CIRCLE - 6(3), MUMBAI. VS. M/S. MAERSK INDIA PVT. LTD., EMPIRE INDUSTRIES COMPLEX, 414, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI - 13. PAN : AAACM8741P ITA NO. 3069 /MUM/201 3 : (A.Y : 2008 - 09) ACIT, CIRCLE - 6(3), MUMBAI. VS. M/S. APM TERMINALS INDIA PVT. LTD., 12 TH FLOOR, TOWER - A, URMI ESTATE, G.K. MARG, LOWER PAREL, MUMBAI - 13. PAN : AAACM8741P ITA NO S . 3283/MUM/2013 & 3284/MUM/2013 : (A.Y : 200 7 - 0 8 ) (A.Y : 2008 - 09) APM TERMINALS INDIA PVT. LTD., (FORMERLY KNOWN AS MAERSK INDIA PVT. LTD. ) 11 TH FLOOR, TOWER A, URMI ESTATE, G.K. MARG, LOWER PAREL, MUMBAI 13. PAN : AAACM8741P VS. ACIT, RANGE - 6(3), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NIRAJ SHETH REVENUE BY : SHRI D. PRABHAKAR REDDY (DR) DATE OF HEARING : 1 5 /0 3 /2016 DATE OF PRONOUNCEMENT : 30 /03/2016 2 M/S. MAERSK INDIA PVT. LTD. & APM TERMINALS INDIA PVT. LTD. ITA NOS. 3069, 3072, 3283 & 3284/MUM/2013 O R D E R PER R.C. SHARMA, AM : THESE ARE CROSS - APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST ORDER OF CIT(A) FOR A.YS 2007 - 08 AND 2008 - 09, IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN BUSINESS OF SHIPPING AGENT/CONTAINER FREIGHT STATION OWNER AND OPERATOR. DURING THE COURSE OF SCRUTINY ASSESSMENT FOR BOTH THE YEARS UNDER CONSIDERA TION THE AO DECLINED ASSESSEES CLAIM OF SOFTWARE EXPENSES BY TREATING SAME AS CAPITAL IN NATURE. BY THE IMPUGNED ORDER, CIT(A) ALLOWED ASSESSEES CLAIM AGAINST WHICH REVENUE IS IN FURTHER APPEAL BEFORE US IN BOTH THE YEARS UNDER CONSIDERATION . 3. IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 2006 - 07 VIDE ORDER DT. 19.12.2014. WE ALSO FIND THAT THE ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE BO MBAY HIGH COURT IN THE CASE OF RAYCHEM RPG LTD. (346 ITR 138) , WHEREIN IT WAS HELD THAT SOFTWARE FACILITATE ASSESSEES TRADING OPERATIONS OR ENABLE THE MANAGEMENT TO CONDUCT ASSESSEES BUSINESS MORE EFFICIENTLY OR MORE PROFITABLY BUT IT IS NOT IN THE NATUR E OF PROFIT - MAKING APPARATUS. THEREFORE, EXPENDITURE ON SOFTWARE WAS TO BE ALLOWED. IN THE INSTANT CASE ALSO, ASSESSEE WAS IN THE BUSINESS OF SHIPPING AGENT, SOFTWARE WAS 3 M/S. MAERSK INDIA PVT. LTD. & APM TERMINALS INDIA PVT. LTD. ITA NOS. 3069, 3072, 3283 & 3284/MUM/2013 USED TO FACILITATE ASSESSEES BUSINESS OF SHIPPING, THEREFORE, THERE IS NO REASON T O TREAT THE EXPENDITURE ON SOFTWARE AS CAPITAL. 4. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 5. THE AO HAS ALSO MADE AN ADDITION OF CLOSING BALANCE OF CENVAT CREDIT ON ACCOUNT OF UNUTILIZED SERVICE TAX CREDIT U/S 145A OF THE ACT. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ADDITION AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT ISSUE WITH REGARD TO APPLICABILITY OF SEC. 145A ON UNUTILIZED SERVICE TAX CREDIT WAS CONSIDE RED BY THE TRIBUNAL IN ASSESSEE S OWN CASE IN ITA NO. 2864/MUM/2011 VIDE ORDER DT. 19.12.2014, WHEREIN THE TRIBUNAL HELD AS UNDER : - 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDING OF THE AO AS WELL AS LD.CIT(A). THE AMOUNT OF UNUTILIZED CENVAT CREDIT OF RS.57,39,710/ - PERTAINS TO SERVICE TAX, WHICH WAS PAYABLE ON ACCOUNT OF SERVICES RENDERED BY THE ASSESSEE. AS PER THE SERVICE TAX LAW, THE SERVICE TAX IS PAYABLE AS AND WHEN THE PAYMENT/FEES FOR UNDER LYING SERVICES PROVIDED BY THE ASSESSEE ARE REALIZED. THE CENVAT CREDIT IS AVAILABLE ONLY ON ACCOUNT OF LAWS LAID DOWN UNDER CENTRAL EXCISE ACT. HERE THERE IS NO VALUATION OF STOCK OF GOODS. SECTION 145A IS A NON OBSTANTE CLAUSE TO SECTION 145 AND PROVIDES THAT THE VALUATION OF P URCHASE AND SALE OF GOODS AND INVENTORY FOR THE PURPOSE OF DETERMINING THE INCOME CHARGEABLE UNDER THE HEAD PROFIT AND GAINS HAS TO BE ADJUSTED SO AS TO INCLUDE THE AMOUNT OF ANY TAX, DUTY, CESS, OR FEE PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS A S ON THE DATE OF VALUATION. THIS SECTION ONLY APPLIES TO PURCHASE AND SALE OF GOODS AND INVENTORY FOR THE PURPOSE OF VALUATION OF STOCK ON THE DATE OF VALUATION. IN THE NORMAL 4 M/S. MAERSK INDIA PVT. LTD. & APM TERMINALS INDIA PVT. LTD. ITA NOS. 3069, 3072, 3283 & 3284/MUM/2013 CIRCUMSTANCES IT IS AT THE TIME OF VALUATION OF CLOSING STOCK AND NOT FOR THE VA LUATION OF SERVICE CONTRACTS. IF THE PROVISION OF SECTION 145A IS NOT APPLICABLE ON SERVICES, THEN THE ACTION OF THE AO IN INVOKING THE PROVISIONS OF SECTION 145A TO MAKE THE ADDITION IS LEGALLY NOT CORRECT. ACCORDINGLY ON THIS REASON, THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THE ADDITION MADE BY THE AO IS DELETED. IN THE RESULT GROUND NO. 3 IS TREATED AS ALLOWED. 7. AS THE FACTS AND CIRCUMSTANCES DURING BOTH YEARS UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL THIS GR OUND OF ASSESSEES APPEAL IS ALLOWED , IN BOTH THE YEARS . 8. IN A.Y 200 7 - 0 8 ASSESSEE HAS ALSO TAKEN A GROUND THAT CIT(A) HAD NOT ADJUDICATED GROUND NO. 7 TAKEN BEFORE CIT(A). IT WAS ARGUED BY THE LD. AR THAT REVISED RETURNED INCOME WAS NOT CONSIDERED BY THE AO FOR THE PURPOSE OF COMPUTATION OF ASSESSED INCOME. WE FOUND THAT THE CIT(A) HAS NOT ADJUDICATED THIS GROUND. IN ALL FAIRNESS, WE RESTORE THIS MATTER BACK TO THE FILE OF THE CIT(A) FOR DECIDING AFRESH CONSIDERI NG INCOME AS PER REVISED RETURN , AND AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. 9. IN A.Y 2008 - 09 ASSESSEE HAS TAKEN A GROUND WITH REGARD TO DISALLOWANCE U/S 14A AMOUNTING TO RS.6,18,410/ - . IT WAS ARGUED BY THE LD. AR THAT THERE WAS NO EXEMPT INCOME D URING THE YEAR UNDER CONSIDERATION, THEREFORE, NO DISALLOWANCE SHOULD BE MADE. THE ISSUE WITH REGARD TO DISALLOWANCE U/S 14A WHEN THERE IS NO EXEMPT INCOME HAS BEEN CONSIDERED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD., 378 ITR 33 WHER EIN IT WAS HELD THAT NO DISALLOWANCE U/S 14A SHOULD BE MADE WHEN THERE IS NO EXEMPT INCOME DURING THE 5 M/S. MAERSK INDIA PVT. LTD. & APM TERMINALS INDIA PVT. LTD. ITA NOS. 3069, 3072, 3283 & 3284/MUM/2013 YEAR. RESPECTFULLY FOLLOWING THE ORDER OF THE HON'BLE DELHI HIGH COURT, WE DELETE THE DISALLOWANCE MADE U/S 14A OF THE INCOME TAX ACT, 1961. 10. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMISSED, WHEREAS APPEALS OF THE ASSESSEE ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 T H MARCH, 2016. SD/ - SD/ - ( PAWAN SINGH ) JUDICIAL MEMBER (R.C. SHARMA) ACCOUNTANT MEMBER MUMBAI, DATE : 3 0 T H MARCH, 2016 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, B BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI