DCIT, New Delhi V. M/s. Cryobanks International (India) Pvt. Ltd., New Delhi

ITA 3625/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97107 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 06-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARVINDER KAUR
• Assessee Lawyers: V K JAIN CA SHRI NEM SINGH
• Keywords: Depreciation; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B NEW DELHI BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER AND SMT BEENA A PILLAI, JUDICIAL MEMBER ITA NO: 3625/DEL/2013 ASSTT. YEAR 2008-09 DCIT VS. M/S. CRYOBA NKS INTERNATIONAL (INDIA) PVT. LTD. CIRCLE 3(1) F-27, O KHLA INDUSTRIAL AREA PHASE-1, NEW DELHI. NEW DELH I. (APPELLANT) ( RESPONDENT) APPELLANT BY : SMT. PARVINDER KAUR, SR. DR RESPONDENT BY :SHRI V.K. JAIN, CA, SHRI NEM SINGH, ADVOCATE DATE OF HEARING :28.8.2015 DATE OF PRONOUNCEMENT : 1. 9.2015 O R D E R PER T.S. KAPOOR, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGA INST THE ORDER OF LD. CIT(A) DATED 12.3.2013. THE REVENUE HAS RAISED TWO GROUNDS OF AP PEAL ONE OF WHICH RELATES TO ITS GRIEVANCE BY THE ACTION OF LD. CIT(A) BY WHICH HE H AD DELETED AN ADDITION OF RS. 18,24,276/- MADE BY AO BY CAPITALISING THE AMOUNT OF ROYALTY DEBITED BY ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT. THE SECOND ISSUE RE LATES TO THE ACTION OF LD. CIT(A) BY WHICH HE HAS DELETED THE ADDITION OF RS. 40,623/- M ADE ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED BY ASSESSEE ON COMPUTER PERIPH ERALS. AT THE OUTSET THE LD. AR SUBMITTED THAT BOTH ISSUES ARE COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF ITA NO. 3625/DEL/2013 DCIT VS. M/S. CRYOBANKS INTE RNATIONAL (INDIA) PVT. LTD. 2 TRIBUNAL DATED 14.3.2014 IN THE CASE OF ASSESSEE IT SELF AND FILED A COPY OF THE SAID TRIBUNAL ORDER. THE LD. AR INVITED OUR ATTENTION TO FIRST TWO GROUNDS OF APPEAL AS NARRATED ON THE SAID TRIBUNAL ORDER AND SUBMITTED T HAT THE GROUNDS OF APPEAL TAKEN BY REVENUE IN THE PRESENT APPEAL ARE SIMILAR. LD. D R THOUGH SUPPORTED THE ORDER OF AO FAIRLY ACCEDED THAT THE ISSUES WERE COVERED IN F AVOUR OF THE ASSESSEE. 2. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT DURING ASSESSMENT PROCEEDIN GS THE AO OBSERVED THAT ASSESSEE HAD MADE A PAYMENT AMOUNTING TO RS. 18,24, 276/- TO CRYO BANK INTERNATIONAL INC., FLORIDA, USA AND THE AMOUNT WA S DEBITED IN PROFIT AND LOSS ACCOUNT. THE ASSESSEE WAS CONFRONTED SO AS TO EXPLA IN AS TO WHY THE AMOUNT BE NOT TREATED AS CAPITAL EXPENDITURE . THE ASSESSEE SUBMI TTED ITS SUBMISSIONS . HOWEVER AO WAS NOT SATISFIED AND HE MADE THE ADDITION THERE ON. 3. SIMILARLY THE AO OBSERVED THAT ASSESSEE HAD CLAIMED DEPRECIATION ON COMPUTER ACCESSORIES@60% WHEREAS THE ASSESSEE SHOULD HAVE CL AIMED DEPRECIATION @ 15% ONLY. THEREFORE HE MADE AN ADDITION OF DIFFERENCE B ETWEEN DEPRECIATION CLAIMED AND THAT @ 15%. AGGRIEVED THE ASSESSEE FILED APPEAL BEF ORE LD. CIT(A) AND LD. CIT(A) DECIDED BOTH ISSUES IN FAVOUR OF ASSESSEE VIDE HIS FINDINGS AS CONTAINED AT PARA 5.2 TO PARA 6.6. WE FURTHER FIND THAT IN ASSESSMENT YEA R 2009-10 SIMILAR PAYMENTS WERE MADE BY ASSESSEE AGAINST THE SAME AGREEMENT WHICH T HE HONBLE TRIBUNAL HAD DECIDED IN FAVOUR OF ASSESSEE AND SIMILARLY THE DEP RECIATION CLAIM OF ASSESSEE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE BY RELYING UPON THE HONBLE DELHI HIGH COURT ORDER IN THE CASE OF BSES RAJDHANI POWER LTD.. THE RELEVANT FINDINGS OF THE TRIBUNAL AS CONTAINED IN PARA 12 TO 14 ARE REPRODUCED BELOW. ITA NO. 3625/DEL/2013 DCIT VS. M/S. CRYOBANKS INTE RNATIONAL (INDIA) PVT. LTD. 3 12. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT AS PER VARIOUS CLAUSES OF LICENSE AGREEMENT THE ASSESSEE WAS TO PAY AT THE TIME OF ENTERING OF AGREEMENT CERTAIN AMOUNTSRCOVER EQUI PMENT AND TRAIN ING AND FURTHER IT WAS REQUIRED TO PAY REGULAR ANNUA L ROYALTY ON ALL DOMESTIC SALES WHICH WAS TO BE CALCULATED ON THE BA SIS OF TURNOVER. THE LD CIT(A) THEREFORE HAS RIGHTLY HELD THE PAYMENT TO BE OF REVENUE NATURE AND HAS RIGHTLY ALLOWED THE RELIEF. THE HON'BLE DELHI HIGH COU RT IN THE CASE LAW OF CLIMATE SYSTEMS (INDIA) LTD. UNDER SIMIL AR FACTS AND CIRCUMSTANCES HAS HELD AS UNDER:- 'HELD ALLOWING THE APPEAL, THAT UNDER THE AGREEMENT P AYMENTS WERE TO BE MADE BY THE ASSESSEE IN TWO PARTS: A LUMP SUM FEE FOR TRANSFER OF TECHNOLOGY WHICH THE ASSESSEE HAD ADMI TTED AS BEING OF CAPITAL NATURE AND ROYALTY PAYMENT IN CONSI DERATION OF PROVIDING TECHNOLOGY SERVICES. THE PAYMENT OF ROYALTY DEPENDED ON THE QUANTUM OF DOMESTIC AS WELL AS EXPORT SALES W HICH WOULD DECREASE OR INCREASE EVERY YEAR DEPENDING UPON THE DECREA SE OR INCREASE IN THE SALES. THIS PAYMENT WAS NOT BECAUSE OF TRANSFER OF TECHNOLOGY BUT FOR PROVIDING TECHNICAL SERVICES. IN SUCH CIRCUMSTANCES, THE PAYMENT OF ROYALTY WHICH WAS A CO NTINUOUS PROCESS, SHOULD HAVE BEEN TREATED AS REVENUE EXPENDITU RE.' 'THEREFORE, RELYING UPON THE JUDGMENT .OF HON'BLE DELH I HIGH COURT JUDGMENT AND ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD C1T(A). THERE FORE, GROUND. NO. 1 OF APPEAL IS DISMISSED. 13. WITH REGARDS TO DISALLOWANCE OF DEPRECIATION ON CO MPUTER PERIPHERALS WE OBSERVE THAT THE SAME IS SQUARELY COVERE D BY THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF BSES RAJDHANI POWERS LTD. AND LD CIT(A) HAS RIGHTLY ALLOWED THE RELI EF. 14. IN VIEW OF THE ABOVE,' THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO. 3625/DEL/2013 DCIT VS. M/S. CRYOBANKS INTE RNATIONAL (INDIA) PVT. LTD. 4 4. SINCE THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL ARE SIMILAR THEREFORE RESPECTFULLY FOLLOWING THE TRIBUNAL ORDER DATED 14. 3.2014 WE DISMISS GROUNDS OF APPEAL RAISED BY THE REVENUE. IN VIEW OF THE ABOVE THE APPEAL FILED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1.9. 2015. SD/- SD/- (BEENA A PILLAI) (T.S. KAPOOR) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: THE 1.9. 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 31.8..2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 31.8.2 015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER