M/s. Chroma Print, CHENNAI V. ACIT, Coimbatore

ITA 366/CHNY/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6157 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-06-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 21-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN IRS J
• Assessee Lawyers: R KUMAR
• Keywords: Reopening of assessment; Revenue expenditure
• Section: 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.A. NO.366/MDS/2012 ( / ASSESSMENT YEAR : 2005-2006 ) M/S. CHROMA PRINT, 9/66, GANESH NAGAR, G.N. MILLS POST, COIMBATORE 641 029. [PAN : AAEFC1527C] ( !% /APPELLANT) VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE II, COIMBATORE. ( &'!% /RESPONDENT) / APPELLANT BY : SHRI. R. KUMAR, ADVOCATE / RESPONDENT BY : SHRI. N. MADHAVAN, IRS, JCIT-DR. /DATE OF HEARING : 19.06.2014. /DATE OF PRONOUNCEMENT : 14.07.2014. #( / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNIN G THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIM BATORE, DATED 13.12.2011 RELEVANT TO THE ASSESSMENT YEAR 2005-20 06. I.T.A.NO.366/MDS/2012 . . :- 2 -: 2. IN APPEAL THE ASSESSEE HAS IMPUGNED THE ORDER OF TH E FIRST APPELLATE AUTHORITY ON THE ISSUE OF REOPENING OF AS SESSMENT U/S147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) AND DISALLOWANCE OF EXPENDITURE D.24,40,453/- TOWARDS P URCHASE OF SOFTWARE LIC PRINECT SIGNA STATION 74. THE ASSESSEE CLAIMED PURCHASE OF SOFTWARE AS REVENU E EXPENDITURE, WHEREAS, THE ASSESSING OFFICER HELD TH E SAME AS CAPITAL IN NATURE. AGGRIEVED BY THE ASSESSMENT ORDER THE A SSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (AP PEALS), COIMBATORE. THE COMMISSIONER OF INCOME TAX (APPEAL S) DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE ASSESS MENT ORDER. AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOM E TAX (APPEALS) THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. THE MATTER WAS HEARD AT LENGTH BY THE CO-ORDINATE BENCH OF THE TRIBUNAL ON 22 ND MAY, 2012. THE APPEAL OF THE ASSESSEE WAS ALLOWED FOR STATISTICAL PURPOSES VIDE ORDER DATED 27 TH JUNE, 2012 WITH THE FOLLOWING OBSERVATIONS:- 5. WE HAVE HEARD BOTH PARTIES AND PERUSED THE REC ORDS. THE ISSUE BEFORE US FOR CONSIDERATION IS WHETHER TH E REASSESEMNT ORDER PASSED BY THE ASSESSING OFFICER B Y ISSUING NOTICE UNDER SECTION 148 IS VALID OR NOT? IN THIS CONTEXT, THE I.T.A.NO.366/MDS/2012 . . :- 3 -: OBSERVATION OF THE CIT(A) VIDE PARA 5 OF HIS ORDER IS REPRODUCED AS UNDER:- 5. I HAVE GONE THROUGH THE INFORMATION FURNISHED BY THE APPELLANT AND ALSO THE ORDER OF THE ASSESSING OFFIC ER. AS SEEN FROM DETAILS, IN THE LETTER FILED ON 27.12.201 0 INONE PARA, THE APPELLANT SUBMITTED A CASE LAW ALF FIRM V S. CIT 189 ITR 285, WHERE THE SUPREME COURT HELD THAT REASSESSEMENT CANNOT BE BASED ON BARE OR MERE CHANG E OF OPENION. THE APPELLANT NOWHERE OBJECTED TO THE ISSUE OF NOTICE U/S. 148 NOR QUESTIONED THE SAME. EVEN D URING THE COURSE OF INITIATION OF PROCEEDING U/S. 148, TH E APPELLANT HAS NOT RAISED ANY OBJECTION BEFORE THE ASSESSING OFFICER TO PASS A SPEAKING ORDER. IT WAS ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THAT T OO IN THE MONTH OF DECEMBER, A LETTER DATED 27.12.2010 WA S FILED BEFORE THE ASSESSING OFFICER WHERE IT STATED THAT THE PROPOSED REASSESSMENT U/S. 148 IS NOT LEGALLY CORRE CT. 6. FROM THE ABOVE ORDER, WE FIND THAT THE CIT(A) WI THOUT DECIDING THE ISSUE IN ITS RIGHT PERSPECTIVE BY SIMP LY SAYING THAT OBJECTION OF THE ASSESSEE WAS RAISED BEFORE THE ASS ESSING OFFICER ONLY BY LETTER DATED 27.12.2010 WHICH IS NO T VALID IN LAW. IN OUR OPINION, CIT(A) HAS NOT CONSIDERED THE ISSUE PROPERLY. WE THEREFORE, SET ASIDE THE IMPUGNED ORDER AND REMI T THE MATTER BACK TO THE CIT(A) TO DECIDE THE MATTER AFRE SH BY CONSIDERING THE CASE LAWS RELIED ON BY THE ASSESSEE AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASS ESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES. THUS, THE CASE WAS REMITTED TO THE CIT(A) TO DECID E THE ISSUE OF REOPENING U/S. 147 OF THE ACT AFRESH. 4. THEREAFTER, THE ASSESSEE FILED MISCELLANEOUS APPLICATION NO.98/2012 STATING, THAT IN APPEAL BEFORE THE TRIBU NAL, THE I.T.A.NO.366/MDS/2012 . . :- 4 -: ASSESSEE HAD RAISED 8 GROUNDS. THE TRIBUNAL HAS CO NSIDERED ONLY FIRST 4 GROUNDS RELATING TO THE ISSUE OF RE-OPENING . THE REMAINING FOUR GROUNDS ON MERITS WERE NOT ADJUDICATED BY THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 24.08.2012 ALLOWED THE MI SCELLANEOUS APPLICATION OF THE ASSESSEE AND RECALLED THE APPEAL FOR DECIDING THE GROUNDS WHICH WERE NOT ADJUDICATED AT THE TIME OF P ASSING OF EARLIER ORDER. THE RELEVANT EXTRACT OF THE ORDER O F THE TRIBUNAL IN MISCELLANEOUS APPLICATION IS AS UNDER:- 3. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDER PASSED BY THE TRIBUNAL. WE FIND THAT THE TRIBUNAL WHILE PASSING THE ORDER DATED 27.06.20 12 HAS CONSIDERED ONLY THE ISSUE REGARDING RE-OPENING OF T HE ASSESSMENT AND INADVERTENTLY THE GROUNDS RAISED I.E GROUNDS 5 TO 8 WERE NOT CONSIDERED. IN THE CIRCUMSTANCES, IN OUR OPINION, THE ORDER OF THE TRIBUNAL HAS TO BE RECALLED. WE TH EREFORE RECALL OUR ORDER DATED 27.06.2012 AND THE DIRECT THE REGIS TRY TO POST THIS APPEAL FOR HEARING ON REGULAR COURSE, AFTER DU E PROCESS. ORDERED ACCORDINGLY. 5. IN THE BACKGROUND OF ABOVE FACTS, THE APPEAL HAS BEEN FIXED FOR HEARING TODAY FOR ADJUDICATING REMAINING 4 GROU NDS I.E. GROUND NOS. 5 TO 8, WHEREIN THE ASSESSEE HAS CHALLENGED TH E FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) WITH RESPE CT TO CLAIM OF ASSESSEE TO TREAT THE EXPENDITURE ON PURCHASE OF SO FTWARE AS I.T.A.NO.366/MDS/2012 . . :- 5 -: REVENUE EXPENDITURE. THE AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE CONTENDED THAT THE EXPENDITURE ON ACQUIRI NG SOFTWARE REPRESENTS LICENSE FEE PAID FOR NON EXCLUSIVE AND N ON TRANSFERABLE RIGHT TO USE SOFTWARE. THE RIGHTS AND TITLE IN SOF TWARE REMAIN THE PROPERTY OF VENDOR COMPANY, HENCE THE EXPENDITURE I S REVENUE IN NATURE. THE LD. AR FURTHER SUBMITTED THAT IN PUR SUANCE OF EARLIER ORDER OF THE TRIBUNAL DATED 27 TH JUNE, 2012, THE ISSUE RELATING TO REOPENING OF ASSESSMENT IS PENDING BEFORE THE COMM ISSIONER OF INCOME TAX (APPEALS). 6. IN THE FACTS AND CIRCUMSTANCES OF THE PRE SENT CASE, WE ARE OF CONSIDERED OPINION THAT IN ORDER TO MAINTAIN CON SISTENCY IN THE DECISION MAKING PROCESS AND TO AVOID CONFLICTING OR DERS, THE ENTIRE APPEAL SHOULD GO BACK TO THE COMMISSIONER OF INCOME TAX (APPEALS). AS BOTH THE ISSUES IN APPEAL HAVE OVERL APPING EFFECT, THEY CANNOT BE DECIDED INDEPENDENTLY BY TWO DIFFERE NT AUTHORITIES. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER DATED 1 3.12.2011 AND REMIT THE FILE BACK TO COMMISSIONER OF INCOME TAX ( APPEALS) TO PASS ORDER ON THE ISSUE OF RE-OPENING OF ASSESSMENT , AS WELL AS ON MERITS, AFTER AFFORDING OPPORTUNITY OF HEARING TO T HE ASSESSEE. THE I.T.A.NO.366/MDS/2012 . . :- 6 -: COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDER ING THE FACTS OF THE CASE AND PLEADINGS SHALL PASS ORDERS, IN ACC ORDANCE WITH LAW. 7. THE APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED ON MONDAY, THE 14 TH OF JULY, 2014, AT CHENNAI. SD/- SD/- ( . . . ) (DR. O.K. NARAYANAN) / VICE PRESIDENT ( ! ) (VIKAS AWASTHY) ' # / JUDICIAL MEMBER !' /CHENNAI #$ /DATED:14.07.2014. K.V $% &' (' /COPY TO: 1. ) APPELLANT 2. / RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. '+, - /DR 6. ,. / /GF.