M/s Shelk Software Private Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-6(1)(1), Bangalore

ITA 398/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4751 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 09-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Keywords: Depreciation; Opportunity of being heard; Unabsorbed depreciation
• Section: 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 398 / BANG/201 8 ASSESSMENT YEAR : 20 1 2 - 1 3 M/S. SHELK SOFTWARE PVT. LTD., #12, VARSAV PLAZA, JAYAMAHAL MAIN ROAD, BANGALORE 560 046. PAN: AABCS9299M VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 6 (1) (1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVISHANKAR, ADVOCATE RESPONDENT BY : SMT. PADMA MEENAKSHI, JCIT (DR) DATE OF HEARING : 09 . 0 5 .2018 DATE OF PRONOUNCEMENT : 01 . 06 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT (A)-6, BANGALORE DATED 16.10.2017 FOR ASSES SMENT YEAR 2012-13. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) PASSED UNDER SECTION 250 OF THE ACT IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, PR OBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 2. THE APPELLANT DENIES TO BE LIABLE TO A TAX DEMAN D OF RS. 2,56,681/ - AS PER THE ORDER DT. 13.03.2015 PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961, ON THE FACTS AND CIRCUMSTANCES OF THE AP PELLANT'S CASE. 3. THE LEARNED CIT (A), IN PASSING THE ORDER U/S. 2 50 OF THE INCOME TAX ACT, 1961, HAS NOT ADJUDICATED ON THE APPELLANT'S G ROUND OF APPEAL WHEREIN THE ASSESSING OFFICER HAD ERRED IN TREATING PROFIT OF RS. 13,91,660 ON REDEMPTION OF UNITS OF MUTUAL FUNDS AS SHORT TERM CAPITAL GAINS WHEN THE SAME WERE LONG TERM CAPITAL GAINS, W HICH ON INDEXATION RESULTED IN A LONG TERM CAPITAL LOSS OF RS. 10,63,890. ITA NO.398/BANG/2018 PAGE 2 OF 4 4. THE LEARNED CIT(A) DID NOT APPRECIATE THE FACT T HAT COMPUTER SOFTWARE PURCHASED PRIOR TO THE COMPANIES AMENDMENT ACT WERE TREATED AS 'NONCURRENT ASSETS' AND WHERE AMORTISED OVER THE PERIOD OF USE AND AFTER THE SAID AMENDMENT, THE REVISED SCHED ULE VI OF THE COMPANIES ACT, 'COMPUTER SOFTWARE' WAS TREATED AS ' INTANGIBLE ASSETS' AND ACCORDING DEPRECIATED AS ALLOWED U/ S. 32 OF TH E INCOME TAX ACT, 1961 AT A RATE @ 25% AS APPLICABLE TO 'INTANGIBLE A SSETS'. 5. THE LEARNED CIT (A) OUGHT TO HAVE CONSIDERED THE VARIOUS SUPPORTING DOCUMENTS SUBMITTED BY THE APPELLANT DUR ING THE APPELLATE PROCEEDINGS, INCLUDING THE COPY OF THE INVOICE FOR IMPORT OF SOFTWARE (IN FY 2006-07) AND ITS CUSTOMIZED COST INCURRED PR IOR TO FY 2011-12 AND ALLOWED DEPRECIATION OF 30,77,944 ON INTANGIBLE ASSETS, U/S. SEC 32 (1) OF THE INCOME TAX ACT, 1961, FOR ASST. YEAR 2012-13. 6. THE LEARNED CIT(A) OUGHT TO HAVE ALLOWED SET-OFF S OF THE UNABSORBED BUSINESS LOSS OF RS. 832,900 AND UNABSOR BED DEPRECIATION OF RS. 159,764 (BOTH TOTALING TO RS. 962,664) OF FY 2010-11 (AY 2011- 12) EVEN WHEN COPY OF THE INTIMATION ORDER OF AY 20 11-112 WAS SUBMITTED DURING THE APPELLATE PROCEEDINGS. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, SUBSTI TUTE AND DELETE ANY OR ALL OF THE GROUNDS OF APPEAL URGED ABOVE. 8. FOR THE ABOVE AND OTHER GROUNDS TO BE URGED DURI NG THE HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL BE A LLOWED IN THE INTEREST OF EQUITY AND JUSTICE. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT GROU ND NOS. 1 AND 2 ARE GENERAL. REGARDING GROUND NO. 3 RAISED BEFORE THE TRIBUNAL, IT WAS SUBMITTED THAT THIS ISSUE WAS RAISED BEFORE CIT(A) BY WAY OF GROUND NO. 2 RAISED BEFORE CIT(A) BUT GROUND NO. 2 RAISED BEFORE CIT(A) WAS NOT DECIDED B Y CIT(A) AND THEREFORE, THIS MATTER MAY BE RESTORED BACK TO THE FILE OF CIT (A) FOR DECISION. 4. REGARDING GROUND NOS. 4 AND 5 RAISED BEFORE THE TRIBUNAL, IT WAS SUBMITTED THAT AS PER PARAS 8 AND 9 OF THE ORDER OF CIT (A), SHE H AS DECIDED THE ISSUE ON THIS BASIS THAT THE ASSESSEE HAS CLAIMED A SUM OF RS. 30 ,77,944/- AS DEPRECIATION ON INTANGIBLE ASSETS BUT NO DETAIL OF THESE INTANGI BLE ASSETS WERE FILED BEFORE AO OR BEFORE CIT(A). HE SUBMITTED THAT SINCE THE I SSUE RAISED BY ASSESSEE BEFORE TRIBUNAL BY WAY OF GROUND NO. 3 HAS TO GO BA CK TO THE FILE OF CIT(A) FOR DECISION, THE ISSUE RAISED BY ASSESSEE AS PER GROUN D NOS. 4 AND 5 IN RESPECT OF DEPRECIATION ON INTANGIBLE ASSETS MAY ALSO BE RESTO RED BACK TO THE FILE OF CIT(A) ITA NO.398/BANG/2018 PAGE 3 OF 4 FOR FRESH DECISION AND IF THIS IS DONE, THE ASSESSE E WILL FURNISH ALL THE EVIDENCES BEFORE CIT(A) IN THIS REGARD. THE LD. DR OF REVENU E SUPPORTED THE ORDER OF CIT(A). 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS.I FIND T HAT THE LD. CIT(A) HAS REPRODUCED THE GROUNDS RAISED BEFORE HIM AND AS PER GROUND NO. 2 RAISED BEFORE CIT(A), THE ISSUE RAISED WAS THIS AS TO WHET HER THE AO IS JUSTIFIED IN TREATING LONG TERM CAPITAL GAINS ON REDEMPTION OF U NITS OF MUTUAL FUNDS AS SHORT TERM CAPITAL GAINS. BUT THEREAFTER, IN PARA 7 OF I TS ORDER, IT IS NOTED BY CIT(A) THAT THE ISSUES TO BE ADJUDICATED IN THE INSTANT AP PEAL ARE DISALLOWANCE OF DEPRECIATION AMOUNTING TO RS. 30,77,944/-, NOT SETT ING OFF UNABSORBED BUSINESS LOSS AND UNABSORBED DEPRECIATION OF AY 2011-12 IN C URRENT YEAR AND HENCE, IT IS SEEN THAT THE ISSUE RAISED BY THE ASSESSEE BEFOR E CIT(A) AS PER GROUND NO. 2 WAS NOT DECIDED BY CIT(A) AS PER THE IMPUGNED ORDER . THEREFORE, THIS ISSUE HAS TO GO BACK TO THE FILE OF CIT (A) FOR DECISION. I ALSO FEEL THAT IN THE INTEREST OF JUSTICE, THE REMAINING ISSUE IN RESPECT OF ALLOW ABILITY OF DEPRECIATION ON INTANGIBLE ASSETS AND ALLOWABILITY OF SET OFF OF B/ F BUSINESS LOSS AND UNABSORBED DEPRECIATION FOR EARLIER YEARS (IF ANY) MAY ALSO GO BACK TO THE FILE OF CIT(A) FOR FRESH DECISION. HENCE, I SET ASIDE T HE ORDER OF CIT(A) AND RESTORE THE ENTIRE MATTER BACK TO THE FILE OF CIT(A) FOR FR ESH DECISION WITH THE DIRECTION THAT HE SHOULD DECIDE THE ISSUE IN RESPECT OF NATUR E OF CAPITAL GAIN ON REDEMPTION OF UNITS OF MUTUAL FUNDS AS TO WHETHER T HE SAME IS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN. HE SHOULD ALSO DEC IDE THE ISSUE REGARDING ALLOWABILITY OF DEPRECIATION ON INTANGIBLE ASSETS A ND ALSO REGARDING THE AVAILABILITY OF ANY B/F BUSINESS LOSS AND BROUGHT F ORWARD UNABSORBED DEPRECIATION AS BEING CLAIMED BY THE ASSESSEE AND I TS ALLOWABILITY FOR SET OFF IN THE PRESENT YEAR> THE ASSESSEES CLAIM IS FOR SET O FF OF UNABSORBED BUSINESS LOSS OF RS. 8,32,900/- AND BROUGHT FORWARD DEPRECIA TION OF RS. 1,59,764/-. ALL THESE ISSUES SHOULD BE DECIDED BY WAY OF A SPEAKING AND REASONED ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BO TH SIDES. ITA NO.398/BANG/2018 PAGE 4 OF 4 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 01 ST JUNE, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.