GP Strategies India Pvt Ltd, Chennai V. ACIT (OSD), Corp Range 3, Chennai

ITA 460/CHNY/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1968 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 22-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: ARUN JOSEPH
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . , !'# $ ! %& , ' !'# !&( BEFORE SHRI DUVVURU RL REDDY , JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBE R !$ ./ ITA NO.460/CHNY/2019 ) *) /ASSESSMENT YEAR: 2015-16 M/S. GP STRATEGIES INDIA PVT. LTD., NO.4/363, BLOCK B, 1 ST AND 2 ND FLOOR, OLD MAHABALIPURAM ROAD, KANDANCHAVADI, CHENNAI 600 096. VS. THE ASST. COMMISSIONER OF INCOME TAX (OSD), CORPORATE RANGE-2, CHENNAI. [PAN: AACCG 7377H] ( +, /APPELLANT) ( -.+, /RESPONDENT) +, / 0 ! / APPELLANT BY : SHRI ARUN JOSEPH, ADVOCATE -.+, / 0 ! /RESPONDENT BY : SHRI R. ANITHA, JCIT ! / 1' /DATE OF HEARING : 26.10.2020 23* / 1' / DATE OF PRONOUNCEMENT : 03.12.2020 '4 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI, IN ITA NO.135/TR/CIT(A)-5/2017-18 DATED 27.12.2018 FOR THE ASSESSMENT YEAR (AY) 2015-16. ITA NO.460/CHNY/2019 :- 2 -: 2. M/S. G.P STRATEGIES INDIA PVT. LTD., THE ASSESSE E, IS ENGAGED IN THE BUSINESS OF TRAINING AND TECHNICAL SERVICES. WHILE MAKING THE ASSESSMENT FOR AY 2015-16, THE ASSESSING OFFICER (A O) FOUND THAT THE ASSESSEE HAD WRITTEN OFF RS. 71,93,801/- AS LEASEHO LD IMPROVEMENTS. THE ASSESSEE SUBMITTED THAT IT SHIFTED ITS OFFICE P REMISES FROM ANNAMALAIPURAM TO KANDHANCHAVADI IN OLD MAHABALIPUR AM ROAD ON A LEASED PREMISES AND IT SPENT THEM TOWARDS MATERIALS PURCHASED FOR THE INTERIOR DECORATION AND OTHER ELECTRICAL INSTALLATI ONS TO ACCOMMODATE ALL WORK STATIONS AND STAFF. THE AO HELD THAT THOUGH IN ITIALLY, THE LEASE WAS FOR A PERIOD OF THREE YEARS, THE ASSESSEE HAD RENEW ED THE LEASE AFTER THREE YEARS AND THE OFFICES ARE PRESENTLY FUNCTIONI NG FROM THERE ONLY. THEREFORE, HE HELD THAT THERE IS AN ENDURING BENEFI T AND HENCE THE IMPUGNED SUM HAS TO BE CAPITALIZED. ACCORDINGLY, HE GRANTED DEPRECIATION @ 10% ON THE SUM AND DISALLOWED THE BA LANCE SUM OF RS. 64,74,421/-. FURTHER, THE AO FOUND THAT THE ASSESSE E PURCHASED SOFTWARE FOR THE USE OF ITS BUSINESS AND CLAIMED DEPRECIATIO N @ 60% WHICH WAS CATEGORIZED AS AN INTANGIBLE ASSET. THEREFORE, THE AO HELD THAT THIS ASSET IS ELIGIBLE FOR DEPRECIATION @ 25% ACCORDINGL Y DISALLOWED THE BALANCE 35% AND COMPLETED THE ASSESSMENT. AGGRIEV ED, THE ASSESSEE FILED AN APPEAL BEFORE CIT(A). THE LD. CIT(A) DISMI SSED THE APPEAL. AGGRIEVED AGAINST THAT ORDER OF LD. CIT(A), THE ASS ESSEE FILED THIS APPEAL. ITA NO.460/CHNY/2019 :- 3 -: 3. THE CASE WAS HEARD THROUGH VIDEO CONFERENCING. T HE LD. AR INVITING OUR ATTENTION TO PAGE NO.10 OF THE PAPER B OOK SUBMITTED THAT THE LD. CIT(A) DID NOT CONSIDER REVENUE EXPENDITURE, PE R SE, AND ERRED IN HOLDING THAT THE REPAIRS AND RENOVATION EXPENSES IN CURRED ON THE LEASED PREMISES AS CAPITAL EXPENDITURE. ON THE RESTRICTIO N OF DEPRECIATION CLAIM ON THE COMPUTER SOFTWARE, INVITING OUR ATTENTION TO THE RELEVANT ENTRY UNDER OLD APPENDIX I CLAUSE III(5) AND RELYING ON T HE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. COMPUTER AGE MANAGEMENT SERVICES (P.) LTD. [2019] 109 TAXMANN.CO M 134 (MAD.) SUBMITTED THAT THE APPEAL MAY BE ALLOWED. PER CONT RA, THE LD. DR SUBMITTED THAT THE LD. CIT(A) ON EXAMINATION OF REL EVANT MATERIAL UPHELD THE CAPITALIZATION OF EXPENDITURE AND ALLOWANCE OF DEPRECIATION AND ON THE 60% DEPRECIATION CLAIM, THE ASSESSEE HAS NOT PL ACED RELEVANT MATERIAL BEFORE THE LD. CIT(A) AND THUS SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THR OUGH THE RELEVANT MATERIAL. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE AO DECIDED THE ISSUES CRYPTICALLY. THOUGH THE ASSESSEE SUBMITS THAT IT HAS PLACED RELEVANT MATERIAL BEFORE THE LOWER AUTHORITI ES, IT IS CLEAR THAT THE ASSESSEE HAS NOT CLARIFIED BEFORE THE LOWER AUTHORI TIES WHICH ARE THE ITEMS IN ITS VIEW ARE REVENUE EXPENDITURE, PER SE, AND WHICH ITEMS OF ITA NO.460/CHNY/2019 :- 4 -: EXPENDITURE COULD BE CONSIDERED FOR CAPITALIZATION ETC. SIMILARLY, THE NATURE OF SOFTWARE PURCHASED, ITS USE, BASIS OF ASS ESSEES TREATMENT IN THE BOOKS ETC. ARE NOT EXAMINED AND BROUGHT ON RECO RD BY THE LOWER AUTHORITIES. THE LD. CIT(A) RECORDS A FINDING ON TH E FIRST ISSUE, HOWEVER ON THE SECOND ISSUE HOLDS THAT NECESSARY MATERIAL I S NOT PLACED BEFORE HIM. IN THE FACTS AND CIRCUMSTANCES, WE DEEM IT F IT TO REMIT THESE ISSUES BACK TO THE AO FOR A FRESH EXAMINATION. THE ASSESS EE SHALL LAY RELEVANT EVIDENCE/MATERIAL IN SUPPORT OF ITS CONTENTION BEFO RE THE AO AND COMPLY WITH HIS REQUIREMENTS IN ACCORDANCE WITH LAW. THE A O ON DUE EXAMINATION AFTER AFFORDING DUE OPPORTUNITY TO THE ASSESSEE AND ON DUE CONSIDERATION OF THE HONBLE JURISDICTIONAL HIGH CO URTS DECISION SUPRA, WOULD DECIDE THE ISSUES IN ACCORDANCE WITH LAW. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED ON THE DAY OF 03 RD DECEMBER, 2020 IN CHENNAI. SD/- SD/- ( . ) (DUVVURU RL REDDY) !'# /JUDICIAL MEMBER ( ! . %& ) (S. JAYARAMAN) ' !'# /ACCOUNTANT MEMBER /CHENNAI, 5'$ /DATED: 03 RD DECEMBER, 2020 . EDN, SR. P.S '4 / - 167 87*1 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 91 ( )/CIT(A) 4. 91 /CIT 5. 7:; - 1 /DR 6. ;) < /GF