NEFAB INDIA P. LTD, MUMBAI V. ACIT 10(3),

ITA 4716/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7613 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 26-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 07-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Assessee Lawyers: JIGAR SAIYA
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE APPELLATE APPELLATE APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A.NO.4716/MUM/2010 A.Y 2007-08 NAEFAB INDIA PVT. LTD., 5, 1 ST FLOOR, NIHARIKA SHOPPING PLAZA, NEXT TO HIRANANDANI MEADOWS, OFF POKHRAN ROAD, 2, MAJIWADE, THANE 400 610. PAN: AACCN 1599 G VS. ASST. COMMISSIONER OF I.T. 10(3), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JIGAR SAIYA. RESPONDENT BY : SHRI NAVEEN GUPTA. DATE OF HEARING: 26-03-2012. DATE OF PRONOUNCEMENT: 28-03-2012. O R D E R PER T.R.SOOD, AM: IN THIS APPEAL ASSESSEE HAS RAISED VARIOUS GROUNDS. 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG THE ASSESSMENT PROCEEDINGS AO NOTICED THAT ASSESSEE CLA IMED EXPENDITURE OF RS.5,18,320/- ON ACCOUNT OF I.T. SERVICES AND TH E SAME WAS CLAIMED AS REVENUE EXPENDITURE. SINCE NO EXPLANATION WAS FI LED IN RESPONSE TO THE QUERY PLACED BY THE AO, THIS EXPENDITURE WAS TR EATED AS CAPITAL EXPENDITURE AND ACCORDINGLY DISALLOWED. 3. BEFORE THE LD. CIT(A) IT WAS MAINLY CONTENDED TH AT CERTAIN SUBMISSIONS WERE MADE BEFORE THE AO WHICH HAVE NOT BEEN ITA NO.4716 OF 2010 NEFAB INDIA PVT.LTD. 2 CONSIDERED. SOME MORE DETAILS WERE FILED BEFORE THE LD. CIT(A) WHO ULTIMATELY ALLOWED A SUM OF RS.1122/-. AN ALTERNATI VE GROUND WAS ALSO TAKEN THAT IF I.T. EXPENDITURE IS TREATED AS CAPITA L EXPENDITURE, THEN AT LEAST DEPRECIATION MAY BE ALLOWED AND THE LD. CIT(A ) ACCORDINGLY DIRECTED THE AO TO ALLOW THE DEPRECIATION AS PER TH E LAW. 4. BEFORE US LD. COUNSEL OF THE ASSESSEE REFERRED T O VARIOUS DOCUMENTS FILED IN THE PAPER BOOK IN THE SHAPE OF I NVOICES FOR I.T. SERVICES AND CERTAIN AGREEMENTS AND MADE VARIOUS SU BMISSIONS. 5. ON THE OTHER HAND, LD. DR POINTED OUT THAT THERE ARE VARIOUS OVER WRITINGS IN THE DOCUMENTS FILED WHICH HAVE BEE N NOTICED BY THE CIT(A) AND THAT IS WHY THE CLAIM HAS BEEN REJECTED AND HE ACCORDINGLY SUPPORTED THE ORDER OF THE CIT(A). 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT IT SEEMS AO HAS NOT GIVEN THE PROPER OPPORTUNITY TO FILE THE DE TAILS REGARDING THE I.T. SERVICES THAT IS WHY EVEN CUTTING ON THE INVOI CES ETC. COULD NOT BE EXPLAINED BY THE ASSESSEE. THEREFORE, IN THE INTERE STS OF JUSTICE WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MAT TER TO THE FILE OF THE AO FOR RE-EXAMINATION OF THE ISSUE. IF ALL ITEMS OF EXPENDITURE ARE BASICALLY FOR ACQUISITION OF SOFTWARE THEN AO SHOUL D ALLOW DEPRECIATION IN ACCORDANCE WITH THE LAW AND IF THE SAME IS FOR M AINTENANCE ETC., THEN SUCH EXPENSES MAY BE ALLOWED. NEEDLESS TO SAY THAT ASSESSEE SHOULD BE GIVEN AN ADEQUATE OPPORTUNITY TO PRESENT ITS CASE. ITA NO.4716 OF 2010 NEFAB INDIA PVT.LTD. 3 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 8/3/2012. SD/- SD/- (VIJAY PAL RAO) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 2012. P/-*