BAJAJ ELECTRICALS LTD, MUMBAI V. DCIT RG 2(1), MUMBAI

ITA 5125/MUM/2010

• Counselvise Citation: 512519914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 21-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G Y WAGH
• Assessee Lawyers: CHARUL TOPRANI
• Keywords: Depreciation; Revenue expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AN D SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 5125/MUM./2010 (ASSESSMENT YEAR : 2002-03 ) BAJAJ ELECTRICALS LTD. 45/47, VEER NARIMAN ROAD FORT, MUMBAI 400 001 PAN AAACB2484Q .. APPELLANT V/S DY. COMMISSIONER OF INCOME TAX-1(2) AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : MS. CHARUL TOPRANI REVENUE BY : MR. G.Y. WAGH DATE OF HEARING 23.8.2011 DATE OF ORDER 30.8.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 6 TH APRIL 2010, PASSED BY THE COMMISSIONER (APPEALS)-IV, MUMBAI, FOR ASSESSMENT YEAR 2002-03, ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION O F THE ASSESSING OFFICER IN NOT GRANTING DEDUCTION IN RESPECT OF SOF TWARE EXPENDITURE AMOUNTING TO ` 19,77,920 UNDER SECTION 37(1) OF THE ACT. BAJAJ ELECTRICALS LTD. ITA NO.5125/M/2010 2 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT( A) FAILED TO GIVE ANY FINDING IN RESPECT OF THE ALTERNATE GROUND NO.2 .3 RAISED THAT IF THE SOFTWARE EXPENSES ARE TO BE TREATED AS CAPITAL EXPE NDITURE DEPRECIATION OUGHT TO BE ALLOWED @ 60% INSTEAD OF 2 5%. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION O F THE ASSESSING OFFICER IN NOT ALLOWING DEDUCTION AMOUNTING TO ` 3,39,133 IN RESPECT OF EXPENDITURE PERTAINING TO ASSESSMENT YEAR 2002-03 B UT DEBITED IN THE ASSESSMENT YEAR 2004-05. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT ALLOWING DEDUCTION AMOUNTING TO ` 22,34,325 IN RESPECT OF EXPENDITURE PERTAINING TO A SSESSMENT YEAR 2002-03 BUT DEBITED IN THE ASSESSMENT YEAR 2003-04. 2. WE HAVE HEARD LEARNED COUNSEL, MS. CHARUL TOPRANI, ON BEHALF OF THE ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENTATIV E, MR. G.Y. WAGH, ON BEHALF OF THE REVENUE. 3. THE FIRST ISSUE AS TO WHETHER THE EXPENDITURE INCUR RED ON SOFTWARE IS ALLOWABLE AS REVENUE EXPENDITURE OR NOT. ALTERNATIV ELY, DEPRECIATION IS CLAIMED @ 60%. 4. BOTH PARTIES AGREED THAT THE ISSUE MAY BE RESTORED TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION IN LINE WI TH THE PROPOSITION LAID DOWN BY THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN A MWAY INDIA ENTERPRISES V/S DCIT, (2008), 111 ITD 112 (DEL.). IN VIEW OF THE AB OVE SUBMISSIONS, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) AND RESTORE THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR DENOVO ADJUDICATION AND IN ACCORDANCE WITH LAW. 5. COMING TO GROUND NO.2, AS THIS DEPENDS ON THE FINDI NG ARRIVED AT WHILE DISPOSING GROUND NO.1 AND AS THE REVENUE AUTHORITIE S HAVE NOT ADJUDICATED THIS GROUND, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) AND RESTORE THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR DENOVO ADJUDICATION IN ACCORDANCE WITH LAW. 6. AS REGARDS GROUND NO.3, LEARNED COUNSEL DID NOT WIS H TO PRESS THIS GROUND AND, CONSEQUENTLY, WE DISMISS THIS GROUND AS NOT PRESSED . BAJAJ ELECTRICALS LTD. ITA NO.5125/M/2010 3 7. GROUND NO.4, IS ON THE ALLOWABILITY OF ` 22,34,325. THE ASSESSEE MADE THIS CLAIM IN ASSESSMENT YEAR 2003-04. 8. ON THE SUBMISSIONS MADE BY THE ASSESSEE THAT THE EX PENDITURE PERTAINS TO ASSESSMENT YEAR 2002-03, THE ASSESSING OFFICER DISALLOWED THE AMOUNT IN ASSESSMENT YEAR 2003-04. THE ASSESSEE CLA IMED THE DEDUCTION BY WAY OF RAISING AN ADDITIONAL GROUND BEFORE THE COMM ISSIONER (APPEALS) BUT WITHOUT ANY SUCCESS. THE ISSUE IS NOW BEFORE US. 9. IN OUR CONSIDERED OPINION, THE EXPENDITURE HAS TO B E ALLOWED IF THE GENUINENESS OF THE SAME IS NOT DOUBTED AND IF IT IS INCURRED FOR THE PURPOSE OF BUSINESS AND THE SAME CRYSTALLIZED DURING THE YE AR. IF THE CLAIM FOR EXPENDITURE HAS BEEN REJECTED IN ASSESSMENT YEAR 20 03-04 ON THE GROUND THAT IT PERTAINS TO ASSESSMENT YEAR 2002-03, THE SA ME SHOULD HAVE BEEN EXAMINED IN THE ASSESSMENT YEAR 2002-03. AS NO SUCH EXAMINATION HAS TAKEN PLACE, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) AND RESTORE THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR DENOVO ADJUDICATION AND IN ACCORDANCE WITH LAW. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.8.2011 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 30.8.2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, B BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI