M/s. Softlink International Pvt.Ltd., Pune V. ACIT, Cir.-6, Pune

ITA 575/PUN/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62723 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-04-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 16-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES, A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, J.M. AND SHRI G.S. PANNU, A.M. I.T.A. NO. 575 TO 577/PN/2010 A.Y. 2001-02 TO 2003-04 SOFTLINK INTERNATIONAL PVT.LTD., 2 ANAND PARK AUNDH, PUNE-411 007. PAN AAACI 5704 J .. APPELLANT VS. ASSTT. CIT CIR. 6, PUNE .. RESPONDENT APPELLANT BY: SHRI NIKHIL PATHAK RESPONDENT BY: MS. ANN KAPTHUAMA DATE OF HEARING : 09-04-2012 DATE OF PRONOUNCEMENT: 25-4-2012 ORDER PER SHAILENDRA KUMAR YADAV, JM THESE THREE APPEALS BY THE SAME ASSESSEE INVOLVE COMMON GROUNDS. THEY WERE THEREFORE, HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS FILED THESE APPEALS AGAINST THE ORDER OF THE CIT(A)III PUNE DATED 30-12-2009 FOR A. Y. 2001-02, 2002-03 AND 2003-04 ON THE POINT OF CONFIRMATION OF PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ITA NO. 575 TO 577/PN/2010 SOFTLINK INTERNATIONAL A.Y. 2001-02 TO 2003-04 2 3. THE FIRST COMMON ISSUE INVOLVES IN ALL THESE APPEALS RELATES TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF THE CLAIM OF DEDUCTION U/S 10A MADE BY THE ASSESSEE COMPANY. 4. AT THE OUTSET OF HEARING, THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE QUANTUM ADDITION AGAINST WHICH THE IMPUGNED PENALTY HAS BEEN LEVIED, WAS THE SUBJECT MATTER OF APPEAL BEFORE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 417 TO 419/PN/2008 AND 955 & 956/PN/2008 FOR A.Y. 2000-01 TO 2005-06 AND THE TRIBUNAL VIDE ITS ORDER DATED 14-2-2012 HAS HELD THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN DENYING THE CLAIMED DEDUCTION U/S 10A TO THE ASSESSEE IN A.Y. 2001-02, 2002-03 AND 2003-04 AND DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEDUCTION U/S 10A OF THE ACT ON THE ELIGIBLE STPI UNIT. THE LEARNED DR DID NOT DISPUTE THIS FACTUAL POSITION. 5. THE NEXT ISSUE RAISED ONLY FOR A.Y. 2003-04 IS I N RESPECT OF PROJECT DEVELOPMENT EXPENDITURE. WE FIND THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION IN THE ASSESSEES OWN CASE FOR A.Y. 2000-01 TO 2005-06 AND THE TRIBUNAL VIDE ITS ORDER DATED 14-2-2012 IN ITA NO. 417 TO 419/PN/2008 AND 955 & 956/PN/2008 ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER: ITA NO. 575 TO 577/PN/2010 SOFTLINK INTERNATIONAL A.Y. 2001-02 TO 2003-04 3 HAVING GONE THROUGH THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF RENU ELECTRONICS PVT. LTD. VS. DCIT & VICE VERSA (ITA NO. 1709 AND 1604/PN/2005 FOR A.Y. 2002-03 DATED 30-4-2009), WE FIND THAT IN THAT CASE, ASSESSEE HAD INCURRED PRODUCT DEVELOPMENT EXPENDITURE ON DEVELOPMENT OF NEW TYPES OF PRODUCTS. THE TRIBUNAL FOLLOWING SEVERAL DECISIONS CITED BEFORE IT INCLUDING DECISIONS IN THE CASES OF KEDARNATH JUTE MANUFACTURING CO. LTD. VS. CIT (1971) 82 ITR 363 (SC), ACIT VS. MEDICAMEN BIOTECH LTD. (2006) 99 TTJ (DEL) 873, CIT VS. SAKTHI SOYAS LTD., (2008) 283 ITR 193 (MAD), HAS HELD THAT THE EXPENDITURE INCURRED ON DEVELOPMENT OF NEW PRODUCT WAS A REVENUE EXPENDITURE AND NOT CAPITAL EXPENDITURE. FACTS OF THE PRESENT CASE BEFORE US ARE ALMOST SIMILAR AS IN THE PRESENT CASE ALSO THE ASSESSEE HAS INCURRED EXPENDITURE ON THE DEVELOPMENT OF TWO NEW PRODUCTS NAMELY IMAGE AND PANACEA AND HAS CLAIMED THE SAME AS REVENUE EXPENDITURE IN ITS RETURNED INCOME. WE THUS RESPECTFULLY FOLLOWING THE CITED DECISION IN THE CASE OF RENU ELECTRONICS PVT. LTD (SUPRA), HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIMED PRODUCT DEVELOPMENT EXPENDITURE AS REVENUE EXPENDITURE. THE AO IS ACCORDINGLY DIRECTED TO ALLOW THE SAME. THE ISSUE IS THUS ALLOWED IN FAVOUR OF THE ASSESSEE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY THE IMPUGNED PENALTIES ARE LEVIED ON TWO COUNTS. A COMMON ISSUE IN ALL THREE YEARS IS WITH REGARDS TO CLAIM OF DEDUCTION U/S 10A WHICH HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AS DISCUSSED IN 4 ABOVE. IN A.Y. 2003-04 IN ADDITION TO DEDUCTION U/ S 10A, THERE IS ONE MORE ISSUE OF ALLOWABILITY OF ITA NO. 575 TO 577/PN/2010 SOFTLINK INTERNATIONAL A.Y. 2001-02 TO 2003-04 4 PROJECT DEVELOPMENT EXPENDITURE WHICH IS ALSO THE BASIS FOR PENALTY IN A.Y. 2003-04. IN QUANTUM PROCEEDINGS BOTH THESE ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 14-2-2012 WHICH HAS NOT BEEN DISPUTED BY THE REVENUE. SINCE THE QUANTUM HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE ON BOTH THESE COUNTS, SO, CONSEQUENTLY, TH E PENALTY IS ALSO NOT LEVIABLE. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. DECISION IS PRONOUNCED IN THE OPEN COURT ON 25 TH APRIL 2012. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 25 TH APRIL 2012. ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-(A) III PUNE 4. THE CIT III PUNE 4. THE D.R, ITAT PUNE BENCH, PUNE 6. GUARD FILE BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL ITA NO. 575 TO 577/PN/2010 SOFTLINK INTERNATIONAL A.Y. 2001-02 TO 2003-04 5