NIRMAL DATACOMM P. LTD, MUMBAI V. ACIT 7(1), MUMBAI

ITA 6503/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3453 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 20-12-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 18-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 43B

Judgement Text

I.T.A NO.6503/ MUM/2009 ASSESSMENT YEAR: 2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL, J BENCH, MUMBAI. CORAM D.K.AGARWAL, JM AND PRAMOD KUMAR, AM I.T.A NO.6503/ MUM/2009 ASSESSMENT YEAR: 2003-04 NIRMAL DATACOMM P.LTD., .. APPELLANT PREM ESTATEM C WING , 3 RD FLOOR, SANT SAVTA CROSS ROAD, NO.1, MUSTAFFA BAZAR, BYCULLA, MUMBAI. PA NO.AABCN 5072 B VS ASST.COMMISSIONER OF INCOME TAX,7(1) ,. RESPOND EN T MUMBAI, APPELLANT BY : SHRI PANKAJ R TOPRANI RESPONDENT BY : SHRI SURENDRA KUMAR, SR. DR O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 15 TH SEPTEMBER, 2009, FOR THE ASSESSMENT YEAR 2003-04. 2. THE FIRST GRIEVANCE OF THE ASSESSEE IS AGAINST CONFIRMA TION OF DISALLOWANCE IN REGARD TO SOFTWARE EXPENSES OF RS 60,000/-. 3. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEBITED RS. 1,50,000/- TOWARDS SOFTWARE EXPENSES. ON BEING ASKED BY THE AO TO EXPLAIN AS TO WHY THE SAID EXPENSES SHOULD NOT BE TREATED AS CAPITAL E XPENSES, THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION TO THE SATISFACTION OF THE ASSESSING OFFICER. IN THIS BACKDROP, THE ASSESSING OFFICER TREATED THE EXPENSES AS CA PITAL IN NATURE AND AFTER I.T.A NO.6503/ MUM/2009 ASSESSMENT YEAR: 2003-04 2 ALLOWING DEPRECIATION @ 60%, DISALLOWED RS. 60,000/-. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED T HE RECORD OF THE CASE. AS LEARNED REPRESENTATIVES AGREE, THE ISSUE IS CO VERED BY THE DECISION OF ITAT DELHI SPECIAL BENCH IN THE CASE OF AMWAY INDIA ENTER PRISES V. DCIT, 301 ITR (AT) 1, WHEREIN, CERTAIN TESTS HAVE BEEN LAID DOWN FOR DECID ING WHETHER THE EXPENDITURE OF SOFTWARE IS IN CAPITAL FIELD OR REVENUE FIELD AND THE MATTER WAS SENT BACK FOR RE- EXAMINATION BY THE AO IN THE LIGHT OF THE TESTS SO LAI D DOWN. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT (A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO CONSIDER THE ALLOWABILITY OF SOFTWARE EXPENSES IN ACCORDANCE WI TH THE GUIDELINES LAID DOWN BY THE DELHI SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF AMWAY ENTERPRISES (SUPRA), AND ALSO IN THE LIGHT OF SUCH OTHER LATER JUDICIAL PRECEDENTS AS MAY THE ASSESSEE MAY WISH TO RELY UPON. WHILE SO DECIDING THE MATTER AFRESH , THE ASSESSING OFFICER WILL DEAL WITH ALL THE CONTENTIONS OF THE ASSESSEE IN ACCORDA NCE WITH THE LAW AND BY WAY OF A SPEAKING ORDER. WE ORDER SO. THIS GROUND IS ALL OWED FOR STATISTICAL PURPOSES. 5. THE SECOND GROUND IS AGAINST CONFIRMATION OF DISALLO WANCE OF RS. 1,02,540/- UNDER SECTION 43B. 6. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSING OFFICE R NOTICED THAT THE ASSESSEE HAS PAID RS. 1,02,540/- TOWARDS PROVIDENT FUND AFTER T HE DUE DATES. ACCORDINGLY, HE DISALLOWED RS. 1,02,540/- AND ADDED THE SAME TO THE TO TAL INCOME OF THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T (A) BUT WITHOUT ANY SUCCESS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RELEVANT MATERIAL ON RECORD. PERUSAL OF THE ASSESSMENT ORDER WOULD REVEAL T HAT THE PAYMENTS HAVE BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURN, AS PER AMENDED PROVISIONS OF THE ACT. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. [(2009) 319 ITR 306 (SC)] HAS HELD THAT THE OMISSION OF THE SECOND PROVISO TO SEC TION 43B OF THE ACT BY THE FINANCE ACT, 2003 OPERATED RETROSPECTIVEL Y AND NOT PROSPECTIVELY AND IT WOULD OPERATE WITH EFFECT FROM 1.4.1988. ACCORDING LY, IF THE AMOUNT PAID BEFORE THE I.T.A NO.6503/ MUM/2009 ASSESSMENT YEAR: 2003-04 3 DATE OF FILING OF THE RETURN UNDER THE ACT, THEN DE DUCTION IS ALLOWABLE. WITH REGARD TO EMPLOYEES CONTRIBUTION, THE DELHI HIGH COURT IN CIT VS. AIMIL LIMITED [2010] 188 TAXMAN 265 (DELHI ) HAS HELD THAT THE EMPLOYEES CONTRIBUTION TOWARDS EPF AND ESI ETC. DEPOSITED AFTER THE DUE DATE BUT BEFORE THE TIME ALL OWED FOR FILING THE RETURN U/S.139(1) WILL NOT CALL FOR ANY DISALLOWANCE U/S.36(1 )(VA). IN THE LIGHT OF THESE JUDICIAL PRONOUNCEMENTS, WE HOLD THAT THE LEARNED CI T(A) WAS NOT JUSTIFIED IN SUSTAINING THE AFORESAID DISALLOWANCE REPRESENTING THE EMPLOYER AND EMPLOYEES CONTRIBUTION TO PROVIDENT FUND, WHICH AMOUNTS WERE A DMITTEDLY PAID BEFORE THE DUE DATE. WE, ACCORDINGLY, DIRECT THE AO TO DELETE THE DISALLOWANCE OF ` .1,02,540/-. THIS GROUND IS ALLOWED. 8. IN THE RESULT, THE APPEAL STANDS ALLOWED FOR STATISTI CAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2010 SD/- (D.K.AGARWAL ) (JUDICIAL MEMBER) SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 23 RD DECEMBER, 2010 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),VII, MUMBAI 4. COMMISSIONER OF INCOME TAX-7 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH J, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI I.T.A NO.6503/ MUM/2009 ASSESSMENT YEAR: 2003-04 4 I.T.A NO.6503/ MUM/2009 ASSESSMENT YEAR: 2003-04 5