R.K. Global Shares & Securities Ltd., New Delhi V. ACIT, New Delhi

ITA 725/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3997 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 19-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 17-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAYANT MISHRA
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 725/DEL/2010 ASSESSMENT YEAR: 2005-06 R.K. GLOBAL SHARES & SECURITIES LTD., 5, 2 ND FLOOR, SAGAR APARTMENT, 6, TILAK MARG, NEW DELHI. AAACR5786P VS. ACIT, CENTRAL CIRCLE 8, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SANTOSH PATHAK, CA RESPONDENT BY: SHRI JAYANT MISHRA, CIT(DR) O R D E R PER I.P. BANSAL, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS D IRECTED AGAINST THE ORDER OF CIT(A) DATED 16.12.09 FOR A.Y. 2005-06. G ROUNDS OF APPEAL READ AS UNDER: - ACTION OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS. 579,231/- BEING COMPUTER SOFTWARE EXPENSES AS CAPITAL IN NATURE WHE REAS THE ASSESSEE WAS REQUIRED TO PAY THE AMOUNT EVERY YEAR AS MAINTE NANCE CHARGES/RENEWAL FEE FOR RUNNING THE SOFTWARE IS UNJ UST, ILLEGAL, ARBITRARY AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE . 2. IT WAS OBSERVED THAT A DEFECT NOTICE WAS ISSUED TO THE APPELLANT SHOWING THEREIN THAT APPEAL IS TIME BARRED BY TWO D AYS. IT WAS SUBMITTED 2 ITA NO. 725/DEL/2010 BY LD. AR THAT ASSESSEE INADVERTENTLY IN COLUMN NO. 9 TO FORM NO. 36 HAS WRITTEN THE DATE OF SERVICE OF ORDER AS ON 7.12.09 WHEREAS THE SAID ORDER OF CIT(A) WAS DISPATCHED TO THE ASSESSEE ON 7.01.10 AND WAS RECEIVED BY THE ASSESSEE ON 09.01.10. HE HAS PRODUCED BEFOR E US PHOTOCOPY OF ENVELOPE. ACCORDING TO WHICH THE ORDER WAS SENT TO ASSESSEE ON 07.01.10. IF THE SAID DATE IS TAKEN INTO CONSIDERA TION THEN THERE IS NO DELAY IN FILING THE APPEAL. HENCE, AFTER HEARING B OTH THE PARTIES AND AFTER GOING THROUGH THE CONTENTIONS, WE FOUND THAT THERE IS NO DELAY IN FILING THE APPEAL. HENCE THE APPEAL FILED BY THE ASSESSEE IS ADMITTED FOR ADJUDICATION. 3. THE AO HAS DISCUSSED THIS ISSUE IN PARA 5.1 OF T HE ASSESSMENT ORDER WHERE HE HAS OBSERVED THAT OUT OF TOTAL SOFTW ARE EXPENDITURE OF RS. 5,79,231/- A SUM OF RS. 5,07,310/- ARE INCURRED TOWARDS SOFTWARE PURCHASED FOR CLIENT ACCESS LICENSE OF DDIN T.M., C ASH FUND, OFFICE SOFTWARE PRODUCT FOR NSE FROM FINANCIAL TECHNOLOGY INDIA LTD. THE AO OBSERVED THAT THE SAID SOFTWARE HELPS THE ASSESSEE IN EXECUTING THE SHARE TRANSACTIONS ON LINE THROUGH COMPUTER AND THU S, THE AO HELD THAT THE EXPENDITURE WAS NOT IN THE NATURE OF REVENUE BU T WAS A CAPITAL EXPENDITURE. BY OBSERVING SO HE HAS ALLOWED DEPREC IATION @ 60% AND AS THE SAID SOFTWARE WAS USED FOR A PERIOD LESS THA N 180 DAYS, 1 OF THE DEPRECIATION ELIGIBLE AT 60% WAS ALLOWED. LD. CIT( A) HAS SUSTAINED THE ACTION OF THE AO, ASSESSEE IS AGGRIEVED, HENCE IN A PPEAL. 4. AT THE TIME OF HEARING, AFTER NARRATING THE FACT S, IT WAS SUBMITTED BY LD. AR THAT ASSESSEE HAS NO GRIEVANCE IF THE AO IS DIRECTED TO ALLOW 3 ITA NO. 725/DEL/2010 THE DEPRECIATION ON THE SAID SOFTWARE @ 60% IN THE NEXT FINANCIAL YEAR AND HE DID NOT OBJECT TO THE ACTION OF AO FOR ALLOW ING DEPRECIATION ON SOFTWARE EXPENDITURE. 5. ON THE OTHER HAND, LD. DR RELINED ON THE ORDER O F AO AND CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. WE OBSERVE THAT AO HIMS ELF HAS WRITTEN IN THE ASSESSMENT ORDER THAT RATE OF DEPRECIATION ALLO WABLE ON SOFTWARE EXPENSES IS 60%. HE HAS RESTRICTED THE DEPRECIATIO N TO 50% ONLY FOR THE REASON THAT THE ASSET WAS PUT TO USE LESS THAN 180 DAYS. THEREFORE, WE SEE NOTHING WRONG FOR THE PRESENT YEAR WHEN HE HAS ALLOWED THE DEPRECIATION @ 60% AND RESTRICTING IT TO 1 AS THE ASSET WAS USED FOR A PERIOD LESS THAN 180 DAYS. AS THE LD. AR HAS NOT D ISPUTED THE GRANT OF DEPRECIATION AND HE DID NOT INSIST ON THE ISSUE OF ALLOWABILITY OF THE SAME AS THE REVENUE EXPENDITURE, WE UPHOLD THE ORDER OF LD. CIT(A). 7. BEFORE PARTING IT MAY BE MENTIONED HERE THAT AO HIMSELF HAS ALLOWED THE DEPRECIATION @ 60%. THEREFORE, WE SEE NO JUSTIFICATION IN ISSUING DIRECTIONS FOR THE NEXT YEAR AS WHAT IS ALL OWABLE AS PER STATUTE HAS TO BE ALLOWED TO THE ASSESSEE AND THE RATE OF D EPRECIATION ON COMPUTER SOFTWARE IS 60% ACCORDING TO STATUTORY PRO VISIONS. 4 ITA NO. 725/DEL/2010 8. IN VIEW OF OUR DISCUSSION, THE APPEAL FILED BY T HE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30.4.2010 (R.C. SHARMA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: 30.4.2010 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR