ACIT, Circle- 19(1), New Delhi V. Onicra Credit Rating Agency of India Ltd., New Delhi

ITA 915/DEL/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9441 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2015-2016
• Appeal Filed On: 05-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 37; 143(3); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SH. CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA No. 915/Del/2018 (Assessment Year : 2015-16) ACIT Circle – 19(1), New Delhi PAN No. AAACO 0849 E Vs. Onicra Credit Rating Agency of India Ltd. UG-7, Janak Puri, District Centre, New Delhi-110 058 (APPELLANT) (RESPONDENT) Assessee by Shri Amit Gupta, CA Revenue by Shri Jeetendra Chand, Sr. D.R. Date of hearing: 01.09.2022 Date of Pronouncement: 07.09.2022 ORDER PER ANIL CHATURVEDI, AM: This appeal filed by the Revenue is directed against the order dated 23.11.2017 passed by the Commissioner of Income Tax (Appeals)-7, New Delhi relating to Assessment Year 2015-16. 2. Brief facts of the case as culled out from the material on record are as under :- 3. Assessee is a company stated to be engaged in the business of providing ratings, risk assessment and analytical solutions to individuals, MSMEs and Corporates. Assessee filed its return of 2 income for A.Y. 2015-16 on 29.09.2015 and thereafter on 15.03.2016, it filed revised return of income declaring loss of Rs.5,07,81,963/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 31.03.2017 and the total income was determined at Rs.2,47,86,920/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 23.11.2017 in Appeal No.10031/34/CIT(A)-7/Del/2017-18 allowed appeal of the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal and has raised the following grounds: 1. “On the facts and under the circumstances of the case, the Ld. CIT(A) has erred in Law and facts in deleting the addition of Rs.1,13,12,013/- made by the Assessing Officer without appreciating the facts that the assessee company did not comply with the provisions of section 2(24)(x) and 36(1)(va) of the Income Tax Act, 1961 on account of payments to be made on or before the due date as prescribed under the law regulating of such funds on account of employee contribution towards provident Fun or any other fund mentioned u/s 2(24)(x). 2. “On the facts and under the circumstances of the case, the Ld CIT(A) has erred in law and facts in deleting the addition of Rs 19,05,441/- without giving any finding on the nature of these expense and its allow ability u/s 37 of I.T Act.. ” 3. “On the facts and under the circumstances of the case, the Ld CIT(A) has erred in law and facts in deleting the disallowances of Rs 1,2777,589/- made by the assessing officer on account of disallowance of depreciation by entertaining the addition evidence furnished by the assessee, r without affording any opportunity to the revenue to furnish any comments which is completely unjustified under rule 46A of I.T. Act. ” 3 4 “The appellant craves to be allowed to add and alter any fresh grounds (s) of appeal and/or delete or amend any of the ground(s) of appeal.” 4. Ground No.1 is with respect to the disallowance u/s 2(24)(x) r.w.s 36(1)(v) of the Act. 5. During the course of assessment proceedings, AO noticed that assessee had not deposited Rs.1,13,12,013/- of Employee’s Contribution towards Provident Fund and ESI within the due date prescribed. He therefore held the aggregate amount of Rs.1,13,12,013/- to be not allowable u/s 36(1)(v) of the Act. He accordingly made addition of the aforesaid amount. Aggrieved by the order of AO, assessee carried the matter before CIT(A). CIT(A) by following the decision of Hon’ble Delhi High Court in the case of CIT vs. AIMIL Ltd (2010) 321 ITR 508 and decision of Hon’ble Supreme Court in the case of CIT vs. M/s. Vinay Cement Ltd. 213 ITR 268 held that since assessee had deposited the Employee’s Contribution to Provident Fund and ESI before the due date of furnishing the return of income u/s 139(1) of the Act, AO was not justified in making the disallowance. He thus deleted the addition. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 6. Before us, Learned DR supported the order of AO. 7. Learned AR on the other hand reiterated the submissions made before lower authorities and further submitted that various 4 Benches of Tribunal in various orders have held that Employee’s Contribution of Provident Fund and ESI deposited though belatedly but before the filing the return of income u/s 139(1) of the Act cannot be disallowed u/s 36(1)(va) of the Act. He thus supported the order of CIT(A). 8. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the disallowance of delayed deposit of PF/ESI by the assessee. We find that CIT(A) by following the decision of Jurisdictional High Court in the case of AIMIL Ltd. (supra) held that no disallowance u/s 36(1)(va) of the Act was warranted when the Employee’s Contribution of PF/ESI are deposited before the due date of filing of return of income. Before us, Revenue has not placed any material on record to demonstrate that assessee has not deposited PF/ESI contribution before filing of return of income u/s 139(1) of the Act nor has Revenue placed any contrary binding decision in its support. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed. 9. Ground No.2 is with respect to deleting the addition of Rs.19,05,441/-. 10. During the course of assessment proceedings, AO noticed that assessee had debited aggregate amount of Rs.3,81,08,825/- on account of various heads namely; Misc. Expenses, Travelling 5 and conveyance, communication and business promotions. He noticed that some of bills and vouchers with respect to the aforesaid expenses were not vouched serially and date wise. He was further of the view that the personal use of expenses from those expenses could not be ruled out. He therefore to protect the interest of Revenue and any possible leakage, disallowed 5% of the aforesaid aggregate expenses amount amounting to Rs.19,05,441/- and made its addition. 11. Aggrieved by the order of AO, assessee carried the matter before CIT(A). CIT(A) after considering the submissions of the assessee while deleting the addition has given a finding that disallowance made by AO was ad hoc in nature and no instance of personal expenditure has been brought on record by the AO. He thus deleted the addition. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 12. Before us, Learned DR supported the order of AO. 13. Learned AR on the other hand reiterated the submissions made before lower authorities and supported the order of CIT(A). 14. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the ad hoc disallowance of expenses made by AO which is deleted by CIT(A). We find that CIT(A) while deleting the addition has given a finding that the disallowance has been made 6 by AO on ad hoc basis and no instance of any personal expenditure has been brought on record by AO. Before us, Revenue has not placed any fallacy in the findings of CIT(A). In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed. 15. Ground No.3 is with respect to deleting the disallowance of depreciation. 16. During the course of assessment proceedings, AO noticed that assessee had purchased software amounting to Rs.7,30,14,797/- and on it assessee had claimed depreciation @ 60%. The assessee was asked to show-cause as to why the depreciation on software be not allowed @ 25% per annum to which assessee made detailed submissions but same was not found acceptable to AO. AO thereafter worked out excess depreciation (being the difference between depreciation @ 60% claimed by assessee and 25% being the rate applied by AO) at Rs.1,27,77,589/- and disallowed the same. 17. Aggrieved by the order of AO, assessee carried the matter before CIT(A). Before CIT(A) assessee inter alia submitted that Clause (5) of New Appendix – I which was with effect from A.Y. 2006-07 onwards of Income Tax Rules, 1962 states that depreciation on computers including computer software is to be calculated 60% per annum. It was therefore submitted that assessee had correctly claimed deprecation as per the Income-tax 7 laws. CIT(A) after considering the submissions of the assessee and following the decision of Delhi Tribunal in the case of Steel Authority of India Ltd. vs. ACIT ITA No.751 & 1488/Del/2011 held that assessee was eligible for depreciation @ 60%. He accordingly deleted the addition. Aggrieved by the order of CIT(A), Revenue is now before us. 18. Before us, Learned DR supported the order of AO. 19. Learned AR on the other hand, reiterated the submissions made before lower authorities and further submitted that while deciding the issue CIT(A) has wrongly stated the depreciation was on UPS. He thereafter supported the order of CIT(A). Learned AR also placed copy of prescribed depreciation table prescribed under Income-tax Rules and pointed to the Item No.5 which states that computers including computer software is eligible for depreciation @ 60%. 20. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to deleting the claim of alleged excess depreciation. We find that CIT(A) after considering the submissions of the assessee and following the decision of Delhi Tribunal in the case of Steel Authority of India Ltd. (supra) held that assessee was eligible to claim depreciation @ 60% and accordingly deleted the disallowance made by AO. Before us, no fallacy in the findings of CIT(A) has been pointed out by Learned DR. In such a situation, 8 we find no reason to interfere with the order of CIT(A). Thus the ground of Revenue is dismissed. 21. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 07.09.2022 Sd/- Sd/- (CHALLA NAGENDRA PRASAD) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 07.09.2022 PY* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI