DCIT LTU, V. TATA CONSULTANCY SERVICES LTD,

MA 93/MUM/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4566 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2005-2006
• Appeal Filed On: 28-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K MOHANDASDR
• Assessee Lawyers: DINESH VYAS
• Keywords: Depreciation; Capital expenditure

Judgement Text

, K INCOME TAX APPELLATE TRIBUNAL,MUMBAI- ,BENCH , , BEFORE S/SHJOGINDER SINGH, JUDICIAL MEMBER & RAJENDRA, ACCOUNTANT MEMBER MA NO.93/MUM/2016 (ARISING OUT OF ITA/7513/MUM/2010 ), ASSESSMENT YEAR 2005-06 DY. COMMISSIONER OF INCOME TAX LTU, CENTRE-1, 29 TH FLOOR,WORLD TRADE CENTRE,CUFFE PARADE MUMBAI 400005 VS. M/S. TATA CONSULTANCY SERVICES LTD. 9 TH FLOOR, NIRMAL BUILDING NARIMAN POINT MUMBAI. PAB: AAACR 4849 R ( / ASSESSEE) ( / RESPONDENT) /ASSESSEE BY : SH. DINESH VYAS -AR / REVENUE BY :SH. K. MOHANDAS-DR / DATE OF HEARING : 29.07 -2016 / DATE OF PRONOUNCEMENT : 29 -07-2016 / O R D E R PER RAJENDRA, A.M. : VIDE HIS APPLICATION DT. 28.4.16 THE ASSESSING OFFI CER (A.O) HAS STATED THAT CERTAIN MISTAKES HAVE CREPT IN THE ORDER OF THE TRIBUNAL DT.4.11.15 , THAT SAME ARE TO BE RECTIFIED AS PER THE PROVISIONS OF SECTION 254(2) OF THE ACT, THAT WHI LE DECIDING THE 1 ST GROUND, THE TRIBUNAL HAD ADJUDICATED THE ISSUE AGAINST THE ASSESSEE, THAT IN THE FINAL RESULT TRIBUNAL HAD DISMISSED THE GROUND RAISED BY THE AO, THAT SIMILARLY GROUND NO.2 WAS ALSO REJECTED THOUGH SAME WAS TO BE ALLOWED. 2. DURING THE COURSE OF HEARING BEFORE US, THE DEPARTM ENTAL REPRESENTATIVE (DR) STATED THAT THERE APPEARS TO BE TYPOGRAPHICAL MISTAKE WITH REGA RD TO FIRST TWO GROUNDS. THE AUTHORISED REPRESENTATIVE (AR) FAIRLY CONCEDED THAT BOTH THE G ROUNDS WERE TO BE DECIDED IN FAVOUR OF THE AO. THEREFORE, WE HOLD THAT PARA NO.6-8 OF THE ORDER, DT. 4.11.2015, SHOULD BE READ AS UNDER:- 6. SINCE ADMITTEDLY THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE IN THE CASE OF TATA SONS LTD. (SUPRA), AND THE SAID DECISION HAS NOT BEEN STATED TO HAVE BEEN STAYED ON APPEAL, RESPECTFULLY FOLLOWING THE SAME, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE . GR.NO.1 STANDS ALLOWED. 7. AS PER GROUND NO.2 THE LD.CIT(A) ERRED IN ALLOWI NG PENAL INTEREST PAID IN THE USA TOWARDS LATE PAYMENT OF TAXES PAID OF RS.4,61,683/- . MA-93/2016-TATA CONSULTANCY SERVICES LTD. 2 8. THIS ISSUE IS RELATABLE TO GROUND NO.1(SUPRA).IN VIEW OF OUR OBSERVATION MADE WITH REGARD TO THAT GROUND , GROUND NO.2 ALSO STANDS ALLOWED. 3. THE AO , IN HIS APPLICATION, HAS FURTHER STATED THA T THERE WERE MISTAKES IN GROUND NO.3, THAT THE GROUND WAS ABOUT ALLOWING THE EXPENSES ON IMPOR TED SOFTWARE, THAT DISALLOWANCE UNDER SECTION 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TD S WAS MADE, THAT DURING THE HEARING BEFORE THE US THE ASSESSEE HAD INVOKED THE PROVISIO NS OF RULE 27 OF THE ITAT RULES,1963, THAT IT HAD ARGUED THAT THE AO HAD DISALLOWED EXPENDITU RE INCURRED ON ACCOUNT OF SOFTWARE ACQUIRED WITHIN INDIA, THAT THE TRIBUNAL HAD UPHELD THE TREATMENT OF LOCALLY PURCHASED SOFTWARE IN CONFIRMATION WITH THE ASSESSMENT ORDER OF THE FIRST APPELLATE AUTHORITY (FAA), THAT THE TRIBUNAL SHOULD AMEND THE ORDER WITH REGA RD TO DEPRECIATION. 4. BEFORE US THE DEPARTMENTAL REPRESENTATIVE (DR) REI TERATED THE ARGUMENTS MENTIONED IN THE MA. THE AUTHORISED REPRESENTATIVE (AR) CONTENDED TH AT THERE WAS NO MISTAKE APPARENT FROM THE RECORD WHICH COULD BE RECTIFIED AS PER THE PROV ISIONS OF SECTION 254 OF THE ACT. 5. WE WOULD LIKE TO REPRODUCE THE GROUND 3 RAISED BY T HE AO AND SAME READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING SOFTWARE EXPENSES U/S. 40(A)(I) ON ACCOUNT OF NON DEDUCTION OF TDS AMOUNTING RS.25,11,88,831/-. WHILE DECIDING THE APPEAL, THE TRIBUNAL AT PARAGRAP H NO.13 HAS DECIDED THE ISSUE AS UNDER:- 13. CONSIDERING THE RIVAL CONTENTIONS, WE FIND THA T THE ARGUMENT OF THE ASSESSEE IS CORRECT. THE LOCALLY ACQUIRED SOFTWARE EXPENSES HAVE BEEN TR EATED AS CAPITAL EXPENDITURE, PLACING RELIANCE ON VARIOUS JUDICIAL DECISIONS, WHICH HOLD THAT THE EXPENSES ON SOFTWARE ARE IN THE NATURE OF CAPITAL EXPENDITURE AND DEPRECIATION IS T O BE ALLOWED ON THE SAME. AS SUCH, EXPENSES ON IMPORTED SOFTWARE ARE ALSO IN NATURE OF CAPITAL EXPENDITURE AND DEPRECIATION NEEDS TO BE ALLOWED THEREON. THE AO, THEREFORE IS D IRECTED TO ALLOW THE DEPRECIATION ON THE IMPORTED SOFTWARE PURCHASED BY THE ASSESSEE. THIS A LTERNATIVE PLEA RAISED BY THE ASSESSEE, HENCE IS ACCEPTED. FROM THE ABOVE DISCUSSION IT IS CLEAR THAT THE GROU ND NO.3 RAISED BY THE AO I.E. DISALLOWANCE U/S. 40(A)(I) REMAINED UNADJUDICATED , THAT THE ALT ERNATIVE PLEA TAKEN BY THE ASSESSEE WAS ACCEPTED. THEREFORE, WE ARE OF THE OPINION THAT MAT TER SHOULD BE PLACED BEFORE REGULAR BENCH TO DECIDE THE ISSUE(GOA-3) AFRESH. AS A RESULT MISCELLANEOUS APPLICATION, FILED BY TH E AO STANDS ALLOWED. MA-93/2016-TATA CONSULTANCY SERVICES LTD. 3 ! ' # $ ' . ORDE R PRONOUNCED IN THE OPEN COURT ON 29 TH JULY,2016. % ' & 29 TH ,2016 SD/- SD/- ( /JOGINDER SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI, ' & /DATE: 29.07.2016 . . . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ &'( )*+ , 4. THE CONCERNED CIT / &'( )*+ 5. DR B BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ ,- //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.