Income Tax Appellate Tribunal - Delhi
Cbm Industries Ltd.,, New Delhi vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'B' DELHI
BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL
ITA No. 1891(Del)/2011
Assessment year: 2007-08
Deputy Commissioner of CBM Industries Ltd.,
Income-tax, Circle 3(1), Vs. 45, first floor, Community
New Delhi. Centre, Ph.-I, Naraina,
New Delhi.
PAN-AAACC3576C
C.O. No. 151(Del)/2011
ITA No. 1891(Del)/2011
Assessment year: 2007-08
CBM Industries Ltd., Deputy Commissioner of
Naraina, New Delhi. Vs. Income-tax, Circle. 3(1),
New Delhi.
(Appellant) (Respondent)
Department by : Ms. Y. Kakkar, DR
Assessee by : Shri K.N. Ahuja, Adv.
ORDER
PER K.G. BANSAL : AM The appeal of the revenue and the cross objection of the assessee, emanating from the order of CIT(Appeals)-VI, New Delhi, passed on 4.2.2011, were argued in a consolidated manner by the ld. DR and the ld. counsel for the assessee. Therefore, a consolidated order is passed. 2 ITA No. 1891 &
C.O. No. 151(Del)/2011
2. At the outset, the ld. counsel submitted that ground no. 1 stands covered by the decision of the Tribunal in the case of the assessee for assessment year 2005-06 in ITA No. 3820(Del)/2008 dated 12.11.2010. The ld. DR also agreed that the issue stands covered. Therefore, following the earlier decision, this ground is allowed. The relevant part of the decision of the Tribunal is reproduced below for ready reference:-
"3.5 We have considered the facts of the case and submissions made before us. It is seen that the revenue has accepted the method of accounting followed by the assessee for six years in respect of Kerala project. It has also accepted the method for four years in respect of Noida project. This is the last year for Kerala project and last but one year of Noida project. It has nowhere been challenged that the method of accounting followed by the assessee gives distorted picture of profits. On the other hand, it has been claimed that the method furnishes fair and reasonable picture of profits. Therefore, the method should have been accepted in the first place on the principle of consistency as otherwise the assessment of earlier years will also have to be modified accordingly. In the case of IRB Infrastructure Limited (supra), the assessee was accounting for the receipts in its books of account by reducing them from work-in-progress, leading to no profit. The method of accounting was sought to be changed by amortizing the project expenses over a period of 16 years, being the period of BOT agreement. The ld. CIT(A) upheld this decision of the Assessing Officer. However, the Tribunal pointed out that there was no change in the facts and, therefore, the Assessing Officer was not justified in taking a different view from the earlier years. Thus, it follows that a consistent method used by the assessee 3 ITA No. 1891 & C.O. No. 151(Del)/2011 ought not to be changed especially when the method adopted by the assessee furnishes a fair and reasonable view of the profits. This follows from a number of decisions upholding the principle of consistency including the decision of Hon'ble Supreme Court in the case of Radhasoami Satsang Vs. CIT (19920) 193 ITR 321, relied upon that case. Respectfully following this decision, it is held that the lower authorities were not justified in modifying the book results based upon following a consistent method of accounting. Thus, this ground is also allowed."
3. Ground no. 2 regarding deduction of depreciation @ 60% is also admittedly covered by the Special Bench of Mumbai Tribunal in the case of CIT Vs. Datacraft India Ltd., (2011) 133 TTJ 377. Further, in the case of Expeditors International (India) (P) Ltd. Vs. Additional CIT, (2008) 13 DTR (Del) (Trib.) 435, it has been inter-alia held that peripherals such as printers, scanners, NT server etc. form integral part of the computer and, therefore, are eligible for deduction of depreciation @ 60% as applicable to the computers. Respectfully following these decisions, this ground is also decided in favour of the assessee.
4. Coming to the cross objection of the assessee, the only ground taken is that ISO certification fee of Rs. 20,000/- is revenue expenditure. While the case of the ld. counsel is that the expenditure neither creates a new asset nor grants benefit of enduring nature, the case of the ld. DR 4 ITA No. 1891 & C.O. No. 151(Del)/2011 that the expenditure grants benefit of enduring nature to the assessee. In this connection, reliance has been placed on the decision of CIT Vs. Official Liquidator, Ahmedabad Manufacturing & Calico Printing Co. Ltd., (2000) 244 ITR 156. In this case, the expenditure incurred in connection with amalgamation and betterment charges paid to the Municipal Corporation were held to be capital expenditure. However, we find that the issue is specifically covered by the decision of the Tribunal in the case of Shriram Pistons & Rings Ltd., in ITA No. 1861(Del)/2008, dated 31.5.2011, in favour of the assessee, the relevant portion of which read as under:-
"9.12 We have considered the facts of the case and submissions made before us. In so far as ISO-9001 expenses are concerned, the issue stands covered by the decision of Delhi Tribunal in the case of Climate Systems India (P) Limited Vs. ACIT in Appeal Nos.1684/D/09 and 2161/D/09 for assessment year 2004-05 dated 17.12.2009, in which it has been held that the expenditure of Rs.95,254/- is revenue in nature. The relevant portion of the decision is reproduced below:-
"9. We have heard both the parties and gone through the material available on record. The ISO certification charges are annual payment as pleaded by theassessee. In the case of Tirupati Microtech (P) Ltd. (supra), it has been held that by making payments for obtaining ISO 9002 certification, the fixed capital of the assessee had not enhanced in any manner. Rather it created a positive image of the product of the assessee for the smooth conduct of the business, therefore, the expenditure incurred by the assessee was in the nature of revenue 5 ITA No. 1891 & C.O. No. 151(Del)/2011 expenditure. The Bench while arriving at this conclusion placed reliance on the decision of Hon'ble Supreme Court in the case of Empire Jute Manufacturing Co. Ltd. VS. CIT 124 ITR 1 = (2002-TIOL-238-SC-IT) wherein the test for determination of the nature of expenditure incurred has been prescribed. It has been held that if the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account even though the advantage may endure for an indefinite future. Since the issue is covered by the decision of LT.A.T. Jodhpur Bench in the case of Tirupati Microtech. (P) Ltd. (supra), we hold that the amount of RS.95,254/- is allowable as revenue expenditure. Accordingly, we set aside the order of Id.CIT(A) and direct the Assessing Officer to allow the claim of the assessee on account of ISO certification charges."
9.13 Relying on this decision, it is held that the expenditure of Rs. 3,97,253/- incurred in relation to ISO-9001 is revenue in nature."
Following this decision, the ground is allowed.
5. In the result, the appeal of the revenue is dismissed and cross objection of the assessee is allowed.
This order was pronounced in the open court on 24 June, 2011.
Sd/- sd/-
(Rajpal Yadav) (K.G. Bansal)
Judicial Member Accountant Member
Date of order: 24 .06.2011.
SP Satia
6 ITA No. 1891 &
C.O. No. 151(Del)/2011
Copy of the order forwarded to:-
CBM Industries Ltd., New Delhi.
DCIT, Circle 3(1), New Delhi.
CIT
CIT(Appeals)
The DR, ITAT, New Delhi. Assistant Registrar.