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Income Tax Appellate Tribunal - Mumbai

Aptech Ltd, Mumbai vs Department Of Income Tax on 12 April, 2012

            IN THE INCOME TAX APPELLATE TRIBUNAL
                  MUMBAI BENCHES "A", MUMBAI

             Before Shri G.E.Veerabhadrappa, President
                     and Shri V.Durga Rao, JM
               ITA No.5434/Mum/2010 : Asst. Year 2005-2006
The Dy.Commissioner of Income-tax             M/s.Aptech Limited
Circle 8(1)                                   A-65, Aptech House, MIDC
Mumbai.                                       Andheri (East) Mumbai - 400 093.
                                       Vs.
                                              PAN :AADCA0602L.
             (Appellant)                                 (Respondent)

                       Appellant by : Shri Amish Kumar Mody
                        Respondent by : Ms. Natasha Mangat

Date of Hearing : 26.03.2012                 Date of Pronouncement : 12.04.2012

                                    ORDER

Per V.Durga Rao, JM :

This appeal by the Revenue arises out of the order passed by the Commissioner of Income-tax (Appeals)-XVI on 13.04.2010 relates to the assessment year 2005-2006.

2. The Revenue has raised following grounds:-

"1. On the fact and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of `3,35,605/- u/s.35D being the expenses incurred towards increase of authorized share capital, without appreciating the facts and circumstances of the case and in law.

2. On the fact and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of `3,76,39,137/- u/s.35DD on account of demerger / takeover of the assessee company, without appreciating the facts and circumstances of the case and in law.

3. On the fact and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of `3,35,767/- on account of depreciation on motor car, without appreciating the facts and circumstances of the case and in law.

M/s.Aptech Limited.

4. On the fact and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of `20,00,000 made by the A.O. on account of various expenses, without appreciating the facts and circumstances of the case and in law."

3. By way of ground no.1, the Revenue has challenged the deletion of addition of `3,35,605 made by the Assessing Officer u/s 35D, towards the expenses incurred towards increase of authorized share capital. At the time of hearing before us, the learned Counsel for the assessee placed on record a copy of Tribunal order in ITA No.7316/Mum/2007, to contend that the issue has been restored by the Tribunal to the file of A.O. for considering the alternate ground of the assessee for deduction u/s 35DD as per law. The learned Departmental Representative has fairly conceded the same.

4. After hearing both the sides and perusing the relevant material on record, we find that the issue under consideration is identical to the one decided by the Tribunal in ITA No.7316/Mum/2007 in the immediately preceding year in assessee's own case. Vide its order dated 25th January, 2010, the Tribunal observed that the allowability of relief u/s 35DD has been made for the first time before the CIT(A) and thus the A.O. has not given any opportunity to examine the matter, therefore, the issue was set aside to the file of A.O. for considering the alternate ground of the assessee for deduction u/s 35DD in accordance with law. Respectfully following the precedent, we remit the matter back to the file of A.O. for adjudication afresh as per the directions contained in the afore-noted Tribunal order, after allowing a reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes.

5. Ground no.2 is against the deletion of addition of `3,76,39,137 made by the Assessing Officer u/s 35DD on account of demerger / takeover of the assessee-company.

M/s.Aptech Limited.

6. We have heard the rival submissions and perused the relevant material on record. Here again, the learned Counsel for the assessee placed on record copy of Tribunal order in MA No.436/Mum/2001 to contend that the issue involved in the present appeal is similar to those decided by the Tribunal in the aforenoted Miscellaneous Application. The learned Departmental Representative has fairly conceded that the facts and circumstances of the present appeal is similar to those of MA No.436/Mum/2006. We find that the issue is squarely covered by the decision of the Tribunal in MA No.436/Mum/2011 in assessee's own case for assessment year 2004-2005, wherein the Tribunal vide its order dated 13.01.2012 held as under:-

"28. Aggrieved by the relief allowed by the learned CIT(Appeals) to the assessee on this issue, the Revenue has raised its grievance in this appeal filed before the Tribunal. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the expenditure in respect of which deduction u/s 35DD is claimed by the assessee in the year under consideration was incurred in assessment year 2002-2003. As submitted by the learned Counsel for the assessee, deduction to the extent of 1/5th of the total expenditure incurred was initially claimed u/s 35DD in assessment year 2002-2003 and the same was allowed by the AO in the assessment completed u/s 143(3) after necessary examination / verification. In our opinion, once the deduction claimed by the assessee u/s 35D was allowed in the initial year i.e. 2002-03 when the relevant expenditure was actually incurred in the assessment completed u/s 143(3), the deduction claimed by the assessee in subsequent years u/s 35DD could not be disallowed especially when the assessment made u/s 143(3) for assessment year 2002-03 was not disturbed or modified on this issue. We, therefore, restore this issue to the file of the AO with a direction to verify whether the claim of the assessee for deduction u/s 35DD was allowed for assessment year 2002-03 in the assessment made u/s 143(3). If it is found on such verification that the claim of the assessee for deduction u/s 35DD was allowed in assessment year 2002-03 in the assessment made u/s 143(3), the AO is directed to allow the same in the year under consideration."

M/s.Aptech Limited.

7. Respectfully following the precedent, we remit the matter back to the file of A.O. for deciding the issue afresh in accordance with the directions contained in the aforenoted Tribunal order dated 13th January, 2012. Needless to say, the assessee will be given adequate opportunity of being heard. This ground is allowed for statistical purposes.

8. As far as ground no.3 is concerned, which is raised by the Revenue against the deletion of addition of `3,35,767 made by the Assessing Officer on account of depreciation on motor car, the learned Counsel for the assessee placed on record copy of Tribunal order in ITA No.7316/Mum/2006 to submit that the issue is covered in favour of the assessee. The learned Departmental Representative has fairly agreed to the same.

9. After hearing both the sides and perusing the relevant material on record, we find that the issue is squarely covered in favour of the assessee by the order of the Tribunal in ITA No.7316/Mum/2006. The Tribunal, in the immediately preceding year, vide its order dated 25th January, 2010, upheld the view point of the learned CIT(A) by observing that the claim of the assessee for higher depreciation @ 50% in respect of motor vehicle acquired after 01.04.2001 and used before 01.04.2002, is justified. In view of the foregoing reasons, we uphold the impugned order and dismiss the ground of the Revenue.

10. As regards the last ground of the Revenue's appeal is concerned, which is challenged against the disallowance out of various expenses amounting to `20,00,000, the learned Counsel for the assessee by placing on record copy of order in ITA No.7316/Mum/2007 submitted that the issue involved in this appeal is covered in favour of the assessee. No serious objection was raised by the learned Departmental Representative.

M/s.Aptech Limited.

11. We have heard the rival submissions and perused the relevant material on record. We find this issue is covered in favour of the assessee by the decision of the Tribunal in ITA No.7316/Mum/2007 dated 25.01.2010, wherein on similar circumstances, the Tribunal has allowed the claim of the assessee by holding that no adhoc disallowance is called for from the expenses. Respectfully following the precedent, we uphold the impugned order on this issue and dismiss the ground of the Revenue.

12. In the result, the appeal is partly allowed for statistical purposes.

Order pronounced on this 12th day of April, 2012.

              Sd/-                                      Sd/-
      (G.E.Veerabhadrappa)                          (V.Durga Rao)
          PRESIDENT                              JUDICIAL MEMBER

Mumbai : 12th April, 2012.
Devdas*

Copy to :
1.    The Appellant.
2.    The Respondent.
3.    The CIT concerned
4.    The CIT(A) - XVI, Mumbai
5.    The DR/ITAT, Mumbai.
6.    Guard File.

       TRUE COPY.
                                                By Order


                                  Assistant Registrar, ITAT, Mumbai.