Income Tax Appellate Tribunal - Mumbai
Dcit 14(3)(2), Mumbai vs Softcell Technologies Ltd, Mumbai on 31 July, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH "L", MUMBAI
BEFORE SHRI P.K. BANSAL, VICE-PRESIDENT AND
SHRI PAWAN SINGH, JUDICIAL MEMBER
ITA No. 1099/Mum/2015 (Assessment Year- 2009-10)
Softcell Technologies Ltd. ACIT -7(2),
303 B Wing, Commercial -I, Room No. 624/670, 6th Floor,
Kohinoor City, Kirol Road, Vs. Aayakar Bhavan, M.K. Road,
Kurla (W), Mumbai-400070. Mumbai-400020.
PAN: AADCS0965J
(Appellant) (Respondent)
ITA No. 7225/Mum/2016 (Assessment Year- 2007-08)
Softcell Technologies Ltd. DCIT Cir -14(3)(2),[formerly
303 B Wing, Commercial -I, known as DCIT Cir 7(2)]
Kohinoor City, Kirol Road, Vs. Room No. 455/670, 4th Floor,
Kurla (W), Mumbai-400070. Aayakar Bhavan, M.K. Road,
PAN: AADCS0965J Mumbai-400020.
(Appellant) (Respondent)
ITA No. 7242/Mum/2016 (Assessment Year- 2007-08)
Softcell Technologies Ltd. DCIT Cir -14(3)(2),[formerly
303 B Wing, Commercial -I, known as DCIT Cir 7(2)]
Kohinoor City, Kirol Road, Vs. Room No. 455/670, 4th Floor,
Kurla (W), Mumbai-400070. Aayakar Bhavan, M.K. Road,
PAN: AADCS0965J Mumbai-400020.
(Appellant) (Respondent)
ITA No. 7174/Mum/2016 (Assessment Year- 2007-08)
DCIT Cir -14(3)(2),[formerly Softcell Technologies Ltd.
known as DCIT Cir 7(2)] 303 B Wing, Commercial -I,
Room No. 455, 4th Floor, Vs. Kohinoor City, Kirol Road,
Aayakar Bhavan, M.K. Road, Kurla (W), Mumbai-400070.
Mumbai-400020 PAN: AADCS0965J.
ITA No.1099/M/2015 & Ors.
Softcell Technologies Ltd.
(Appellant) (Respondent)
ITA No. 7175/Mum/2016 (Assessment Year- 2008-09)
DCIT Cir -14(3)(2),[formerly Softcell Technologies Ltd.
known as DCIT Cir 7(2)] 303 B Wing, Commercial -I,
Room No. 455, 4th Floor, Vs. Kohinoor City, Kirol Road,
Aayakar Bhavan, M.K. Road, Kurla (W), Mumbai-400070.
Mumbai-400020. PAN: AADCS0965J
(Appellant) (Respondent)
Assessee by Shri Sunil Motilala with
: Sh.Fenil Bhatt and Sh. Tushar
Hathiramani (AR)
Revenue by : Shri Jasbir Chauhan (CIT-
DR)
Date of hearing : 11.07.2017
Date of Pronouncement : 31.07.2017
Order Under Section 254(1) of Income Tax Act
PER PAWAN SINGH, JUDICIAL MEMBER,
1. These five appeals under section. 253 of the Income-tax Act (the Act) are directed against the separate orders of ld. CIT(A)-14 dated 12.12.2014 for Assessment Year (AY) 2009-10 and CIT(A) 22-Mumbai dated 16.09.2016 for A Ys 2007-08, and AY-2008-09 respectively. As common grounds of appeal are raised by parties, facts of the case are also common. Thus, all the appeals were clubbed together heard and are decided by consolidated order to avoid the conflicting decision. For appreciation of facts we are referring the facts for AY 2007-08. In ITA No. 7174/Mum/2016 for AY 2007-08, the Revenue has raised the following grounds of appeal:
2 ITA No.1099/M/2015 & Ors.
Softcell Technologies Ltd.
1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the claim of the assessee company of Rs. 65,41,72,734/-
towards purchase of software as the purchases, without appreciating the fact that the purchase of software was essentially payment in the nature of royalty towards purchase of copyrights attracting the provisions of section 194J of the Act and the same was liable for disallowance u/s 40(a)(ia) of the IT Act on account of no deduction of TDS on the royalty payment of Rs. 65,41,72,734/- for purchase of software u/s 194J of the IT Act by the assessee.
2. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal.
3. The appellant prays that the order of CIT(A) on the above grounds be set- aside and that of the assessing officer be restored.
2. The assessee in its cross appeal for AY 2007-08 in ITA No. 7225/Mum/2016 the assessee has raised the following grounds of appeal:
1. On the facts and in the circumstances of the case and in law the learned Commissioner of Income tax (Appeals)-22, Mumbai erred in confirming disallowance u/s. 40(a)(i) of the I.T. Act made by the Dy. CIT, Circle-7(2), Mumbai of Rs.46,21,900/- on account of alleged non deduction of tax at source, on payment of commission to M/s. Software Spectrum Pty Ltd. (Non- Resident).
2. On the facts and in the circumstances of the case and in law the learned Commissioner of Income tax (Appeals)-22, Mumbai erred in confirming addition of Rs.4,61,582/- (Rs.5,50,229/- Less Rs.88,647/-) on account of non consideration of VAT component in the valuation of closing stock made by the Dy. CIT, Circle-7(2), Mumbai.
3. Brief facts of the case are that the assessee filed return of income on 31.03.2007 declaring total income of Rs. 5,73,42,828/-. The assessment was completed on 24.11.2009 under section 143(3) of the Act. The Assessing Officer (AO) while framing assessment besides the other addition and disallowance made the disallowance of Rs. 65,41,72,734/- under section 40(a)(ia) on account of failure to deducts Tax at Source on payment made against purchase of software holding that purchase of software was purchase of copyright and against such purchase of such software the provision of section 194J are attracted. The AO further disallowed a sum of Rs. 46,21,900/- under section 40(a)(i) on account of failure to deducts Tax 3 ITA No.1099/M/2015 & Ors. Softcell Technologies Ltd.
at Source on payment of commission to an Australian company treating it as Fees for Technical Services. On appeal before the ld. CIT(A), both the disallowance was confirmed. On appeal before the Tribunal, both the grounds/disallowance was restored to the AO with a direction to pass fresh assessment order in view of various judicial pronouncements. The AO in its order under section 143(3) read with section 254 dated 25.03.2013 sustained both the disallowances. On further appeal before the ld. CIT(A), the disallowance of purchase of software of Rs.65,41,72,734/- under section 40(a)(ia) of the Act was deleted. However, the disallowance under section 40(a)(i) on account of commission payment to Australian company was sustained. Thus, aggrieved by the order of ld. CIT(A), both the party have filed appeal before us. The Revenue has challenged the validity of deleting the disallowance under section 40(a)(ia) of the Act. The assessee has challenged the sustaining of disallowance of commission payment under 40(a)(i) of the Act.
4. We have heard the ld. AR of the assessee and ld. DR for the Revenue and perused the material available on record. First, we shall take up the appeal filed by Revenue. At the outset of the proceeding, the ld. AR of the assessee argued that the ground of appeal raised by Revenue is covered in favour of assessee by various decisions of Tribunal including the decisions of Tribunal, various High Courts and Hon'ble Supreme Court. The ld. AR of the assessee besides filing the copy of other decision strongly relied upon the decision of Hon'ble Delhi High Court in CIT v/s Dynamic Vertical Software India Pvt. Ltd. (2011) 12 taxman.com 431 (Del.), CIT v/s M-tech India Pvt. Ltd. 381 ITR 31(Del.), DIT v/s Infrasoft Ltd. 4 ITA No.1099/M/2015 & Ors.
Softcell Technologies Ltd.
(2013) 264 CTR 329 (Del.) and the decision of Mumbai Tribunal in DDIT vs. Reliance Industries Ltd. reported vide (2016) 69 taxaman.com (Mum. Trib.), and n the decision of Hon'ble Supreme Court in Tata Consultancy v/s State of Andhra Pradesh 271 ITR 401 (SC). On legal aspect, it was argued that amendment to section 197A was brought by inserting sub-section 1F by Finance Act, 2012 which is relevant for the disallowance as envisaged under section 40(a)(ia) emanating from non-deduction of tax at source with the same amendment the legislature has inserted the second proviso in section 40(a)(ia) and corresponding provision in section 201(1) by inserting first proviso therein. The preliminary issue is whether the made against purchase of software to a resident entity prior to insertion of Explanation-4 to clause (vi) in section 9(1) of the Act would constitute Royalty. It was argued that this issue has been settled by a number of decisions including by the decision of Tata Consultancy Services (supra) wherein it was held that purchase and sale of software rerecorded on CD was held to be goods and the consideration paid for purchase of goods cannot be considered as Royalty. The ld. CIT(A) followed the various decision and granted relief to the assessee. On the other hand, the ld. DR for the Revenue argued that decision of Hon'ble Apex Court in Formula One Word Championship vs. CIT in Civil Appeal No. 3849 & 5051 of 2017 dated 24.04.2017 wherein the Explanation -4 to section 9(1)(1) of Income-tax Act is held to be retrospective in nature. Thus, after the decision of Apex Court, the grounds of appeal raised by Revenue is not covered in favour of assessee.
5 ITA No.1099/M/2015 & Ors.
Softcell Technologies Ltd.
5. We have considered the rival submission of the parties and have gone through the order of authorities below. The AO made the disallowance holding that the purchase of software from resident person is essentially purchase of copyright and in the nature of Royalty and the assessee was required to deduct tax at sources and made the disallowance under section 40(a)(ia) of Rs. 654172734/-. The ld. CIT(A) after considering the factual background and the legal submission made before him passed the following order:
"6.6 I have given a careful consideration to the contentions put forth on behalf of the appellant and also analyzed the issue with reference to the material on record, the relevant provisions and the principles laid down by the Hon'ble Delhi High Court, Hon'ble Karnataka High Court and the Hon'ble jurisdictional ITAT. From this analysis, the lega1 position that emerges is that in the absence of any contrary decision on the issue by the Hon'ble Bombay High Court, the Assessing Officer was duty bound to follow the Hon'ble Mumbai ITAT orders in Sonata Information Tech Ltd. (supra) and Solid Works Corporation (supra), Wherein the Hon'ble ITAT has followed the Hon'ble Delhi High Court decisions and held that payment against software would not partake the character of royalty. It is pertinent to mention here that these decisions having been rendered in the context of disallowance u/s. 40(a)(ia)/40(a)(i), the ratio laid down there under has a direct bearing on the issue under consideration. Ratio decidendi of a decision is an important source of law, which is binding on all lower authorities. As on today, the issue under dispute, whether payment against purchase of software prior to the insertion of Explanation-4 would constitute royalty or not vis-a-vis disallowance under section 40(a)(ia), has attained more clarity with the rendering of the Hon'ble Delhi High Court judgment dated 19.01.2016 in M.Tech India Pvt. Ltd. (supra) and Hon'ble Mumbai ITAT order dated 18-05-2016 in the case of DDIT vs. Reliance Industries and others in I.T.A No.1980 to 1984 & 1986,2523,2529/M/2008. In its order, the Hon'ble Delhi High Court has made a distinction between consideration paid to acquire the right to use a patent or a copyright and payments made to acquire products which are patented or copy righted. In cases where payments are made to acquire products which are patented or copyrighted, the consideration paid cannot be treated as payment against royalty. The Court had referred to the judgement of the Hon'ble Supreme Court in the case of Tata Consultancy Services v. State of Andhra Pradesh: (2004) 271 ITR 401 (SC) wherein the purchase and sale of software recorded on a CD was held to be goods and held that the consideration paid for purchase of goods cannot be considered as 'royalty'. Moreover, the Hon'ble jurisdictional TAT in Reliance Industries Ltd. (supra) has held as under: 6 ITA No.1099/M/2015 & Ors.
Softcell Technologies Ltd.
"54. We have considered the above submissions of the Ld. Representatives of the parties. Admittedly, as noted in 4th column of the table drawn in para 4 of this order, the purchase orders were made by the assessee for the softwares as mentioned in column No.5, prior to the bringing of amendment vide Finance Act, 2012, though the amendment has been made with retrospective effect from 01.06: 1916. However, we find that the said amendment vide which the Explanation 4 has been inserted to section 9(1)(vi) has the effect of change in the law as was existing and even interpreted by the various higher courts of the country prior to the insertion of Explanation 4 in the said provision. By the introduction of the said Explanation 4, computer software has been specifically included in the definition of right, property or information' which was never assumed to have been included by any court of law prior to the insertion of Explanation 4 vide amendment of Act of 2012. The Hon'ble Supreme Court in the case of Sedco Forex International Drill INC. & Others vs. Commissioner of Income Tax & another (supra) has held that if an explanation added to a provision changes the law, then it is not to be presumed to be retrospective irrespective of the fact that the phrase used are it is declared' or for the removal of doubts'. As it is an admitted position that in the earlier years, not only the various High Courts but also the Tribunal in the cases of the assessee has taken a view that the consideration paid for the purchase of the software cannot be treated as royalty; the assessee was, thus, under the bonafide belief that no TDS/withholding of tax was required to be done in respect to said purchases. The assessee had no reason to believe or to foresee a subsequent event vide which the definition of royalty has been extended to include the consideration for the use of or right to use the software has been included in the definition of royalty under the Act. As per the existing law which was in operation at the time of purchase of software, the assessee was under the bonafide belief that there was no liability to deduct tax in respect of the consideration paid for the said purchase of software. It may be further observed that as the definition as was in existence before the insertion of Explanation 4, there was a remote possibility to give a broad interpretation to the definition of right, property or information' so as to include the right to use or right for use of the software in the said definition. The Explanation 4 has brought and added a further meaning to the provision which was not supposed to be foreseen by the assessee. The co-ordinate bench of the Tribunal in the case of - Rich Graviss Products (P.) Ltd. vs. ACIT (supra), while relying upon various other decisions of the Tribunal, has held that the disallowance cannot be made under section 40(a)(ia) on the basis of a subsequent amendment brought into the Act with retrospective effect. In view of this, even otherwise, the Explanation 4 inserted vide Finance Act, 2012 cannot be applied retrospectively to the case of the assessee as the said Explanation 4 has the effect of change in law and the assessee was not expected to foresee such change at the time of making the remittance in consideration of purchase of the software in question. Hence, under such circumstances, even otherwise, the assessee was not supposed to deduct TDS on such purchases.
55. We may mention here that in cases of ITA Nos. 5264 & 5829/M/2009 before us, there is no treaty/DTAA of India with Hong Kong, 'from the resident of which country, the assessee had made purchase of software in the 7 ITA No.1099/M/2015 & Ors. Softcell Technologies Ltd.
above two cases. In the light of the law laid down by the Hon'ble Supreme Court in the case of - Sedco Forex International Drill INC. & Others vs. Commissioner of Income Tax & another11 (supra) and in view of the observations made above, we hold that the assessee during the relevant period prior to the insertion of explanation 4 to section 9(1)(vi) of the I. T. Act, was not liable to deduct TDS even in above said two cases also even though there was no DTAA with the countries from the residents of whom the assessee had made the purchases."
It is seen from the above decision that explanation-4 to section 9(1)(vi) inserted by Finance Act, 2012 cannot be applied retrospectively as the assessee was not expected to foresee such a change at the time of making payment against purchase of software in an earlier period. Hence the assessee was not supposed to deduct tax at source in earlier period from payment against purchase of software. With the advent of digital technology almost every product driven by technology, especially in the field of computing, information technology, telecommunication and electronics incorporates one software program or another. In the period prior to the insertion of Explanation-4 to section 9(1)(vi) vide Finance Act, 2012, sale of such a product integrated with software program or sale of either the product or software independently would not give rise to transfer of patent or copy right. In the case under consideration what the appellant purchased from local vendors on resale basis was a patented or copyrighted product viz. software embedded in C.D. and not the right to use a patent or copyright. In this view of the matter, the disallowance made by the assessing officer cannot be sustained. Respectfully following the ratio laid down in the aforesaid decisions, the Assessing Officer is directed to delete the disallowance of Rs.65,41,72,734/- made under section 40(a)(ia) of the Act. The appellant's ground of appeal is allowed. We have seen that the co-ordinate bench of Mumbai Tribunal while considering the similar issue in DDIT vs. Reliance Industries Ltd. (supra) held as under:
"54......the purchase orders were made by the assessee for the softwares as mentioned, prior to the bringing of amendment vide Finance Act, 2012, though the amendment has been made with retrospective effect from 1-6-1976. However, the said amendment vide which the Explanation 4 has been inserted to section 9(1)(vi) has the effect of change in the law as was existing and even interpreted by the various higher courts of the country prior to the insertion of Explanation 4 in the said provision. By the introduction of the Explanation 4, computer software has been specifically included in the definition of 'right, property or information' which was never assumed to have been included by any court of law prior to the insertion of Explanation 4 vide amendment of Act of 2012. As per the existing law which was in operation at the time of purchase of software, the assessee was under the bonafide belief that there was no liability to deduct tax in respect of the consideration paid for the said purchase of software. It may be further observed that as the definition as was in existence before the insertion of Explanation 4, there was a remote possibility to give a broad interpretation to the definition of 'right, 8 ITA No.1099/M/2015 & Ors. Softcell Technologies Ltd.
property or information' so as to include the right to use or right for use of the software in the said definition. The Explanation 4 has brought and added a further meaning to the provision which was not supposed to be foreseen by the assessee. In view of this, even otherwise, the Explanation 4 inserted vide Finance Act, 2012 cannot be applied retrospectively to the case of the assessee as the said Explanation 4 has the effect of change in law and the assessee was not expected to foresee such change at the time of making the remittance in consideration of purchase of the software in question. Hence, under such circumstances, even otherwise, the assessee was not supposed to deduct TDS on s u c h p u r c h a s e s . "
6. So far as the decision of Hon'ble Supreme Court in Formula One World Companionship Vs CIT (supra), relied by ld DR, we noted that the said decision relates to Explanation 2 to Section 9 (1)(i) of Income-tax Act. The case of the assessee does not relate to Section 9(1) (i) but relates to Section 9(1) (vi). No doubt that Explanation 4 of Section 9(1) (vi) has been amended with retrospective date, but the definition of the "Royalty" as given under the 'Treaty' with various Country has not been amended. The Country making treaty with other State cannot unilaterally amend the definition of 'Royalty', unless the treaty is amended. Even otherwise in view of the provision of section 90(2) of the Act, the Government of India has entered with agreement with other country outside India for granting relief of the tax under section 90(1), the provision of Income-tax cannot be applied, ignoring the treaty, until and unless they are more beneficial to the assessee. Therefore, in our opinion the decision of Hon'ble Supreme Court in Formula One World Companionship Vs CIT (supra), relied by ld. DR is not helpful to the Revenue. As per our view the Explanation 4 inserted vide Finance Act, 2012 cannot be applied retrospectively to the case of the assessee as the said Explanation 4 has the effect of change in law and the assessee was not expected to foresee such change at the time of 9 ITA No.1099/M/2015 & Ors. Softcell Technologies Ltd.
making the remittance in consideration of purchase of the software in question. Similar view was taken by co-ordinate bench in DDIT vs. Reliance Industries Ltd. (supra). Thus considering the facts of the present case and the various legal preposition, we do not find any illegality or infirmity in the order passed by ld. CIT(A). Thus, the ground of appeal raised by Revenue is dismissed.
7. In the result, all the appeals filed by Revenue are dismissed.
8. ITA No. 7225/M um/2016 (AY-2007-08), in this present appeal, the assessee has raised two grounds of appeal. At the outset of the hearing, the ld. AR of the assessee made the submission that he is not pressing ground no.2 which relates to confirming the addition related to VAT component in valuation of closing stock. The ld. DR for the Revenue has no objection. Considering the submission of both the representative, the Ground No.2 raised by assessee in the present appeal is dismissed as not pressed.
9. Ground No.1 relates to the disallowance under section 40(a)(i) of the Act on account of commission payment to M/s Software Spectrum Pvt. Ltd. The ld. AR of the assessee argued that similar disallowance was made by AO for AY 2009-10 and the assessee filed appeal before the ld. CIT(A) and the ld. CIT(A) vide its order dated 12.12.2014 in CIT(A)-13-IT-180/2013-14 deleted the disallowance and the Revenue has not filed any further appeal. The order of ld. CIT(A) has attained finality. It was argued that on the basis of order of ld. CIT(A) for AY 2009-10, the assessee is entitled for similar relief. On the other hand, the ld. DR for the Revenue not disputed the submission of ld. AR of the assessee that assesse was granted relief on similar disallowance by ld. CIT(A) for AY 2009-10. 10 ITA No.1099/M/2015 & Ors.
Softcell Technologies Ltd.
10. We have considered the rival submission of both the parties and also perused the order of ld. CIT(A) for AY 2009-10 in CIT(A)-13-IT-180/2013-14 dated 12.12.2014, wherein the following order was passed.
"4. By taking ground no.2, the appellant have agitated against disallowance of commission of Rs.47,79,509/- . I have gone through the assessment order where AC. has discussed the issue in para 4. As per that during the course of assessment proceedings, the assessee was asked why the payment of commission made to the party named M/s. Insight Technology Solutions Pvt.Ltd. [earlier known as Software Spectrum Pvt.Ltd.] should not be disallowed, to which assessee vide letter t.40.11.2011 made submissions. After considering the same, the A.O. has concluded as under:
The plea of the assessee has been considered but it is not fund to be tenable at all. The case cited by the assessee deal with the deduction of tax on payments made for services rendered outside India. However, the facts of the assessee's case are totally different. The assessee has made no export sales during the year. All the marketing activities of the assessee company are confined to India. There is no doubt at all that the services are rendered outside India in this case, as they relate to the sales made inside India. Software is a highly technical product, and any service provided to sell their highly technical product can only be 'technical service'. They are narrated in the books of the assessee as 'commission' just to escape the mischief of section 195. It is also strange that a company in Australia can provide an Indian company, services in India, relating to sales made in India, without having any establishment in India at all. Hence, in such a case when the services are rendered inside India, even the income of a Non-resident is chargeable to tax under the Income Tax Act. Hence, the provisions of sec. 195(i) are clearly applicable to these payments. As no tax has been deducted on this amount of Rs. 47,79,509/- it is disallowed u/s. 40(a)(ia) of the Income Tax Act and added to the total income of the assessee.
4.1 During the appellate proceedings, the appellant have argued that whole reason to disallow the commission as given above by AO. I have considered the same. The A.O's reasoning that services could not have been given in unsupported by any finding. On the other hand, appellant in para 2.3 onwards of letter dated 30.11.2011 have given details before A.O. After going through the same, and on the fact that there was an agreement to that effect and then there is no dispute that job was done, commission paid is allowed. The ground no.2 is allowed.
11. Considering the order of ld. CIT(A) in assessee's own case wherein similar disallowance was allowed in favour of assessee. The Revenue has not filed any appeal against the said order and the same has attained finality. Hence, considering 11 ITA No.1099/M/2015 & Ors. Softcell Technologies Ltd.
the principle of consistency the AO is directed to delete the disallowance for the year under consideration. In the result, this Ground of appeal is allowed.
12. In the result, appeal of the assessee is allowed.
13. ITA No. 7175/M um/2016 (AY-2008-09). In the present appeal the Revenue has raised identical ground of appeal as raised in ITA No. 7174/Mum/2016 for AY 2007-08. As we have already dismissed the appeal of the Revenue for AY 2007-08 wherein identical grounds was raised, vide ITA No. 7174/Mum/2016, considering the principle of consistency, the present appeal of the Revenue is also dismissed with the same observation.
14. ITA No. 7242/Mum/2016 (AY-2008-09). In the present appeal the ground no.1 raised by the assessee is identical to the ground no.1 of ITA No. 7225/Mum/2016 for AY 2007-08. As we have already allowed the appeal of assessee for AY 2007- 08 in ITA No. 7225/Mum/2016. Thus, considering the principle of consistency, this ground of appeal is allowed in favour of assessee with similar observation. Ground No.2 relates to addition on account of non-consideration of VAT component in the valuation of closing stock. At the outset of the hearing, the ld. AR of the assessee made the submission that he is not pressing ground no.2. The ld. DR for the Revenue has no objection. Considering the submission of both the representative, the Ground No.2 raised by assessee in the present appeal is dismissed as not pressed.
15. In the result, appeal of the assessee is allowed.
16. ITA No. 1099/Mum/2016 (AY-2009-10). In the present appeal, Ground No.1 raised by the assessee is identical to the grounds of appeal as raised by Revenue in 12 ITA No.1099/M/2015 & Ors. Softcell Technologies Ltd.
ITA No. 7225/Mum/2016 for AY 2007-08. The Ground No.2 is raised in alternative that ld. CIT(A) erred in confirming the addition of Rs. 7,88,50,772/- instead of the amount due and payable to the supplier only at the year end. It was argued by ld. AR of the assessee that similar disallowance was made by AO for AY 200708 & 2008-09.The assessee filed appeal before the ld. CIT(A) wherein the disallowance was deleted. However, for the year under consideration, the similar disallowance was sustained. On the other hand, the ld. DR for the Revenue supported the order of authorities below.
17. We have considered the rival submission of ld. representative of the parties. As we have already dismissed the appeal of Revenue for AY 2007-08 in ITA No. 7225/Mum/2016 and for AY 2008-09 in ITA No. 7175/Mum/2016 and upheld the decision of ld. CIT(A). Hence, considering the principle of consistency, the Ground No.1 raised by assessee is allowed in favour of assessee. The assessee has raised the Ground No.2 in alternative, since we have already allowed the Ground No.1, hence, the discussion on Ground No.2 raised by assessee has become academic. Thus, the appeal of the assessee is allowed.
18. In the result, appeal filed by Revenue for AY 2007-08 & 2008-09 are dismissed and the appeal filed by assessee for AY 2007-08, 2008-09 & 2009-10 are allowed.
Order pronounced in the open court on 31st day of July 2017.
Sd/- Sd/-/-
(P.K. BANSAL) (PAWAN SINGH)
(VICE-PRESIDENT) JUDICIAL MEMBER
Mumbai; Dated 31/07/2017
S.K.PS
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
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ITA No.1099/M/2015 & Ors.
Softcell Technologies Ltd.
3. The CIT(A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai
6. Guard file. BY ORDER,
स या पत त //True Copy/
(Asstt.Registrar)
ITAT, Mumbai
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