Income Tax Appellate Tribunal - Delhi
Dcit, New Delhi vs M/S Gates India Pvt. Ltd.,, New Delhi on 24 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : C : NEW DELHI
BEFORE SHRI R.S. SYAL, VICE PRESIDENT
AND
SMT. BEENA A. PILLAI, JUDICIAL MEMBER
ITA No.5852/Del/2011
Assessment Year : 2003-04
ITA No.3471/Del/2014
Assessment Year : 2004-05
ITA No.5156/Del/2012
Assessment Year : 2007-08
ITA No.3716/Del/2013
Assessment Year : 2008-09
ACIT, Vs. Gates India Pvt. Ltd.,
Circle-12(1), C-434, Defence Colony,
New Delhi. New Delhi.
PAN: AAACA8125F
(Appellant) (Respondent)
Assessee By : Shri S.D. Kapila &
Shri Pravesh Sharma, Advocates
Department By : Shri S.R. Senapthy, Sr. DR
ITA Nos.5852/Del/2011, 3471/Del/2014,
5156/Del/2012 & 3716/Del/2013
Date of Hearing : 23.01.2017
Date of Pronouncement : 24.01.2017
ORDER
PER BENCH:
These four appeals by the Revenue relate to assessment years 2003-04, 2004-05, 2007-08 and 2008-09. Since some of the issues raised in these appeals are common, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience. Assessment Year 2003-04.
2. The only issue raised in this appeal is against the deletion of disallowance of Rs.74,56,229/- made by the Assessing Officer on account of Product development expenses.
3. Briefly stated, the facts of the case are that the assessee paid Rs.74.56 lac on account of Product development expenses, which is in the nature of testing charges. The Assessing Officer, relying on the view taken by him in earlier years, made the addition. The ld. CIT(A), however, deleted such addition by relying on the view taken by him. 2 ITA Nos.5852/Del/2011, 3471/Del/2014,
5156/Del/2012 & 3716/Del/2013
4. Having heard both the sides and perused the relevant material on record, it is noticed that similar issue came up for consideration before the Tribunal in the assessee's own case for assessment year 2002-03. Vide order dated 31.07.2017 in ITA No.75/Del/2011, the Tribunal has confirmed the deletion of disallowance. A copy of such order has been placed on record. Relevant discussion has been made on pages 11 and 14 of the order. The ld. DR fairly conceded that the facts and circumstances of the instant ground are similar to those for the assessment year 2002-03. Respectfully following the precedent, we uphold the impugned order on this score.
5. In the result, the appeal is dismissed.
Assessment Year 2004-05
6. The first ground is against the deletion of disallowance of Rs.38,44,431/- on account of Testing charges/Product development charges.
7. Both the sides agreed that the facts and circumstances of this ground are similar to those for the assessment year 2003-04. Following 3 ITA Nos.5852/Del/2011, 3471/Del/2014, 5156/Del/2012 & 3716/Del/2013 the view taken hereinabove, we uphold the impugned order in deleting the disallowance.
8. The only other ground in this appeal is against the deletion of disallowance of Software expenses.
9. Briefly stated, the facts of this ground are that the assessee claimed software expenses of Rs.5.62 lac. On being called upon to furnish the details of such expenses, the assessee submitted that this included purchase of various softwares like Novell netware, MS Project 2003, and Autocad etc. Not convinced with the assessee's submission for treating it as revenue expenditure, the Assessing Officer capitalized the same. After allowing depreciation @ 60%, an addition of Rs.2,92,473/- was made, which stood deleted in the first appeal.
10. Having heard both the sides and perused the relevant material on record, we find that similar issue came up for consideration before the Tribunal in earlier years as well. Vide its order for the assessment year 2002-03, the Tribunal upheld the deletion of similar disallowance. However, when the matter came up for consideration before the Tribunal 4 ITA Nos.5852/Del/2011, 3471/Del/2014, 5156/Del/2012 & 3716/Del/2013 in respect of assessment year 2006-07, the Tribunal remitted the matter to the file of Assessing Officer for considering the nature, use and useful life of software and, thereafter, deciding the question of deductibility. The ld. AR was fair enough to accept that the matter may be restored for examination in the similar way. Respectfully following the Tribunal order for the assessment year 2006-07, we remit the matter to the file of Assessing Officer for deciding the question of software expenses as revenue or capital in the light of the discussion made by the Tribunal in its order for assessment year 2006-07.
11. In the result, the appeal is partly allowed for statistical purposes. Assessment Year 2007-08.
12. The first ground is against the deletion of disallowance of Rs.26,79,194/- on account of Testing charges/product development charges. Both the sides are agreeable that the facts and circumstances of this ground are similar to those of assessment year 2003-04. Following the view taken hereinabove, we uphold the impugned order in deleting the disallowance.
5 ITA Nos.5852/Del/2011, 3471/Del/2014,
5156/Del/2012 & 3716/Del/2013
13. Ground No.3 is against the deletion of disallowance of Software expenses. Here also both the sides agreed that the facts and circumstances of this ground are similar to those of assessment year 2004-05. Following the view taken hereinabove, we send the matter back to the file of the AO for deciding the same in consonance with directions given earlier.
14. The only other ground which survives in this appeal is against deletion of disallowance of Rs.10,44,969/- paid to Gates Corporation, USA, holding the same as revenue expenditure.
15. After considering the rival submissions and perusing the relevant material on record, we find that similar issue was raised in the appeal of the Revenue for immediately preceding assessment year. The Tribunal, vide its order dated 29.07.2011 in ITA NO.2535/Del/2011, has confirmed the deletion of disallowance of royalty expenses. The facts being similar, we uphold the impugned order on this score.
16. In the result, the appeal is partly allowed for statistical purposes. 6 ITA Nos.5852/Del/2011, 3471/Del/2014,
5156/Del/2012 & 3716/Del/2013 Assessment Year 2008-09
17. The first ground of the Revenue is against the deletion of addition of Rs.65,99,143/- made by the Assessing Officer on account of Testing fees.
18. Both the sides are agreeable that the facts and circumstances of this ground are similar to those for the assessment year 2003-04. Following the view taken hereinabove, we uphold the impugned order in deleting the disallowance.
19. Ground No.2 relate to the deletion of addition of Rs.7,81,198/- made by the Assessing Officer on account of software expenses.
20. Here also both the sides agreed that the facts and circumstances of this ground are similar to those of assessment year 2004-05. Following the view taken hereinabove, we remit the matter to the file of the AO for deciding it in terms as discussed above.
21. Ground No.3 relates to the deletion of addition of Rs.43,08,295/- made by the Assessing Officer on account of royalty expenses. 7 ITA Nos.5852/Del/2011, 3471/Del/2014,
5156/Del/2012 & 3716/Del/2013
22. Here also both the sides agree that the facts and circumstances of this ground are similar to those for the assessment year 2007-08. Following the view taken hereinabove, we uphold the impugned order in deleting the disallowance.
23. In the result, the appeal is partly allowed for statistical purposes.
The order pronounced in the open court on 24.01.2018.
Sd/- Sd/-
[BEENA A. PILLAI] [R.S. SYAL]
JUDICIAL MEMBER VICE PRESIDENT
Dated, 24th January, 2018.
dk
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.
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