Income Tax Appellate Tribunal - Ahmedabad
Indian Research Manifestation Labs, ... vs Assessee on 5 November, 2007
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH - AHMEDABAD
(BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL, AM)
ITA No.391/Ahd/2008
A. Y.: 2004-05
Indian Research Manifestation Vs The D. C. I. T., Circle-4,
Labs Pvt. Ltd., Navjeevani Trust Building, Nr.
IRM House, Off. C. G. Road, Navjeevan Post Office,
Navrangpura, Ahmedabad Off. Ashram Road,
Ahmedabad 380 014
PA No. AAACI 1367 M
(Appellant) (Respondent)
ITA No.510/Ahd/2008
A. Y.: 2004-05
The A. C. I. T., Circle-4, Vs Indian Research Manifestation
Navjeevani Trust Building, Nr. Labs Pvt. Ltd.,
Navjeevan Post Office, IRM House, Off. C. G. Road,
Off. Ashram Road, Navrangpura, Ahmedabad
Ahmedabad 380 014
PA No. AAACI 1367 M
(Appellant) (Respondent)
Assessee by Shri S. N. Soparkar, AR
Department by Shri R. K. Dhanesta, DR
ORDER
PER BHAVNESH SAINI: Both the cross appeals are directed against order of the CIT(A)-VIII, Ahmedabad dated 05-11-2007 for assessment year 2004-05.
2. The appeal of the assessee is time barred by 28 (twenty eight) days. The assessee received the impugned order on 08-11-2007 but the appeal is filed on 04-02-2008. It is stated in the application for condonation of delay and affidavit that on receipt of the order of the learned CIT(A) on 08-11-2007 by Shri Ghanshyam Gupta, AGM (Taxation), he has resigned from the service of the Company and was relieved on 17-11-2007. Due to ITA No.391 and 510/Ahd/2008 2 Indian Research Manifestation Labs Pvt. Ltd.
inadvertent mistake, the matter could not be taken up for filing of the appeal. The learned DR did not dispute the claim of the assessee. Consideration the explanation of the assessee, we find that the assessee has sufficient cause in not filing the appeal within the period of limitation. The delay in filing the appeal by the assessee is, therefore, condoned.
3. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material on record. The learned Counsel for the assessee did not press the additional ground of appeal. The same is dismissed as withdrawn.
ITA No.391/Ahd/2008 (assessee's appeal)4. It stated in the grounds of appeal that the learned CIT(A) has erred in upholding the order of the AO with regard to the computation of book profit u/s 115 JB of the IT Act because the AO while computing the book profit u/s 115 JB of the IT Act has not deducted the prior period expenses of Rs.12,48,203/-. The assessee prayed that prior period expenses should be deducted from the computation of book profit u/s 115 JB of the IT Act. The assessee contended before the learned CIT(A) that while calculating the profit u/s 115 JB of the IT Act, the AO should have deducted the prior period expenses of Rs.12,48,203/- from the book profit of Rs.1,79,39,623/-. The learned CIT(A) however, confirmed the order of the AO by observing that as per section 115J of the IT Act, book profit as in the profit & loss account has to be taken and below the line adjustments are not to be deducted. The appeal of the assessee was accordingly dismissed.
5. The learned Counsel for the assessee submitted that the issue is now covered by the order of the ITAT Ahmedabad "B" Bench in the case ITA No.391 and 510/Ahd/2008 3 Indian Research Manifestation Labs Pvt. Ltd.
of United Phosphorous Ltd. Vs DCIT in ITA No.5361/Ahd/1996 dated 30-04-2003 in which it was held in Para 3 as under:
"3. The next dispute is with regard to deduction in respect of prior period adjustment while computing book profit u/s. 115J of the Act. After hearing the parties, we find that the matter stands covered in favour of the assessee by the decision of the Supreme Court in the case of Apollo Tyres 256 ITR 273 wherein it was held that no adjustment in the profit shown as per the profit shown as per profit and loss account can be made while working out the income of the assessee u/s. 115J of the Act. We, accordingly, direct the Assessing Officer not to disallow the prior period adjustment amounting to Rs.3,87,865/- while computing the book profit u/s. 115J of the Act".
The learned Counsel for the assessee also relied upon the decision of the Hon'ble Delhi High Court in the case of CIT Vs Khaitan Chemicals and Fertilizers Ltd. 307 ITR 150 in which it was held as under:
"Held, dismissing the appeal, that because of the prescribed accounting standard which had to be followed by the assessee in view of the provisions of section 115JA (2) read with section 211 of the 1956 Act, the assessee was required to show the prior period items/extraordinary items separately so that their impact on the current profit or loss could be perceived. The fact that the assessee adopted the alternative approach of showing such items in the statement of profit and loss after determination of current net profit or loss, did not mean that these items were not to be taken into account in computing the net profit as envisaged in section 115JA. Thus, what the assessee had done was only to indicate the prior period items/extraordinary items separately. This did not mean that the figure of net profit was to be arrived at the de hors these items. Thus, the Tribunal was correct that the net profit for the purposes of section 115 JA was to be computed only after deducting the prior period expenses/extraordinary items".ITA No.391 and 510/Ahd/2008 4
Indian Research Manifestation Labs Pvt. Ltd.
6. The learned DR on the other hand, relied upon the orders of the authorities below.
7. On consideration of the rival submissions, we are of the view that the issue is covered in favour of the assessee by the order of the ITAT Ahmedabad Bench in the case of United Phosphorus Ltd. (supra) and the decision of the Hon'ble Delhi High Court in the case of Khaitan Chemicals and Fertilizers Ltd. (supra). We accordingly, set aside the orders of the authorities below and direct the AO not to disallow prior period expenses of Rs.12,48,203/- while computing the book profit u/s 115JB of the IT Act. As a result, this ground of appeal of the assessee is allowed.
ITA No.510/Ahd/2008 (departmental appeal)8. The revenue has filed the appeal on the following effective ground:
"1. The Ld. CIT(A) has erred in law and on the facts in holding that the assessee is entitled to depreciation at the enhanced rate of 60% on equipments like routers, modems etc. which are a part of computer net work or computer system and cannot be taken to be covered by the term 'computers including computer software' used in Appendix - I of Income- tax Rules providing for depreciation rates".
9. The learned CIT(A) following his appellate order in assessment year 2003-04 allowed the appeal of the assessee and deleted the addition. The learned Counsel for the assessee submitted that the order of the learned CIT(A) for assessment year 2003-04 has been confirmed by the Tribunal in the case of the same assessee in ITA No.4230/Ahd/2007 and vide order dated 29-05-2009 the departmental appeal on the identical ground has been dismissed. The learned DR conceded that the issue is covered in favour of the assessee by the order of the Tribunal (supra). Considering the above, we find that the departmental appeal has no merit. The same is accordingly dismissed being covered by the earlier ITA No.391 and 510/Ahd/2008 5 Indian Research Manifestation Labs Pvt. Ltd.
order of the Tribunal in the case of the same assessee as referred above. The departmental appeal is accordingly dismissed.
10. As a result, the appeal of the assessee is allowed and the departmental appeal is dismissed.
Order pronounced on 13-08-2010
Sd/- Sd/-
(D. C. AGRAWAL) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date : 13-08-2010
Lakshmikant/-
Copy of the order forwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A) concerned
5. The DR, ITAT, Ahmedabad
6. Guard File
BY ORDER
Dy. Registrar, ITAT, Ahmedabad