Income Tax Appellate Tribunal - Chennai
Acit, Chatrapatti vs M/S. Chona Financial Services Pvt. ... on 2 November, 2018
आयकर अपील य अ धकरण, 'बी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI
ी एन.आर.एस. गणेशन, या यक सद य एवं
ी ए. मोहन अलंकामणी, लेखा सद य केसम%
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
&व&वध या चका सं / M.P. No.383/Chny/2017
(in I.T.A. No.3039/Mds/2016)
नधा'रण वष' / Assessment Year : 2000-01
M/s Chona Financial Services
The Deputy Commissioner of Pvt. Ltd.,
Income Tax, v. New No.46, Old No.19,
Company Circle - 1(2), Prakasam Street,
Chennai - 600 034. T. Nagar, Chennai - 600 017.
PAN : AAACC 3031 C
(*ाथ'क/Petitioner) (*,यथ-/Respondent)
*ाथ'क क/ ओर से /Petitioner by : Shri AR.V. Sreenivasan, JCIT
*,यथ- क/ ओर से/Respondent by : Shri Ashit Agrawal, CA
सन
ु वाई क/ तार ख/Date of Hearing : 02.11.2018
घोषणा क/ तार ख/Date of Pronouncement : 02.11.2018
आदे श /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
The Revenue has filed the present Miscellaneous Petition praying for recall of order of this Tribunal dated 31.05.2017 on the ground that the appeal was filed before this Tribunal due to audit objection.
2 M.P. No.383/Chny/17
2. Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that this Tribunal decided the appeal on the ground that the tax effect was less than ₹10 lakhs. However, according to the Ld. D.R., when there is audit objection, the circular of the CBDT fixing the monetary limit for filing before this Tribunal may not be applicable. Referring to the audit report, the Ld. D.R. submitted that a sum of ₹16,16,000/- was claimed as revenue expenditure towards software license. The Assessing Officer allowed the claim of the assessee. However, the Audit Wing of the Department found that it has to be treated as capital in nature. Due to this audit objection, according to the Ld. D.R., there is an additional demand of ₹9,06,767/-, hence, the appeal has to be decided on merit.
3. We heard Shri Ashit Agrawal, the Ld. representative for the assessee also. The assessee admittedly claimed ₹16,16,000/- during the year under consideration towards software licence fee and claimed the same as revenue expenditure. In fact, the Assessing Officer allowed the claim of the assessee as revenue expenditure. The Audit Wing of the Department examined the records of the assessee and found that the licence fee paid for software is not a revenue expenditure and it has to be classified as 3 M.P. No.383/Chny/17 capital expenditure. The question arises for consideration is whether the classification of income under the head "Revenue expenditure" or "Capital expenditure" could be decided by the Assessing Officer or by the Audit Wing of the Department? This Tribunal is of the considered opinion that the classification of expenditure has to be decided only by the Assessing Officer. At the best, the wrong classification can be brought to the notice of the Assessing Officer by the Audit Wing of the Department. In this case, when the Audit Wing of the Department found that it has to be classified as capital expenditure, the Assessing Officer reiterated his view by way of a reply to the Audit Wing of the Department. Since the Audit Wing has not accepted the reply filed by the assessee, the Assessing Officer reopened the assessment by issuing notice under Section 148 of the Income-tax Act, 1961 (in short 'the Act'). Therefore, the Commissioner directed the Assessing Officer to file an appeal. This Tribunal is of the considered opinion that licence fee paid to obtain software is nothing but revenue expenditure. Moreover, the Assessing Officer has rightly reiterated that it has to be treated only as revenue expenditure. In those circumstances, this Tribunal do not find any merit in the Miscellaneous Petition filed by the Revenue. Accordingly, the same is dismissed. 4 M.P. No.383/Chny/17
4. With the above observation, the Miscellaneous Petition filed by the Revenue stands dismissed.
Order pronounced in the open court after conclusion of hearing on 2nd November, 2018 at Chennai.
sd/- sd/-
(ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन)
(A.Mohan Alankamony) (N.R.S. Ganesan)
लेखा सद य/Accountant Member या यक सद य/Judicial Member
चे नई/Chennai,
nd
5दनांक/Dated, the 2 November, 2018.
Kri.
आदे श क/ * त6ल&प अ7े&षत/Copy to:
1. *ाथ'क/Petitioner 2. *,यथ-/Respondent
3. आयकर आय8
ु त (अपील)/CIT(A) 4. आयकर आय8
ु त/CIT
5. &वभागीय * त न ध/DR 6. गाड' फाईल/GF.