Document Fragment View

Matching Fragments

2025.08.11 15:04:59 +0530 Twenty Four Thousand Five Hundred and Fifty only) from MIL/Macro, despite the fact that revisionists did not purchase any software from MIL, controlled by one, Tarun Goyal, rather, had only obtained bogus bill in respect of the said alleged. Markedly, as per the respondent, search proceedings had been earlier conducted, wherein Sh. Tarun Goyal, admitted in his statement recorded on oath under Section 132(4) IT Act that he was providing accommodation entry and bogus bills to a number of persons/entities. Correspondingly, further enquiries are avowed to have revealed that MIL had no expertise in software business, besides the said entity was not even found in existence at the address, furnished. Concomitantly, revisionist no. 1 is proclaimed to have been unable to produce any evidence regarding the use of software, allegedly obtained from MIL. It is further narrated under the complaint that the revisionists were issued questionnaire along with notice under Section 142(1) IT Act, dated 19.08.2011 regarding MIL and its transactions with the revisionists for the relevant assessment year and also to prove the genuineness of the transaction made. However, it is the respondent's case that the revisionists failed to provide any satisfactory answer/failed to establish the requisite information. As per the respondent, the revisionists claimed expenditure of Rs. 4,24,24,550/- (Rupees Four Crores Twenty Four Lakhs Twenty Four Thousand Five Hundred and Fifty only) as capital expenditure during AY 2008-09 and claimed depreciation on the opening written down value of the bogus software in AY 2010- 11, to a tune of Rs. 2,03,63,784/- (Rupees Two Crores Three Lakhs Sixty Three Thousand Seven Hundred and Eighty Four only), on which, depreciation of Rs. 81,45,514/- (Rupees Eighty Digitally signed by ABHISHEK ABHISHEK GOYAL GOYAL Date:

(Rupees twenty Seven Lakhs Ninety Six Thousand Three Hundred and Forty Eight only), as per the Demand Notice under Section 156 IT Act.

2.2. Further, as per the respondent, it was subsequently determined that the disallowance of depreciation to a tune of Rs. 81,45,514/- (Rupees Eighty One Lakhs Forty Five Thousand Five Hundred and Fourteen only) was erroneously computed, wrongly considering the rate of 40% (forty percent), instead of 60% (sixty percent) rate. Ergo, vide order dated 11.05.2016, issued under Section 154 IT Act, the disallowance on account of depreciation on software was re-worked at Rs. 71,27,324/- (Rupees Seventy One Lakhs Twenty Seven Thousand Three Hundred and Twenty Four only). Relevantly, the addition(s)/assessment order for AYs 2008-09, 2009-10, 2010-11 were challenged by the revisionists before the Commissioner of ABHISHEK GOYAL GOYAL 2025.08.11 15:05:07 +0530 Income-Tax (Appeals) (hereinafter referred to as 'CIT(A)'). However, CIT (A) vide its order dated 18.07.2012, upheld the disallowance of the depreciation claimed on the software, allegedly purchased from MIL. Undeterred, the revisionists filed a further appeal before the Income Tax Appellate Tribunal (hereinafter referred to as 'ITAT'), whereupon ITAT vide its common order dated 10.03.2016 for AYs 2008-09, 2009-10 and 2010-11, also upheld the disallowance of depreciation on software purchased by the revisionists. However, upon a further challenge before the Hon'ble High Court of Delhi, the Hon'ble High Court vide its order dated 19.07.2017, whilst, upholding the assessment order for AYs 2009-10 and 2010-11, quashed the order of ITAT for AY 2008-09. Notably, in the meanwhile, penalty u/s 271(1)(c) IT Act was levied on the revisionists pursuant to order dated 20.03.2014, for the revisionists' willfully concealing the particulars of their true income and furnishing inaccurate particulars. Subsequently, show cause notices dated 08.08.2016 were issued by/on behalf of the respondent to the revisionists, individually, which was responded by the revisionists on 23.08.2016. Markedly, under their reply(ies) the revisionists asserted that revisionist no 1 had made genuine purchase of software and that the ledger extracts in respect of software purchase, copy of invoice, details of payment made to the suppliers of software, etc., were duly filed in the course of assessment and the disallowance of depreciation made was illegal. Successively, upon the grant of sanction under Section 279(1) IT Act on 20.09.2016, the instant proceedings came to be initiated before the Ld. Trial Court.

2025.08.11 15:05:14 +0530 addition on account of the claim of depreciation on software." This question was framed in view of the appeal filed by the accused no. 1 challenging the order dt. 10.03.16 of ITAT for the Assessment year 2009-10 & 2010-11. In the order dt. 10.03.16 ITAT had noted that there was no purchase of any hardware corresponding to the extent of purchase of the software and how the software was involved and used was not demonstrated by the accused. It further noted that some irregularities with respect to use of the software and waiver of compensation for destruction of software. ITAT for AY 2009-10 & 2010-11 confirmed the disallowance of depreciation on software.
11. However, with respect to AY 2009-10 & 2010-11 Hon'ble High Court has held that ITAT has reexamined every shred of evidence to come to a clear conclusion that the assessee was not able to demonstrate the genuineness of the purchase of the software. It further noted the story of accused that software has been handed over to Sobha was also not substantiated by any documentary evidence or even otherwise. It finally held that the concurrent opinion of AO, CIT(A) and ITAT to the effect that purchase of software was infact a bogus transaction and accordingly not entitled to depreciation.