M/s AXA Group Solutions Private Limited, Bangalore v. DCIT, Bangalore

ITA 136/BANG/2016 | misc
Pronouncement Date: 27-11-2017 | Result: Allowed

Appeal Details

RSA Number 13621114 RSA 2016
Assessee PAN AAFCA2750H
Bench Bangalore
Appeal Number ITA 136/BANG/2016
Duration Of Justice 1 year(s) 9 month(s) 22 day(s)
Appellant M/s AXA Group Solutions Private Limited, Bangalore
Respondent DCIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted B
Tribunal Order Date 27-11-2017
Date Of Final Hearing 20-07-2017
Next Hearing Date 20-07-2017
First Hearing Date 20-07-2017
Assessment Year misc
Appeal Filed On 05-02-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI INTURI RAMA RAO ACCOUNTANT MEMBER ITA NO.136/BANG/2016 ASSESSMENT YEAR : 2009-10 M/S. CAPGEMINI SOLUTIONS PVT. LTD. (EARLIER KNOWN AS M/S AXA GROUP SOLUTIONS PRIVATE LIMITED) 2 ND & 3 RD FLOOR MFAR MANYATA TECH PARK PHASE IV GREEN HEART RACHENAHALLI VILLAGE NAGAWARA BENGALURU-560045. PAN : AAFCA2750H VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(1)(1) BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. T. SURYANARAYANA ADVOCATE REVENUE BY : SMT. PADMA MEENAKSHI JCIT DATE OF HEARING : 16.11.2017 DATE OF PRONOUNCEMENT : 27.11.2017 O R D E R PER SUNIL KUMAR YADAV JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A) INTERALIA ON THE FOLLOWING GROUNDS: 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF IN COME-TAX (APEALS) [CIT(A)] IN SO FAR AS IT IS PREJUDICIAL TO THE IN TEREST OF THE APPELLANT IS BAD IN LAW AND THEREFORE NOT SUSTAINABLE. 2. THE LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF THE LEARNED ASSESSING OFFICER IN DISALLOWING THE EXPENDITURE INCURRED BY THE APPELLANT TOWARDS SOFTWARE MAINTENANCE/SERVICES AND MINOR PORTION TOW ARDS APPLICATION SOFTWARE ON THE BASIS THAT IT IS CAPITAL IN NATURE. 3. WITHOUT PREJUDICE TO THE ABOVE THE LD. CIT(A) E RRED IN NOT CONSIDERING SUCH ADJUSTMENT IN ARRIVING AT THE PROFITS FROM BUS INESS ELIGIBLE FOR A DEDUCTION UNDER SECTION 10A OF THE ACT. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL M AY BE ALLOWED. ITA NO. 136/BANG/2016 PAGE 2 OF 3 2. THOUGH VARIOUS GROUNDS ARE RAISED BUT THEY ALL RELATE TO THE NATURE OF EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS SOFTWARE MAINTENAN CE/SERVICE. ACCORDING TO THE ASSESSEE IT HAS INCURRED THE EXPENDITURE TOWARDS S OFTWARE MAINTENANCE/SERVICES AND SUPPORT. THEREFORE IT IS OF REVENUE IN NATURE. WH EREAS THE AO HAS MADE OUT THE CASE THAT THE ASSESSEE HAS NOT ONLY RENDERED ITS SERVICES OF MAINTENANCE BUT ALSO ACQUIRED THE SOFTWARE. HE ACCORDINGLY HELD THE ENTIRE EXPENDITU RE TO BE IN CAPITAL IN NATURE AND ALLOWED THE DEPRECIATION THEREON. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT BUT DID NOT FIND FAVOUR WITH HIM. NOW THE ASSESSEE IS BEFORE US AND DURING THE COURSE OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO CERTAIN SAMPLE OF INVOICE WITH THE SUBMISSION THAT THE EXPENDITURE WERE INCURRED TOWARDS THE SOFTWARE MAIN TENANCE/SERVICES. WHEREAS THE LEARNED DR EMPHATICALLY ARGUED THAT IT WAS NOT ONLY FOR SOFTWARE MAINTENANCE/SERVICES BUT IT WAS ACQUISITION OF SOFTWARE THEREFORE THE REVEN UE AUTHORITIES HAVE RIGHTLY TREATED IT TO BE CAPITAL EXPENDITURE. 4. HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTH ORITIES BELOW AND DOCUMENTS PLACED ON RECORD IN THE LIGHT OF RIVAL SUBMISSIONS WE FI ND THAT ASSESSEE HAS INCURRED AN EXPENDITURE RELATING TO SOFTWARE. THE ASSESSEE HAS FILED FEW SAMPLES OF INVOICES OF SMALL AMOUNT WHERE FROM IT CAN BE DEDUCED THAT EXPENDITUR E MUST HAVE BEEN INCURRED FOR SOFTWARE MAINTENANCE/SERVICES BUT DETAILS OF MAJOR EXPENDITURES ARE NOT AVAILABLE. DURING THE COURSE OF HEARING BOTH THE PARTIES HAVE AGREED THAT LET THE MATTER BE SENT BACK TO THE AO FOR VERIFICATION OF THE ENTIRE EXPENDITURE AND I F ANY EXPENDITURES ARE INCURRED TOWARDS THE ACQUISITION OF THE SOFTWARE THE SAME BE TREATE D TO BE CAPITAL EXPENDITURE AND THE EXPENDITURE INCURRED FOR MAINTENANCE/SERVICE MAY BE TREATED AS REVENUE EXPENDITURE. 6. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWE R AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT SINCE THE ISSU E WAS NOT PROPERLY EXAMINED AND THE LOWER AUTHORITIES HAVE TAKEN A DIFFERENT VIEW WITHO UT EXAMINING THE EVIDENCES ON RECORD IT REQUIRES A PROPER ADJUDICATION BY THE AO. WE ACCOR DINGLY SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE AO TO VERIFY THE ENTI RE EXPENDITURE INCURRED TOWARDS SOFTWARE AND IF HE COMES TO THE CONCLUSION THAT CERTAIN PART OF EXPENDITURE WAS INCURRED FOR ITA NO. 136/BANG/2016 PAGE 3 OF 3 ACQUISITION OF SOFTWARE THE SAME MAY BE TREATED AS CAPITAL EXPENDITURE AND THE EXPENDITURE RELATING TO SOFTWARE MAINTENANCE/SERVIC ES MAY BE TREATED TO BE REVENUE EXPENDITURE. ACCORDINGLY MATTER IS RESTORED TO TH E FILE OF THE AO TO READJUDICATE THE ISSUE IN TERMS INDICATED ABOVE AFTER AFFORDING OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER 2017. SD/- SD/- (INTURI RAMA RAO) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JU DICIAL MEMBER PLACE : BANGALORE DATED : 27/11/2017 /NS/* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR ITAT BANGALORE. 6 GUARD FILE BY ORDER SR. PRIVATE SECRETARY ITAT BANGALORE.