The ACIT, Anand Circle,, Anand v. Power Build Limited, Dist.Anand

ITA 1811/AHD/2007 | 2002-2003
Pronouncement Date: 05-03-2010 | Result: Dismissed

Appeal Details

RSA Number 181120514 RSA 2007
Assessee PAN AABCP2464K
Bench Ahmedabad
Appeal Number ITA 1811/AHD/2007
Duration Of Justice 2 year(s) 10 month(s) 2 day(s)
Appellant The ACIT, Anand Circle,, Anand
Respondent Power Build Limited, Dist.Anand
Appeal Type Income Tax Appeal
Pronouncement Date 05-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 05-03-2010
Date Of Final Hearing 02-03-2010
Next Hearing Date 02-03-2010
Assessment Year 2002-2003
Appeal Filed On 03-05-2007
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH JM AND D.C.AGRAWAL AM ASSTT. CIT ANAND CIRCLE ANAND. V/S . POWER BUILD LTD. ANAND-SOJITRA ROAD VALLABH VIDYANAGAR- 388120. PAN NO.AABCP2464 K (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI D. K. PARIKH AR RESPONDENT BY:- SHRI V. C. MODI ADDL.CIT DR O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE FOR ASST. Y EAR 2002-03 RAISING FOLLOWING GROUNDS:- 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO DELETE ADDITION OF RS 13 97 170/- MADE UNDER SEC TION 145A OF THE ACT ON ACCOUNT OF EXCISE DUTY ON CLOSING STOCK OF FINISHED GOODS BY FOLLOWING THE RATIO OF THE CASE OF CIT VS. ENGLISH ELECTRIC COMPANY OF INDIA LTD. 243 ITR 152 (MAD.) WHICH DOE S NOT TAKE INTO ACCOUNT THE VITAL PROVISIONS OF SECTION 43B AN D GOES CONTRARY TO THE RATIO OF BERGER PAINTS INDIA LTD VS. CIT 266 ITR 99 (SC) DESPITE THE EXCISE DUTY HAVING BEEN ACCRUED ON THE MANUFACTURE OF GOODS AS SETTLED IN THE CASE OF MC DOWELL & CO VS. CTO 154 ITR 148 (SC) AND ALL OVERHEADS INCLUDING EXCISE DUTY BE ING INCLUDIBLE ITA NO.1811/AHD/2007 ASST. YEAR :2002-03 2 IN THE VALUATION OF FINISHED GOODS AS SETTLED IN TH E CASE OF CIT VS. BRITISH PAINTS INDIA LTD 188 ITR 44(SC). 2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 7 58 740/- BEING SOFTWARE DEVELOPME NT EXPENSE INCURRED FOR DEVELOPMENT OF ERP ORACLE SOFTWARE BEI NG SPECIFIC TYPE OF SOFTWARE OF ENDURING NATURE AND WHICH CAN B E RIGHTLY TREATED AS CAPITAL EXPENDITURE IN VIEW OF THE DECIS ION OF MARUTI UDYOG LIMITED ( 92 ITD 119) (DEL ) AND ARAVALI CON STRUCTION COMPANY LTD (259 ITR 30) (RAJ R ) | 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 4) IT IS THEREFORE PRAYED THAT THE ORDER OF THE C IT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. THE FIRST ISSUE IS REGARDING INCLUSION OF EXCISE DUTY IN THE VALUATION OF CLOSING STOCK. 3. WE HAVE EXAMINED THE DOCUMENTS AVAILABLE BEFORE US AND ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. LD. CI T(A) HAS NOTICED THAT EXCISE DUTY WAS PAID BEFORE FILING OF THE RETURN. T HEREFORE EVEN IF EXCISE DUTY IS INCLUDED IN THE CLOSING STOCK THE SAME WILL BE ALLOWED AS DEDUCTION UNDER SECTION 43B. IN VIEW OF THIS THERE WILL NOT BE ANY CHANGE IN THE INCOME ASSESSED. AS A RESULT NO INTERFERENC E IS CALLED FOR IN THE ORDER OF CIT(A). THIS GROUND OF REVENUE IS REJECTED . 4. GROUND NO.3 RELATES TO DELETION OF ADDITION OF R S.7 58 740/- BEING SOFTWARE DEVELOPMENT. THE AO TREATED IT AS CAPITAL EXPENDITURE BUT THE LD. CIT(A) ALLOWED THE CLAIM HOLDING THAT WHEN TECHNOLO GY IS FAST CHANGING THE SOFTWARES ARE REQUIRED TO BE UPDATED AND THERE FORE NO ENDURING BENEFIT CAN BE SAID TO BE DERIVED. HE ACCORDINGLY DELETED THE ADDITION. 3 5. WE HAVE HEARD THE PARTIES. IN OUR CONSIDERED VIE W EXPENDITURE ON PURCHASE OF SOFTWARE WOULD BE REVENUE EXPENDITURE A S IT IS NOT DEMONSTRATED HOW ASSESSEE WOULD GET ENDURING BENEFI T. IT IS NOT SHOWN THAT SOFTWARE PURCHASED BY THE ASSESSEE HAS ANY END URING LIFE. WHAT THE ASSESSEE HAS GOT WAS ONLY IMPROVEMENT IN FUNCTIONIN G. HE DID NOT GET ANY LICENCE OR COPY RIGHT. IN FACT IT WAS ONLY FOR EXCL USIVE USE OF THE ASSESSEE AND ASSESSEE COULD NOT GET ANY OWNERSHIP ADVANTAGE. USEFULNESS OF SOFTWARE ARE SHORT-LIVED BECAUSE OF THE RAPID DEVEL OPMENT IN TECHNOLOGY AND BUSINESS REQUIREMENTS UNLESS THERE IS MATERIAL TO SUGGEST THAT ASSESSEE HAS GOT EITHER RIGHT OF OWNERSHIP OVER THE SOFTWARE THE USE THEREOF COULD BE MADE BY OTHERS AND IN THE PROCESS ASSESSEE EARNS MONEY. WE ARE SUPPORTED BY THE DECISION OF ITAT DELHI BENC H IN THE CASE OF AMWAY INDIA ENTERPRISES VS. DCIT (2008) 301 ITR (AT ) 1 (DELHI) AND ITAT JAIPUR BENCH IN BUSINESS INFORMATION PROCESSIN G SERVICES VS. ACIT (1999) 239 ITR(AT) (JP) 19. 6. GROUND NOS.3 & 4 ARE OF GENERAL NATURE THEY REQ UIRE NO ADJUDICATION AND HENCE REJECTED. 7. AS A RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. SD/- SD/- (MAHAVIR SINGH) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED : 5/3/2010 MAHATA/- ORDER PRONOUNCED IN OPEN COURT ON 5/3/2010 4 COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD