M/s. CREST ANIMATION STUDIES LTD., MUMBAI v. ACIT CIR 11(1), MUMBAI

ITA 2895/MUM/2005 | 2001-2002
Pronouncement Date: 29-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 289519914 RSA 2005
Assessee PAN AAACC6134C
Bench Mumbai
Appeal Number ITA 2895/MUM/2005
Duration Of Justice 6 year(s) 3 month(s) 10 day(s)
Appellant M/s. CREST ANIMATION STUDIES LTD., MUMBAI
Respondent ACIT CIR 11(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 29-07-2011
Date Of Final Hearing 27-07-2011
Next Hearing Date 27-07-2011
Assessment Year 2001-2002
Appeal Filed On 19-04-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI R.S.SYAL AM AN D SHRI N.V.VASUDEVAN JM ITA NO.2895/MUM/2005 : ASST.YEAR 2001-2002 M/S.CREST ANIMATION STUDIOS LIMITED 401/501 RAHEJA PLAZA LBS MARG GHATKOPAR (WEST) MUMBAI 400 086. PAN : AAACC6134C. VS. THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 11(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V.SONDE RESPONDENT BY : SHRI SATBIR SINGH DATE OF HEARING :27 TH JULY 2011 DATE OF PRONOUNCEMENT : 29 TH JULY 2011 O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE ASSESSEE IS DIR ECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 01.02.2005 IN RELATION TO THE ASSESSMENT YEAR 2001-2002. IT IS A RECALLED MATTER INAS MUCH AS THE EARLIER ORDER PASSED BY THE TRIBUNAL WAS R ECALLED VIDE ITS ORDER DATED 25 TH JUNE 2010. 2. FIRST GROUND IS AGAINST THE CONFIRMA TION OF DISALLOWANCE OF BAD DEBT OF RS.89 95 000. BRIEFLY STATED THE FACTS OF TH IS GROUND ARE THAT THE ASSESSEE CLAIMED DEDUCTION OF BAD DEBTS FOR RS.90 70 834 U/S.36(1)(VII). THE ASSESSING OFFICER MADE DISALLOWANCE FOR THE SAID SUM ON TH E GROUND THAT THE ASSESSEE HAD NOT PROVED THAT THE DEBT HAD BECOME BAD AND IRRECOVERABLE. THE LEARNED CIT(A) ALLOWED DEDUCTION FOR A SUM OF RS.75 834 IN RESP ECT OF CERTAIN PARTIES BUT UPHELD THE ADDITION OF RS.89.95 LAKHS. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS BORNE OUT FROM THE ANNUAL REPO RT OF THE ASSESSEE THAT THE AMOUNT OF ITA NO.2895/MUM/2005 M/S.CREST ANIMATION STUDIOS LIMITED. 2 BAD DEBT HAS BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT. RE CENTLY THE HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS. CIT [( 2010) 323 ITR 397 (SC)] HAS HELD THAT AFTER 01.04.1989 THE ASSESSEE IS NOT REQUIRED TO ESTABLISH THAT THE DEBT BECAME BAD IN THE PREVIOUS YE AR U/S.36(1)(III). IT HAS BEEN HELD THAT DEDUCTION IS TO BE ALLOWED AS BAD DEBT ON A SIMPLE WRITE OFF. SIMILAR OPINION HAS BEEN TAKEN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. STAR CHEMICALS (BOMBAY) P.LTD. [(2009) 313 ITR 126 (BOM.)]. IN VIEW OF THE FACT TH AT THE ASSESSEE WROTE OFF THE SAID AMOUNT IN ITS BOOKS OF ACCOUNT A ND CLAIMED DEDUCTION ACCORDINGLY IN OUR CONSIDERED OPINION THE CLAIM OF THE A SSESSEE HAS TO BE ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE PRECEDENTS WE ORDER FOR THE DELETION OF ADDITION. THIS GROUND IS ALLOWED. 4. GROUND NO.2 IS AGAINST THE UPHOLDING OF DISALLOWANCE OF DEPRECIATION OF RS.1 46 81 197. FROM THE GROUND ITSELF IT IS APPARENT THAT THE LEARNED CIT(A) DID NOT ADJUDICATE ON THE CONTENTION OF THE ASSESSEE FIRSTLY TH AT THE COST OF COMPUTER SOFTWARE ON WHICH DEPRECIATION WAS ALLO WED BY THE A.O. AT 25% WAS FUNCTIONALLY INTEGRATED WITH THE COMPUT ER HARDWARE; SECONDLY THAT THE COST OF HARDWARE OF RS.2.63 CRORES WAS WRONGLY CLAS SIFIED AS COMPUTER SOFTWA RE BY THE A.O.; AND LASTLY THAT THE DISALLOWANCE OF DEPRECIATION WA S EXCESSIVE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THE ABOVE CONTENTIONS WHICH WERE SPECIFICALLY RAISED BEFORE HIM. IT WA S PRAYED THAT THE MATTER MAY BE RESTORED TO THE FILE OF A.O. FOR A FRESH DECISION SINCE IT WOULD REQUIRE EXAMINATION OF NECESSARY RECORD . THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT RAISE ANY SERIOUS OBJECTION TO IT. IN VIEW OF TH E RIVAL BUT COMMON SUBMISSIONS WE SET ASIDE THE IMPUGNED ORDE R ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR DE NOVO ADJUDICATION AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. ITA NO.2895/MUM/2005 M/S.CREST ANIMATION STUDIOS LIMITED. 3 5. GROUND NO.3 IS AGAINST THE CONFIR MATION OF DISALLOWANCE OF WEBSITE DEVELOPMENT EXPENSES OF RS .2 15 000 ON THE GROUND THAT IT WAS OF A CAPITAL NATURE. THIS DISALLOWANCE MADE BY THE ASSESS ING OFFICER WAS UPHELD BY THE LEARNED CIT(A) FOR THE REASON THAT IT WAS CAPABLE OF BEING USED FOR AN Y NUMBER OF TIMES. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELE VANT MATERIAL ON RECORD IT IS NOTICED THAT SIMILAR ISSUE CAME UP BEFORE THE HON BLE DELHI HIGH COURT IN CIT VS. INDIAN VISIT.COM (P) LTD. [(2008) 219 CTR (DELHI) 603] IN WHICH IT HAS BEEN HELD THAT THE EXPENDITURE OF DEVEL OPMENT OF WEBSITE IS REVENUE EXPENDITURE EVEN THOUGH RESULTING IN ENDURING BENE FIT. SIMILAR VIEW HAS BEEN TAKEN BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. MAHINDRA REALTY & INF. DEVELOPERS LTD. VIDE ITS ORDER DATE D 28.01.2011 IN ITA NO.1160/MUM/2010. IN VIEW OF THE ABOVE PRECEDEN TS WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION ON ACCOUNT OF WEBSITE DEVELOPMENT EX PENSES. THIS GROUND IS ALLOWED. 7. LAST GROUND IS AGAINST CHARGING OF INTEREST U/S.234D OF THE ACT. THE ASSESSING OFFICER CHARGED INTEREST U/S. 234D WHICH LEVY WAS UPHELD IN THE FIRST APPEAL. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELE VANT MATERIAL ON RECORD IT IS NOTICED THAT SECTION 234D HA S BEEN INSERTED BY TH E FINANCE ACT 2003 WITH EFFECT FROM 01.06.2003. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BAJAJ HINDUSTAN LTD. IT APPEAL NO.198 OF 2009 VIDE ITS JUDGEMENT DATED 15.04.2009 HAS HELD THAT SECTION 234D HA S BEEN INSERTED W ITH EFFECT FROM 01.06.2003 AND THAT BEING THE POSITION IT CA NNOT HAVE A RETROSPECTIVE EFFECT. SINCE THE ASSESSMENT YEAR I NVOLVED BEFORE US IS 2001-2002 RESPECTFULLY FOLLOWING THE PRECEDENT WE HOLD THAT NO INTEREST CAN BE CHARGED U/S.234D. THIS GROUND IS ALLOWED. ITA NO.2895/MUM/2005 M/S.CREST ANIMATION STUDIOS LIMITED. 4 9. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN TH E OPEN COURT ON THIS 29 TH DAY OF JULY 2011. SD/- SD/- (N.V.VASUDEVAN) (R.S.SYAL) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI : 29 TH JULY 2011. DEVDAS*` COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) -XI MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.