ACIT CIR 4(2), MUMBAI v. TATA SECURITIES P. LTD( FORMERLY KNOWN AS TATA TD WATER HOUSE SECURITIES P. LTD), MUMBAI

ITA 4346/MUM/2008 | 2004-2005
Pronouncement Date: 30-07-2010 | Result: Partly Allowed

Appeal Details

RSA Number 434619914 RSA 2008
Assessee PAN AAACT2150R
Bench Mumbai
Appeal Number ITA 4346/MUM/2008
Duration Of Justice 2 year(s) 1 month(s) 7 day(s)
Appellant ACIT CIR 4(2), MUMBAI
Respondent TATA SECURITIES P. LTD( FORMERLY KNOWN AS TATA TD WATER HOUSE SECURITIES P. LTD), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-07-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted J
Tribunal Order Date 30-07-2010
Date Of Final Hearing 15-09-2010
Next Hearing Date 15-09-2010
Assessment Year 2004-2005
Appeal Filed On 23-06-2008
Judgment Text
ITA NO. 4346/MUM/2008 ASSESSMENT YEAR : 2004-05 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH MUMBAI BEFORE SHRI D. K. AGARWAL (JUDICIAL MEMBER) AND SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) ITA NO. 4346/MUM/2008 ASSESSMENT YEAR 2003-04 DATE OF HEARING : 13.7.2010 ASSISTANT COMMISSIONER OF INCOME TAX ..... . APPELLANT CIRCLE 4(2) ROOM NO.642 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020 VS. M/S. TATA SECURITIES PVT. LTD. .. RESP ONDENT (FORMERLY KNOWN AS TATA TD WATER HOUSE SECURITIES P. LTD) ONE FORBES DR. V.B. GANDHI MARG MUMBAI 400 001 AAACT2150R APPELLANT BY : SHRI MANOJ MISHRA RESPONDENT BY : SHRI M.M. GOLVALA O R D E R PER PRAMOD KUMAR: 1. THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIREC TED AGAINST THE ORDER DATED 21 ST APRIL 2008 PASSED BY THE CIT(A) FOR THE ASSESSMENT YEAR 2004-05. ITA NO. 4346/MUM/2008 ASSESSMENT YEAR : 2004-05 PAGE 2 OF 5 2. IN THE FIRST GROUND OF APPEAL THE ASSESSING OFFICE R IS AGGRIEVED OF THE CIT(A) HAVING GRANTED DEPRECIATION ON BOMBAY STOCK EXCHANGE MEMBERSHIP CARD. 3. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY HONBLE BOMBAY HIGH CO URTS JUDGMENT IN THE CASE OF CIT VS TECHNO SHARES & STOCK LTD. 225 CTR 337. RESPECTFULLY FOLLOWING THE SAME WE UPHOLD THE GRIEVANCE OF THE ASSESSING OFFICER AND VACATE THE IMPUGNED RELIEF GRANTED BY THE CIT(A) ON THIS ISSUE. 4. GROUND NO.1 IS THUS ALLOWED. 5. BY WAY OF SECOND GROUND OF APPEAL ASSESSING OFFICE R HAS RAISED A GRIEVANCE AGAINST CIT(A)S HOLDING THAT THE SOFTWAR E SUPPORT EXPENDITURE IS ELIGIBLE FOR DEDUCTION AS A REVENUE EXPENDITURE. 6. THE MATERIAL FACTS ARE AS FOLLOWS. DURING THE COURS E OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS INTER- ALIA PAID ` 15 54 944 TOWARDS SOFTWARE SUPPORT CHARGES IN RESP ECT OF DEPLOYMENT OF PERSONNEL OF ASSESSEE COMPANYS OFFIC E FOR ON-SITE SUPPORT. THE ASSESSING OFFICER WAS OF THE VIEW THAT AS THIS EXPENDITURE RESULTS IN BENEFITS OF ENDURING NATURE THE SAME HAS TO BE TRE ATED AS CAPITAL EXPENDITURE. ACCORDINGLY SOFTWARE SUPPORT CHARGES WERE DECLINED DEDUCTION IN COMPUTATION OF ASSESSEES INCOME. AGGR IEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO REVERSED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING AS FOLLOWS:- 2.4 THE DEPLOYMENT OF PERSONNEL CHARGES PAID BY AP PELLANT TO TATA CONSULTANCY SERVICES LTD. AT THE OFFICE OF THE ASSESSEE ITA NO. 4346/MUM/2008 ASSESSMENT YEAR : 2004-05 PAGE 3 OF 5 ARE ONLY FOR MAINTENANCE OF THE EXISTING SOFTWARE. AS THE CHARGES ARE ONLY FOR SOFTWARE SUPPORT AND NOT FOR A CQUISITION OF CREATION OF SOFTWARE THE SOFTWARE SUPPORT CHARG ES ARE REVENUE EXPENDITURE. UNDER THE CIRCUMSTANCES THE A .O. IS DIRECTED TO ALLOW THE SOFTWARE SUPPORT CHARGES AND WITHDRAW DEPRECIATION ALLOWED BY HIM ON THE SAME. THUS AN E XPENDITURE OF RS.15 54 994/- IS DIRECTED TO BE ALLOWED AND DEP RECIATION OF RS.9 32 996/- IS REQUIRED TO BE WITHDRAWN. THUS TH E APPELLANT GETS A RELIEF OF RS.6 21 998/-. 7. REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE US. 8. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PERUS ED THE MATERIAL ON RECORD WE ARE NOT INCLINED TO DISTURB THE WELL REASONED CONCLUSION OF THE CIT(A). THERE CANNOT BE ANY DISPUTE ON THE FACT UAL ASPECT THAT THE IMPUGNED PAYMENT IS ONLY FOR MAINTENANCE OF COMPUTE R SOFTWARE GIVEN THIS FACT THE CIT(A) IS INDEED JUSTIFIED IN HOLDIN G IT TO BE OF REVENUE IN NATURE. WE APPROVE HIS ACTION AND DECLINE TO INTERF ERE IN THE MATTER. 9. GROUND NO.2 IS THUS DISMISSED. 10. IN THE RESULT REVENUES APPEAL IS PARTLY ALLOWED I N THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THIS 30 TH DAY OF JULY 2010. SD/XX SD/XX (D. K. AGARWAL) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 30 TH DAY OF JULY 2010. ITA NO. 4346/MUM/2008 ASSESSMENT YEAR : 2004-05 PAGE 4 OF 5 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) MUMBAI 4. COMMISSIONER (APPEALS) MUMBAI 5. DEPARTMENTAL REPRESENTATIVE J BENCH ITAT MUMB AI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR PRADEEP J. CHOWDHURY INCOME TAX APPELLATE TRIBUNAL SR. PRIVATE SECRETARY MUMBAI BENCHES MUMBAI ITA NO. 4346/MUM/2008 ASSESSMENT YEAR : 2004-05 PAGE 5 OF 5 DATE INITIAL 1. DRAFT DICTATED ON 28.7.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 28.7.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 28.7.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 28.7.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 28.7.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 30.7.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER