DCIT Vs Paypal India Private Limited (ITAT Chennai)
Material Facts: The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) dated 12.03.2025 for Assessment Year 2014-15, while the assessee filed a Cross Objection supporting the appellate order.
The assessee filed its return of income on 28.11.2014 declaring total income of Rs.95,31,33,970/-. The return was selected for scrutiny, and an assessment under Section 143(3) was completed on 19.01.2018 assessing total income at Rs.121,02,76,062/-. During the original scrutiny proceedings, the Assessing Officer issued notices under Sections 143(2) and 142(1), including a specific notice dated 06.09.2016 seeking details and ledger copies relating to software expenses. The assessee furnished the requested details on 28.10.2016.
Subsequently, after expiry of four years from the end of the relevant assessment year, the Assessing Officer issued a notice under Section 148 on 31.03.2021. The recorded reasons stated that software expenditure of Rs.4,24,07,026/- claimed in the profit and loss account ought to have been capitalised, resulting in proposed disallowance of Rs.3,18,05,269/- after allowing depreciation. A reassessment order under Section 147 dated 30.06.2023 made the said addition.
The CIT(A) allowed the assessee’s legal ground and held the reopening invalid without adjudicating the merits of the addition. The Revenue challenged this finding before the Tribunal, while the assessee supported the CIT(A)’s order through its Cross Objection.
