Case Law Details
Wifi Networks Pvt. Ltd Vs DCIT (ITAT Bangalore)
The issue under consideration is whether depreciation on ‘imported software’ will be considered as royalty and liable for disallowance under section 40(a)(ia) for want of TDS?
ITAT states that from the submissions made by ld AR, ITAT notice that there is contradiction between the facts narrated by the Ld A.R with regard to the payment of Rs.5.00 crores on which the impugned depreciation has been claimed by the assessee and the facts that were understood by Ld.CIT(A). Further, ITAT notice that the Ld CIT(A) has not taken cognizance of the order passed by the ITAT in ITA No.1624 to 1627/Bang/2012 (Supra) or possibly it has not been brought to his notice by the assessee. In the above said order of the Tribunal, it has been held that the payment of Rs.5.00 crores made to Shri Mohan Raju was not royalty. ITAT have noticed that the ld CIT(A) has held the payment as royalty and the said decision is contrary to the decision rendered by ITAT. Further, the above said amount of Rs.5.00 crores was paid during the financial year 200506 and 2006-07. The said payment had been capitalized in those years. ITAT are concerned here with AY 2012-13 and during the year under consideration, the assessee has claimed only depreciation thereon. In the earlier years, the AO had only disallowed the depreciation claimed by the assessee by invoking the provisions of sec.40(a)(ia) of the Act, i.e., the AO has not disturbed the action of the assessee in capitalizing the payment of Rs.5.00 crores. Hence the issue of capitalizing the payment has attained finality. Hence ITAT are not able to understand as to how the ld CIT(A) can direct the AO to treat the amount of depreciation as royalty payment. The foregoing discussions would show that the ld CIT(A) has rendered his decision without properly appreciating the facts surrounding the issue. In any case, the facts presented by Ld A.R also, in our view, requires verification. Hence, ITAT are of the view that this issue requires fresh examination at the end of the ld CIT(A). Accordingly ITAT set aside the order passed by ld CIT(A) on this issue and restore the same to his file for examining it afresh, after affording adequate opportunity of being heard to the assessee.
FULL TEXT OF THE ITAT JUDGEMENT
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