Case Law Details
HIGH COURT OF GUJARAT
Commissioner of Income-tax- IV
versus
Shree Rama Multi Tech Ltd.
TAX APPEAL NO. 506 of 2012
JANUARY 7, 2013
ORDER
Ms. Sonia Gokani, J. – The appellant has challenged the order dated 06.01.2012 passed by the Income Tax Appellate Tribunal, Ahmedabad in the present Tax Appeal preferred under Section 260A of Income-tax Act, 1961 (Hereinafter referred to as “the Act”), raising following substantial questions of law for our consideration:
“(1) “Whether the Tribunal is right in rejecting the revenue’s appeal filed against the decision of the CIT(A) in deleting the dis allowance of claim of depreciation on intangible assets, being software.”
(2) “Whether the Tribunal is right in deleting the addition made on account of bogus purchase.”
(3) “Whether the Tribunal is right in deleting the addition made on account of dis allowance of interest u/s 36(1)(iii) of the Act”
(4) “Whether the Tribunal is right in deleting the addition made on account of dis allowance of loss on sale of raw materials”
(5) “Whether the Tribunal is right in deleting the addition made on account of differences of balance of Rs.14,03,85,459/-“
(6) “Whether the Tribunal is right in deleting the addition made on account of dis allowance of share and debenture issue expenses”
(7) “Whether the Tribunal is right in deleting the addition made on account of dis allowance of machinery repair expenses”
2. On having heard learned counsel Ms. Paurami Sheth for the revenue and on having examined the entire material on record with her assistance, all the questions are being dealt with hereinafter.
3. As far as the question no. 1 is concerned, the Tribunal by making following observations remanded the matter to the Assessing Officer made in the Tax Appeal No. 509, adjudicated today:
“The learned CIT(A) on proper examination of evidences and material rightly came to the conclusion that software is intangible asset and was loaded in the system of machine. The learned CIT(A) also rightly held that installation of software could be checked by the technical person whether it was loaded in the system or not. Therefore, the finding in the survey cannot be relied upon. Even the AO has accepted the fact that some of the software were developed locally and installed in the system. The finding of fact recorded by learned CIT(A) find support from the valuation report of assets prepared by Dalal Mott Macdonald which was found in survey which indicated that software developed and installed by the assessee in the system. The assessee produced all the vouchers and receipt for the same which was also examined by learned CIT(A). Nothing is produced before us during the course of arguments to rebut the findings of learned CIT(A). Considering the facts and circumstances of the case in the light of the material on record, we do not find any justification to interfere with the order of the learned CIT(A) in allowing depreciation in respect of all the software purchased and installed during the year.”
4. This issue had also arisen in Tax Appeal No. 509 of 2012. We have not deemed it fit to interfere with the findings of the Tribunal in view of the fact that it is only a remand to the Assessing Officer. This issue also meets similar fate and therefore, no interference is required.
5. As far as the question no. 2 is concerned, this is based on the evidence made available to the Tribunal and is predominantly based on the factual aspects and as identical issue has also been not entertained by us in Tax Appeal No. 509 of 2012, this question merits on consideration.
6. As far as the question no. 3 is concerned, the Tribunal deleted the addition made on account of dis allowance of interest u/s. 36(1)(iii) of the Act. The Tribunal also noted from the reasonings given by the CIT(A) that the advances made to the different concerns were for the purpose of purchase of raw material or for the purchase of plant-machinery. On having found from the record that there was sufficient fund available with the assessee- respondent, it had held that there was no question of diversion of interest bearing funds by way of loan and advances.
7. Even otherwise, law on this issue is well settled as laid down in the case reported in S.A. Builders Ltd. v. CIT [2008] 288 ITR 1. Therefore, this issue requires no further consideration.
8. As far as the question no. 4 is concerned, the Tribunal deleted the addition made on account of dis allowance of loss on sale of raw materials. It appears that the assessee had provided the requisite details elaborately before the CIT(A) and based on that the remand report was called for from the Assessing Officer. It was noted by the Tribunal that the assessee suffered a loss and this basic fact was not even challenged by the Assessing Officer in the remand report submitted to the CIT(A). In absence of any evidence to rebut the factum of respondent having sustained loss, the Tribunal thought it fit not to interfere with the findings of the CIT(A).
9. This issue is too essentially & predominantly based on the facts and it can be noted that sufficient reasonings have been given by the Tribunal to arrive at such conclusion. In absence of any question of law arising, this issue requires no indulgence.
10. As far as the question no. 5 is concerned, the Tribunal deleted the addition made on account of difference of balances of Rs.14,03,85,459/-. The Tribunal after considering the explanation of the assessee- respondent and the findings of the CIT(A), recorded the reconciliation statement substantiated by necessary evidence which had been furnished by the respondent assessee. The remand report of the Assessing Officer was also called for here. In absence of any difference in details and reconciliation statement furnished by the assessee, the CIT(A) deleted the addition and the same came to be confirmed by the Tribunal. There being no material to take a contrary view & as both the authorities have concurrently held to delete the said addition, we find on reason to interfere in this question.
11. As far as the question no. 6 is concerned, it can be noted that in Tax Appeal No. 235 of 2012, the Court in its order dated 18.12.2012 remanded the matter to the Tribunal to adjudge the issue on merit rather than remanding the issue all over again. Notice is required to be issued to the revenue as far as this question is concerned considering the stand taken by this Court in aforementioned Tax Appeal.
12. As far as the question no. 7 is concerned, the Tribunal deleted the addition made on account of dis allowance of machinery repair expenses. This issue is predominantly based on the factual matrix. It appears that, in the earlier assessment year 2002-2003, both the CIT(A) and Tribunal on the basis of the facts and materials available before it, had deleted such addition. It being the question based on facts requires no further consideration.
13. Resultantly, notice be issued to the respondent to be made returnable after four weeks for the purpose of deciding the question no. 6 which is reiterated here under:
“(6) “Whether the Tribunal is right in deleting the addition made on account of dis allowance of share and debenture issue expenses”
