This issue was now covered by the decision of the Punjab and Haryana High Court in the case of CIT v. Mark Auto Industries Ltd (2013) 358 ITR 43 (P&H). wherein the High court held that in absence of any requirements in law for making deduction of tax at source on expenditure incurred on technical know-how which was capitalized, disallowance under the provisions of section 40(a)(ia) could not be made. In the light of above it was held that the AO was not justified in making disallowance under section 40(a)(ia) on account of alleged failure to deduct tax at source on purchase of software capitalized in books of account.
FULL TEXT OF THE ITAT JUDGMENT
This appeal by the assessee is directed against the order dated 01.03.2016 of the CIT(Appeals)-7, Bengaluru, relating to assessment year 201 0-11.
2. At the time of hearing of the appeal today i.e., 18.1.2017, none appeared on behalf of the assessee, though notice-cum-acknowledgement of the appeal intimating the hearing for this date has been communicated to the assessee. However, we find that there is neither any appearance nor any communication from the assessee’s side.
3. Considering the totality of the facts, we are, thus, left with no option but to infer that that the assessee is not interested in prosecuting the Therefore, following the ratio of decision of the Delhi Bench of the Tribunal in the case of Multiplan (India) Ltd., 38 ITD 320 (Del) and considering the ratio of the Hon’ble Supreme Court and various Hon’ble High Courts in such a situation; we treat the appeal as unadmitted and dismiss the appeal in limine for want of prosecution of the case. The assessee is, however, at liberty to move the Tribunal showing out sufficient reason(s) and/or reasonable cause for failure to prosecute the case on his/her/its behalf.
4. In the result, the appeal is dismissed in limine.
Pronounced in the open court on 18.1.2017.