TMI Blog2012 (7) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. - ITA No.5674/Del/2011 - - - Dated:- 15-6-2012 - R P Tolani, T S Kapoor, JJ. For Appellants: Shri Rupesh Jain Ms Shiksha Verma, CA For Respondent: Shri R I S Gill, CIT-DR ORDER Per: T S Kapoor: This is an appeal filed by the assessee against the order of Ld CIT(A), LTU, New Delhi. The grounds raised by the assessee are as under:- 1. That the Assessing Officer erred on facts and in law in completing the assessment u/s 143(3) read with sec. 144C of the Income Tax Act, 1961 vide order dated 28.10.2011 at an income of Rs.5,37,66,96,176/- as against income of Rs.3,95,15,21,538/- returned by the appellant. 2. That the Assessing Officer erred on facts and in law in treating the expenditure of Rs.136,98,96,997/- incurred during the year on account of royalty paid to Honda Motor Co. Japan (Honda) in accordance with the Technical Collaboration Agreement (TCA) as capital expenditure following the assessment orders of earlier years. 2.1. Without prejudice that the Assessing Officer erred on facts and in law in not allowing depreciation in respect of the aforesaid expenditure incurred on account of royalty disallowed as capital expenditure. 3. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditions made by the Assessing Officer in respect of earlier assessment years. The assessment was completed after making the following additions:- 1. Royalties Rs.136,98,96,997/- 2. Provision for warranty. Rs. 3,43,10,141/- 3. Air fair under technical guidance Rs.1,71,80,600/-. 4. Entry tax Rs.4,25,398/- 5. Software expenses. Rs.33,61,502/.- 3. The Assessing Officer has been making addition to the income of assessee for all the years starting from 2001-02 to 2006-07. As per Ld AR the assessee had been obtaining favourable judgment from ITAT Delhi on similar type of additions made in the earlier years. However, the Department has been filing appeal in respect of all these years with Hon'ble Delhi High Court. 4. The assessment for the present year has been completed keeping in view the addition made in earlier years. The addition made during the present year vis-a-vis previous year along with the findings of Hon'ble Tribunal for assessment year 2006-07 and our findings are discussed in the following paragraphs. 5. The first ground of appeal is general in nature and do not require adjudication. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is seen that ground No.1 related to disallowance with respect to technical know how and royalty, the Hon'ble Tribunal has followed earlier Tribunal order relating to assessment year 2001-02, 2002-03 2003-04 and had decided in favour of the assessee. The facts of the case remain same as in the earlier year. Therefore, respectfully following the order of the Tribunal, the matter is decided against the revenue in this year also. Therefore, ground No.2 is decided in favour of the assessee. Provision for Warranty: 10. The third ground of appeal relates to disallowance of an amount of Rs.3,43,10,141/- being provision for warranty and sales services debited to the P L Account alleging the same to be un-ascertained liability. The relevant portion of Ld CIT, LTU is reproduced below. It is pertinent to mention that Hon'ble ITAT had allowed it as ascertained liability whereas the view of the Department is that it is an un-ascertained liability. Therefore, with due regard to the findings of ITAT, the Department has filed an appeal before Hon'ble High Court at Allahabad on 10.11.2008 against the order of the Tribunal and also before Hon'ble Delhi High Court in subsequent years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier order of Tribunal should be followed. 14. The Ld DR relied upon the order of ACIT. 15. We have heard the rival submissions of both the parties and have gone through the material available on record. On perusal of order of Tribunal for assessment year 2006-07, it is seen that ground No. 6 related to disallowance of air ticket in the preceding year. The Hon'ble Tribunal had followed assessment year 2005-06 and had decided in favour of the assessee. The facts of the present case remain the same as in the earlier year. Respectfully following the order of the ITAT, the matter is decided against the revenue in this year also. Therefore, ground No.4 is decided in favour of the assessee. Disallowance of Rs.4,25,398/-.: 16. The Assessing Officer had made the addition of above amount considering the same to be un-ascertained liability. The assessee had paid this amount as entry tax on provisional basis and under protest. This point was part of cross objection filed by the assessee in the assessment year 2006-07. The Hon'ble Tribunal had held that the entry tax paid by the assessee under protest and provisional Is immaterial because it has been paid on the basis of rules an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as envisaged such ownership for which depreciation is allowable under the Act. 18. The Ld AR brought before our notice a judgment of Hon'ble Delhi High Court in the case of CIT v. Asahi India Safety Glass Ltd. 245 CTR 529 wherein it was held that expenditure incurred on appellant s software is an allowable revenue deduction. 19. The Ld DR relied on the order of ACIT. 20. We have heard the rival submissions of both the parties and have gone through the material available on record and the citation relied upon by the Ld AR. The Hon'ble High Court had observed that what is required to be seen is the real intent and purpose of expenditure and whether the expenditure results in creation of fixed assets for the assessee. The Hon'ble Court further observed that expenditure which is incurred and which enables the profit making structure to work more efficiently leaving the source of profit making un-touched would be the expense in the nature of revenue expenditure. The Hon'ble Court held that expenditure incurred by the assessee on software is allowable as revenue expenditure more so as the software purchased by the assessee was an application software which enabled it to execut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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