9911796707
TMI Blog2014 (1) TMI 1598X X X X Extracts X X X X X X X X Extracts X X X X ..... brief facts of the case. The assessee is a subsidiary of Central Depository Services (India) Limited, incorporated during the relevant previous year, i.e., on 25.09.2006. The company is formed to operate and maintain a system for creating, holding or maintaining any information, records, documents or database in the electronic form. Its maiden project is that of profiling of investors of the Mutual Funds, who are its customers, also popularly known as 'Known Your Client' (KYC) project. It filed its return of income for the year on 22.10.2007, claiming a net loss of Rs.115.58 lacs. This was on account of claim for expenditure in the sum of Rs.116.69 lacs, detailed as under; the income being in a paltry sum of Rs.81,000/-: Preliminary expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged to the operating statement for the year. Further, maintenance cost is incurred as investors are to be serviced in case of a request for change. 2.2 In view of the Assessing Officer (A.O.), the assessee was clearly in the process of setting up its business, the preparation of data base, for which expenditure had been incurred, being toward the same. The said process had been completed only during the following year. He drew support from the fact that even the furniture and fixture was in the process of installation as at the year-end and, accordingly, stood classified thereat as capital work-in-progress. Reliance was placed by him on the decision by the hon'ble jurisdictional High Court in the case of Western India Vegetable Products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f additional ground was also made, praying for allowance of depreciation on the impugned expenditure of Rs.116.69 lacs, where considered as capital expenditure, qua admission of which (additional ground) reliance stood placed on the decisions in the case of CIBA of India Ltd. v. CIT [1993] 202 ITR 1; Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 ITR 351 (Bom.); Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688; and National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC). 3.2 The ld. Departmental Representative (DR), on the other hand, would submit that no case for admission of additional evidence has been made out; the assessee having been allowed adequate opportunity by both the authorities below. In fact, the assessee does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re entities, its customers. What is the critical stage or point of time when the project is or can be said to be complete, so that it is ready to be delivered or in an operable state, would need to be determined, and which can only be on the basis of hard facts and evidences. The matter, thus, in our view, is clearly factual. The ld. Authorized Representative (AR), when questioned in this regard during hearing; the assessee having not specified any date on/by which its project stood completed, rather, claiming all the expenses incurred since the inception of the company, stated the same as '10.01.2007'. The same is de hors any material on record nor we find any claim before the Revenue in this regard. As further observed, and even as agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with by the Revenue authorities, and which would also definitely be relevant. The same would also clarify the basis for considering it as 'income from other sources', which, surprisingly though, has not been contested by the assessee. Further, what would need to be considered, and, again, in terms of the relevant material, viz. the agreements, etc., is that all such expenditure as is required to set-up the project in an operable state only would need to be capitalized, and that is precisely what it means when the assessee refers to the relevant provision of AS-26. The maintenance expenditure, even as stated by the assessee, for regular changes or updating the information on record, would only be in the nature of maintenance expenditure, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In fact, even the primary aspect of the revenue model or criterion of revenue generation has not been clarified or ascertained. In this regard, we are, therefore, in agreement with the ld. AR that the matter requires proper examination after admission of the additional evidences as being sought to be admitted, as the matter has necessarily to be decided in accordance with the law. The assessee, on whom the onus to establish its claims lie, would also be at liberty to raise any additional claim before the A.O. In view of the said decision, we do not consider it necessary to admit the assessee's additional ground, which becomes infructuous. Further, we are conscious, and only acutely aware that in so deciding, i.e., setting aside the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
