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TMI Blog2017 (12) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and circumstances of the case. 2. The Commissioner of Income Tax (Appeals), LTU erred in re-opening of the assessment as the appellant had furnished all the materials and particulars fully and truly while completing the assessment u/s.143(3). 2.1. The Commissioner of Income Tax (Appeals), LTU ought to have appreciated that addition made in the reassessment has arisen only due to change of opinion or is a case of review on the same set of facts and not on account of concealment of any particulars by the appellant; hence the order is to be quashed as being without jurisdiction. 2.2 The Appellant relies on the decision of the Supreme Court in the case of CIT V. Kelvinator of India Limited, reported in 320 ITR 561 (SC). 3. The Commissioner of Income Tax (Appeals), LTU erred in confirming the disallowance of Rs. 95,07,58,118/- u/s.40(a)(i) as the Appellant had not deducted TDS from the payments made to Hardy Exploration and Production India Inc u/s.195. 3.1 The Commissioner of Income tax (Appeals), LTU ought to have appreciated that payment made to HEPI was for the purchase of crude oil and hence payment is not subject to tax in India. 3.2 The Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld.AR that M/s.HEPI was assessed to tax in India and the assessment in the case of M/s.HEPI for the AY 2006-07 was completed on 30.03.2012 on 'Nil' income. The Ld.AR drew our attention to Page Nos.13 to 17 of the Paper Book which was a copy of the Assessment Order in the case of M/s.HEPI for the AY 2006-07. It was a submission that as per the decision of the Hon'ble Supreme Court in the case of M/s.GE India Technology Cen. (P) Ltd., reported in 327 ITR 456 (SC), if the payment did not contain the element of income, the payer cannot be made liable for deduction of TDS. It was a submission that this had been reiterated in Circular issued by CBDT in Circular No.3/2015 dated 12.02.2015 read with Instruction No.02/2014 dated 26.02.2014. It was a submission that as per the said Circular, Para No.4, which reads as follows: 4. As disallowance of amount under section 40(a)(i) of the Act in case of a deductor is interlinked with the sum chargeable under the Act as mentioned in section 195 of the Act for the purposes of tax deduction at source, the Central Board of Direct taxes, in exercise of powers conferred under section 119 of the Act, hereby clarifies that for the purpose of making d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws that TDS was liable to be deducted by the payer on the gross amount if such payment included in it an amount which was exigible to tax in India. By keeping these two decisions in mind, if we look at the Assessment Order in the case of M/s.HEPI, it shows that under the normal provision of IT Act, M/s.HEPI has admitted profits and gains of business at Rs. 27.66 Crs. This has been set off against the carry forward business losses of the earlier years. There is also computation of the tax liability u/s.115JB of the Act. Under such computation, the net profit disclosed by M/s.HEPI in the P&L A/c is Rs. 27.12 Crs. and after set off unabsorbed business losses M/s.HEPI still has a taxable book profit of Rs. 16.34 Crs. Against such tax liability u/s.115JB, M/s.HEPI has also claimed set off TDS. Thus, the claim of the assessee that the decision of the Hon'ble Supreme Court in the case of M/s.GE India Technology Cen. (P) Ltd., would apply and TDS is liable to be made when the remittances is on sum chargeable under the Act would come into play. Now, M/s.HEPI having income chargeable under the Act in India and having been assessed to such tax under the Act in India and the assessee having no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terprises reported in 301 ITR 1 Delhi (AT) (SB) (2008) had laid down test as follows: 59. Our conclusions on the issue under consideration thus can be summarized, as under: (i) When the assessee acquires a computer software or for that matter the license to use such software, he acquires a tangible asset and becomes owner thereof as held above relying on the decision of Hon'ble Supreme Court in the case of TCS (supra). (ii) Having regard to the fact that software becomes obsolete with technological innovation and advancement within a short span of time. It can be said that where the life of the computer software is shorter (say less than 2 years), it may be treated as revenue expenditure. Any software having its utility to the assessee for a period beyond two years can be considered as accrual of benefit of enduring nature. However, that by itself will not make the expenditure incurred on software as capital in nature and the functional test as discussed above also needs to be satisfied. (iii) Once the tests of ownership and enduring benefit are satisfied, the question whether expenditure incurred on computer software is capital or revenue has to be seen from the point o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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