M/S Spb Projects & Consultancy v. The Deputy Commissioner Of

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 24.02.2016

CORAM:

THE HONOURABLE MR.JUSTICE V.RAMASUBRAMANIAN AND THE HONOURABLE MR.JUSTICE N.KIRUBAKARAN Tax Case(Appeal) No.968/2007 M/s.SPB Projects and Consultancy Ltd., Esvin House, Perungudi, Chennai-96.

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Appellant -vsThe Deputy Commissioner of Income Tax Company Circle-VI [1], New Block 121, Nungambakkam High Road Chennai 600 034.

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Respondent TAX CASE filed under Section 260 A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Chennai 'C' Bench, Chennai dated 08.03.2007 passed in ITA.No.683/MDS/2003.

For Appellant :

Dr.Anitha Sumanth For Respondent :

Mr.J.Narayanasamy

J U D G M E N T

(Judgment of the Court was delivered by V.RAMASUBRAMANIAN, J) This Tax Case Appeal filed by the assessee, was admitted on 04.07.2007 on the following four questions of law:-

"[1] Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the expenditure incurred by the appellant on the purchase of software is not eligible for deduction in computing the income?

[2] Whether on the facts and in the circumstances of the case, the Tribunal is right in law in not accepting the contention that the expenditure incurred by the appellant for the purchase of software is revenue in nature and hence, eligible for deduction in computing the income?

[3] Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that not only the direct expenses but also the indirect expenses should be deducted in computing the profit for purpose of Sec.80-O?

[4] Whether on the facts and in the circumstances of the case, the Tribunal having taken the decision on identical issue for the Assessment year 199697, is justified in taking a different view on the same issue for the Assessment year 1998-99?"

Heard Dr.Anitha Sumanth, learned counsel appearing for the appellant/assessee and Mr.J.Narayanasamy, learned Standing Counsel for the respondent/Revenue.

The questions No.1 and 2 are already covered in favour of the appellant/assessee, by virtue of the decision in 288 ITR 15 [COMMISSIONER OF INCOME TAX Vs. SOUTHERN ROADWAYS LIMITED]. Therefore, the questions 1 and 2 are answered in favour of the appellant/assessee. Question No.3 would follow the fate of Question No.4. Question No.4 revolves around the deduction allowed by the Assessing Officer in respect of the Assessment Year 1996-1997 under section 80-O. It appears that for the Assessment Year 1996-1997, the Assessing Officer, not only deducted direct expenses but also deducted 3% of the indirect expenses. There are no averments in the order of the Assessing Officer or the order of the Appellate Commissioner to the effect that the assessee had changed the method of Accounting or their line of business, so as to make the Assessing Officer to take a different view from the view taken in the previous Assessment Year insofar as deduction under section 80-O is concerned.

However, Mr.J.Narayanasamy, learned Standing counsel for the Department contended that as per the decision of the Bombay High Court in CIT Vs. ASIAN CABLE CORPORATION LIMITED, [262 ITR 0537], both direct as well as indirect expenses are to be deducted in entirety, while making computations under section 80-O. Though the applicability of the ratio laid down in the said decision to this case is questioned by Dr.Anitha Sumanth, learned counsel appearing for the appellant/assessee, we need not go into the said issue for the

simple reason that the Assessing Officer himself did not chose to deduct the indirect expenses in entirety.

Therefore, question of law No.4 has to be answered in favour of the appellant/assessee, in view of the position already settled in respect of the Assessment Year 1996-197 in favour of the assessee by the Tribunal in ITA 1204/NDS/1999.

As a consequence, question No.3 does not arise for consideration. `8 The Tax Case Appeal is disposed of.

[V.R.S., J] [N.K.K., J] 24.02.2016 Index : Yes / No Website : Yes / No AP To 1.The Deputy Commissioner of Income Tax Company Circle-VI [1], New Block 121, Nungambakkam High Road Chennai 600 034.

2.Income Tax Appellate Tribunal "C" Bench, Chennai.

V.RAMASUBRAMANIAN, J., AND N.KIRUBAKARAN, J., AP Tax Case(Appeal) No.968/2007 24.02.2016