AZURE KNOWLEDGE CORPORATION PRIVATE LIMITED,AHMEDABAD vs. THE DY.CIT, CIRCLE-1(1)(1), AHMEDABAD

ITA 2013/AHD/2024Status: DisposedITAT Ahmedabad19 October 2026AY 2018-196 pages
AI SummaryRemanded

What were the facts?

The assessee, Azure Knowledge Corporation Pvt. Ltd., filed an appeal against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) for Assessment Year 2018-19. The assessee, engaged in KPO and BPO, initially filed a return declaring income of ₹1,29,13,400. After a merger, a revised return declared NIL income. The Assessing Officer (AO) completed the assessment under section 143(3) on 19.04.2021, determining total income at ₹3,03,81,820. The AO added ₹2,46,71,893 as unexplained investment in intangible assets under section 69 and disallowed depreciation of ₹30,83,987. The assessee contended that the difference related to software customization expenses recorded in its books. The CIT(A) upheld the AO's action. The assessee is aggrieved by this order.

What did the Tribunal hold?

The Tribunal found that the nature and source of expenditure claimed for software customization, its accounting treatment, and its eligibility for capitalization as an intangible asset require thorough verification. This includes examining books of account, invoices, agreements, ledger accounts, payment details, and salary records. The issue cannot be decided solely on the difference between book entries and furnished documents. The AO is directed to verify the genuineness of these expenses. Depreciation is a consequential issue. Regarding the computation of assessed income, the Tribunal noted that verification is needed to ascertain if disputed amounts were already disallowed by the assessee and if any duplication occurred. To ensure substantial justice, the Tribunal set aside the CIT(A)'s order and restored the matter to the AO for fresh examination. The AO is to provide the assessee an opportunity to submit evidence and explanations, then pass a speaking order. The grounds of appeal are allowed for statistical purposes.

What were the issues?

1. Whether the assessment order is void ab initio due to the absence of a draft assessment order and inadequate opportunity of being heard (Section 144B, Section 143(3)). 2. Whether the addition of ₹2,46,71,893 as unexplained investment in intangible assets is justified, and if the CIT(A) erred in upholding it (Section 69, Section 115BBE). 3. Whether the disallowance of depreciation of ₹30,83,987 on intangible assets is correct (Section 32). 4. Whether the computation of assessed income by considering adjustments from the Section 143(1) intimation, instead of the returned income, is erroneous. 5. Whether the CIT(A) erred in not providing a video hearing as requested by the assessee. Assessee's Arguments: The assessment order is void ab initio. The addition of ₹2,46,71,893 is incorrect as it represents customization expenses recorded in books. Section 69 and Section 115BBE are wrongly applied. Depreciation disallowance is incorrect. Adjustments in the Section 143(1) intimation led to duplication of disallowances. An adequate opportunity and video hearing were not provided. Revenue's Arguments: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3),Section 144B,Section 69,Section 115BBE,Section 32,Section 143(1),Section 115JB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

For Appellant: Shri Biren Shah, AR
For Respondent: Shri Amit Pratap Singh, Sr. DR
Hearing: 15.10.2026Pronounced: 19.10.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

- This appeal has been filed by the assessee against the order dated 01.10.2024 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) [hereinafter referred to as the ‘Ld. CIT(A)’], under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2018-19. 2. The assessee has raised the following grounds of appeal:

1.

In law and on the facts and circumstances of the appellant's case, the order passed by the learned CIT(A) u/s 250 of the Income-tax Act is void ab initio being bad in law.

ITA No.2013/AHD/2024, AY-2018-19 Azure Knowledge Corporation Pvt. Ltd -

The order continues below.

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