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Income Tax Appellate Tribunal, DELHI BENCH “Friday”: NEW DELHI
Before: SHRI H.S.SIDHU & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M.
These are two Miscellaneous applications of the assessee for two assessment years involving common issues pointing out mistakes apparent from record in a common order of ITAT for these two assessment years, therefore , those applications are disposed of by this common order.
First miscellaneous application is filed by the assessee Sony India private limited in ITA number 4978/Del/2011 for assessment year 2007 – 08, which was disposed of by the consolidated order by the coordinate bench on 07/06/2013.
The assessee also filed a miscellaneous application in the same order vide MA number 68 and 69/Del/2013 which was disposed of by the coordinate bench vide order dated 20/03/2015 holding that these miscellaneous application were not filed according to the rules and they are not maintainable and dismissed with the liberty to the assessee to file to separate miscellaneous application in each appeal under the law. Consequently, MA number 347/Del/2017 is filed for assessment year 2007 – 08. Thus, this miscellaneous application as it is under the direction of the coordinate bench. Similarly, MA number 348/Del/2017 is filed for assessment year 2008 – 09.
The first issue in this petition is that ground number 27 of the appeal in the above order has been raised before the coordinate bench wherein the disallowance of 10% of the advertisement and selling expenditure incurred by the appellant was made on the ground that it has resulted in incidental benefit to the appellant’s associated enterprises. The coordinate bench referred the above ground as per para number 4 of that order but in the final order; the coordinate bench did not decide the above ground. The contention raised in the miscellaneous application is that identical ground raised
for assessment year 2001 – 02 to 2003 – 04 has already been decided in favour of the assessee on identical facts and circumstances which is also been confirmed by the honourable Delhi High Court for assessment year 2001 –
02. Further appeal of the revenue for assessment year 2005 – 06 and 2006 – 07 before the honourable Delhi High Court is also dismissed holding that no substantial question arises on the said issue. Therefore, it is submitted that non- adjudication of the above ground is a mistake apparent from the record, as it is required to be adjudicated.
5. The 2nd mistake apparent from the record is explained that ground number 28 of appeal has not been stated in the order of the coordinate bench which is against a further disallowance of Rs. 118818028/– being 10% of the advertisement and selling expenses on the ground that it resulted in enduring benefit to the appellant and was thus capital in nature but the same has been adjudicated on page number
44. Therefore it is stated that the ground not included in the order but adjudicated, for the sake of completeness resulted into the mistake apparent from record.
6. The 3rd mistake apparent from the record is stated that ground number 34 with respect to the depreciation on the license fees paid for the use of computer software restricted to 25% instead of 60% was dealt with by the coordinate bench in para number 14 and 16 of the order wherein the coordinate bench has decided the issue against the assessee based on the order of the coordinate bench for assessment year 2006 – 07 in assessee’s own case , with the liberty to file miscellaneous application in consequences of favourable order in the earlier miscellaneous application for AY 2006-07. Now it is stated that MA number 103/Del/2011 against the order of the coordinate bench for assessment year 2006 – 07 has set aside the order of the coordinate bench in ITA number 499/Del/2010 by order dated 17/04/2014 on the issue of depreciation on software license. After recalling the order, the coordinate bench as per order dated 19/04/2016 restored the matter back to the file of the learned assessing officer for verification whether the expenditure on software license fee qualifies as a capital or revenue expenditure. Consequent to that, it is submitted that the learned assessing officer provided complete relief allowing 60% depreciation on software license to the assessee per order dated 06/09/2016. Therefore, it is submitted, that in view of the above series of judicial orders, assessment order was for assessment year 2006 – 07, now the issue is squarely covered in favour of the assessee and as coordinate bench has granted liberty to the assessee on the fate of decision of miscellaneous application for assessment year 2006 – 07, the above issue for assessment year 2007 – 08 is squarely covered in favour of the assessee. Therefore, there is a mistake apparent from record for which the order of the coordinate bench requires to be rectified. The learned authorised representative referred to above three mistakes apparent from the record and referred to the various orders of the coordinate bench as well as of the assessing officer. Therefore, he submitted that the above order passed by the coordinate bench may be recalled and rectified to the above extent.
The learned departmental representative submitted that the order of the coordinate bench does not suffer from any infirmity and therefore there is no mistake apparent from the record.
We have carefully considered the rival contentions and the various orders referred to before us in above miscellaneous application. On careful consideration of the various arguments and perusal of the orders, we are of the view that non-adjudication of ground number 27 of the appeal of the assessee is a mistake apparent from record. Therefore, on this ground the order of the coordinate bench is recalled to decide the ground number 27 of the appeal.
As the ground number 27 of the appeal is squarely covered in favour of the assessee by the decision of the coordinate bench, which is also confirmed by the honourable Delhi High Court in assessee’s own case for earlier years we do not find any reason to fix a fresh hearing for adjudication of the above ground. As the issue is squarely covered in favour of the assessee we allow ground number 27 of the above appeal which is as under:- “that on the facts and in law, the AO/DRP erred in making the disallowance of rupees 118818028/– being 10% of advertisement and selling expenses on the ground that the appellant is associated enterprise also benefit from such expenditure.”
Based on the order of the coordinate bench for assessment year 2001 – 02 to 2003 – 04, wherein the identical disallowance made is deleted, which is also been confirmed by the honourable Delhi High Court in ITA number 1283/2009 for assessment year 2001 – 02, we also direct the learned assessing officer to delete the disallowance of rupees 118818028/– on this count. Accordingly, ground number 27 of the appeal of the assessee for assessment year 2007 – 08 is allowed. 11. The next mistake is not mentioning the ground number 28 raised by the assessee in appeal memo not stated in the order of the coordinate bench but decided. Identical issue is also there in MA no 438 /Del/2017 for AY 2008-09. Therefore to rectify the above mistake we insert para number 4.2 at page number 5 of the above order inserting the above ground as under:- “28. That on the facts and in law, the AO/DRP erred in making a further disallowance of Rs. 118818028/– for assessment year 2007 – 08 and INR 1 90489900/– for assessment year 2008 – 09 being 10% of advertisement and selling expenses on the ground that it resulted in enduring benefit to the appellant, and was, thus, capital in nature.” 12. Accordingly, above order is modified as mentioned above. Hence, the second mistake apparent from the record pointed out by the assessee is rectified. 13. The third mistake apparent from record is with respect to the claim of the assessee on depreciation on the license fee for the use of computer software restricted by the learned assessing officer to the extent of 25% instead of claim of the assessee of depreciation at the rate of 60%. The coordinate bench for assessment year 2006 – 07 on the identical facts in ITA number 4994/del/2010 vide order dated 19/05/2016 has set aside the whole issue back to the file of the learned assessing officer, we also respectfully following the decision of the coordinate bench in assessee’s own case for that year set aside the whole issue back to the file of the learned assessing officer for the similar directions as contained therein. We are conscious of the order of the learned assessing officer passed on 6/9/2016 u/s 254 of the income tax act wherein he has reduced to the total income as per order u/s 143 (3) dated 30/9/2010 of assessment year 2006 – 07 by allowing the depreciation on the license fees amounting to INR 5 078450/–. Therefore, we also set aside the whole issue back to the file of the learned assessing officer accordingly.
In the result, the miscellaneous application number 347/Del/2017 is allowed and ITA number 4978/Del/2011 for assessment year 2007 – 08 was recalled. Further, the recalled order of the coordinate bench is also decided accordingly.
Thus, ITA number 4978/del/2011 is allowed with above directions.
Now we come to ITA number 348/Del/2017 filed by the assessee in ITA number 6389/Del/2012 for assessment year 2008 – 09 pointing out the identical errors/mistakes apparent from record as pointed out in ITA number 347/Del/2017 for assessment year 2007 – 08.
The learned authorised representative has pointed out the following mistakes apparent from the record for assessment year 2008 – 09 in the order of the coordinate bench:- i. there is no disallowance for assessment year 2008 – 09 made by the learned assessing officer on account of incidental benefit to the associated enterprises, however the learned ITAT has mentioned that the disallowance of INR 1 90489900/– being 10% of the advertisement and selling expenses was disallowed by the learned assessing officer wide para number 4 of its order. As there is no ground of appeal taken by the appellant before the coordinate bench, the above mentioned by the ITAT in that ground is factually incorrect and thus there is a mistake apparent from record. ii. Assessee has raised a ground against the disallowance of 10% of the advertisement and selling expenses for the reason that it resulted in enduring benefit to the appellant hence was in the nature of the capital expenditure as per ground number 20 of the order. The coordinate bench decided the above issue however has not stated the above ground. Therefore, there is a mistake apparent from record. iii. The ground number 21 with respect to the depreciation on license fees paid for the use of computer software which was restricted by the learned assessing officer at the rate of 25% instead of claimed by the assessee at the rate of 60% was decided by the coordinate bench based on the decision of the coordinate bench in assessee’s own case for assessment year 2006 – 07 with the liberty to file miscellaneous application. Now the order of assessment year 2006 – 07 has already been decided in favour of the assessee, the matter is restored back to the file of the learned assessing officer, and therefore the above ground needs to be allowed in favour of the assessee. Thus, there is a mistake apparent from record.
The learned authorised representative reiterated the above submission well as the learned departmental representative vehemently opposed the miscellaneous application of the assessee.
We have carefully considered the rival contentions and perused the order of the coordinate bench. On careful consideration of the order of the coordinate bench, the disallowance of INR 1 90489900/– adjudicated by the coordinate bench without there being any ground or any disallowance made by the learned assessing officer is a mistake apparent from record. Further non-stating a ground of appeal to set out the complete facts but deciding the issue by the coordinate bench is also a mistake apparent from record. Further when the coordinate bench itself is granted liberty to the assessee to file the miscellaneous application for recalling the adjudication of ground about the allowability of depreciation also results into recalling of the above order. Therefore, to the extent of about three mistakes pointed out by the learned authorised representative stated in the miscellaneous application the order of the coordinate bench in ITA number 6389/del/2012 for assessment year 2008 – 09 is recalled. Thus, miscellaneous application 348/Del/2017 is allowed.
Now we proceed to adjudicate the record order in ITA number 6389/del/2012 is no fresh facts are required to be investigated.
With respect to the 1st mistake, the para number 4 of the order of the coordinate bench is rectified by removing reference of AY 2008-09, as under:- “4. That on the facts and in law, the AO/DRP erred in making the disallowance of Rs. 118818028 (for assessment year 2007 – 08) being 10% of advertisement and selling expenses on the ground that the appellant is associated enterprises also benefited from such expenditure.” 22. With respect to the second mistake, we have already incorporated the para number 4.2 in the order of the coordinate bench while deciding the miscellaneous application number 437/Del/2017 therefore; this mistake is now rectified accordingly. 23. The third mistake apparent from record is with respect to the claim of the assessee on depreciation on the license fee for the use of computer software restricted by the learned assessing officer to the extent of 25% instead of claim of the assessee of depreciation at the rate of 60%. The coordinate bench for assessment year 2006 – 07 on the identical facts in ITA number 4994/Del/2010 wide order dated 19/05/2016 has set aside the whole issue back to the file of the learned assessing officer, we also respectfully following the decision of the coordinate bench in assessee’s own case for that year set aside the whole issue back to the file of the learned assessing officer for the similar directions as contained therein. We are conscious of the order of the learned assessing officer passed on 6/9/2016 u/s 254 of the income tax act, wherein he has reduced to the total income as per order u/s 143 (3) dated 30/9/2010 of assessment year 2006 – 07 by allowing the depreciation on the license fees amounting to INR 5 078450/–. Therefore, we also set aside the whole issue back to the file of the learned assessing officer accordingly. 24. In the result, the miscellaneous application number 348/Del/2017 is allowed and ITA number 6389/Del/2011 for assessment year 2008 – 09 was