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Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’, CHANDIGARH
Before: SHRI SANJAY GARG & Ms. ANNAPURNA GUPTA
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against
the order dated 10.01.2018 of the Commissioner of Income Tax(A)-
2, Chandigarh [hereinafter referred to as ‘CIT(A)’].
The assessee in this appeal has raised following grounds of
appeal:- 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in summarily rejecting the alleged additional evidence placed on record which goes to the root of the additions made on technical grounds without affording any opportunity of being heard on the issue which is against the Principals of Natural Justice and as such the order passed is arbitrary and unjustified.
Without prejudice to the above, the Ld. Commissioner of income Tax (Appeals) has erred in law as well as on facts in
ITA No. 241/Chd/2018- M/s Bebo Technologies Pvt Ltd., Chandigarh 2
upholding the addition of Rs.3,89,179/- made by applying the provisions of Section 14A of the Act is arbitrary and unjustified.
That no expense whatsoever has been incurred to earn dividend income and as such invocation of Section 14A read with rule 8D of the Act is misplaced, arbitrary and unjustified.
That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the addition of Rs.4,29,549/- treating software license expenses to be in the nature of Capital expense as against revenue expense claimed by the assessee which is arbitrary and unjustified.
That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the charging of interest under section 234-C of the Act which is not chargeable in the facts of the case.
That the order of the Ld. CIT(A) is erroneous, arbitrary, opposed to law and facts of the case and is thus untenable.
At the outset, Ld. Counsel for the assessee has submitted that
assessee in this appeal has taken two effective issues, firstly, relating
to the disallowance u/s 14A of the Act taken vide ground Nos.1 to 3
and secondly, the issue relating to addition of Rs. 4,29,549/- treating
software license expenses to be in the nature of capital expense as
against the claim of the assessee that the same represents Revenue
expenditure.
Ground No.5 of the appeal is consequential in nature and ground
No. 6 of the appeal is general in nature.
Ground Nos. 1 to 3 : So far as ground Nos. 1 to 3 of the appeal
are concerned, the Ld. Counsel for the assessee has submitted that
the issue is squarely covered by the decision of the Tribunal in the
ITA No. 241/Chd/2018- M/s Bebo Technologies Pvt Ltd., Chandigarh 3
own case of the assessee year for assessment year 2011-12 vide
order dated 9.4.2018 passed by the Tribunal in ITA No.
1258/Chd/2017 wherein the Tribunal after noting the relevant facts
have restored the matter to the file of the Assessing officer observing
as under:-
“7. We have considered the rival submissions. A perusal of the para 5.1 of the impugned order of the CIT(A) reveals that it has been noticed by the CIT(A) that assessee had claimed that it had not incurred any expenditure in relation to earning of the tax exempt income. As per sub section (2) of section 14A of the Act, the Assessing officer is supposed o determine the amount of expenditure in relation to the tax exempt income as prescribed method under rule 8-D, if the Assessing officer having regard to the account of the assessee is not satisfied with the correctness of the claim of the assessee in respect of the said expenditure in relation to the tax exempt income of the assessee. Further, as per the provisions of sub section (3) the provisions of sub section (2) shall also apply in relation to the case where the assessee claimed that no expenditure has been incurred by him in relating to earning of tax exempt income. In the case in hand, apparently, the tax exempt income has been earned from investment in mutual funds. It is plea of the assessee that no expenditure has been incurred in making the aforesaid investment. Further, it has not come out on the record whether the assessee has used interest bearing funds for making the aforesaid investment and what were the available own funds / interest free funds available to the assessee as on the date of making the investment and further what were the resources for making the investment in mutual funds. Though the Ld. CIT(A) has powers co-terminus with that of Assessing officer, but he has failed to examine the claim of the assessee in this respect. In view of this, the entire issue is required to be restored to the file of the Assessing officer for examining it afresh and to pass a speaking order on this issue in accordance with law. Needless to say that the Assessing officer will give opportunity to the assessee to present its accounts and evidences and then to examine the same and decide the issue in the light of the relevant judicial pronouncements.”
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The facts and issue being identical to that have been raised in the
case of assessee for assessment year 2011-12, therefore, the issue
taken vide grounds Nos. 1 to 3 of the appeal is accordingly restored
to the file of the Assessing officer with the identical directions.
Ground 4 : So far as the ground No. 4 is concerned the issue
has been decided by the Tribunal in the own case of the assessee vide
order dated 9.4.2018 for assessment year 2011-12, observing as
under:-
“9. Now coming to ground No.3 of the appeal, the assessee has agitated the disallowance of expenditure of Rs. 43,302/- incurred on software license expenses. The Ld. Counsel for the assessee has brought our attention to para 6.2 of the impugned order of the CIT(A) wherein the Ld. CIT(A) has mentioned that the aforesaid expenditure was incurred to secure antivirus for mobiles and Norten antivirus for computers and the license for the use of the aforesaid software was granted for one year only. In our view, the antivirus expenses are not of the nature of expenses to enhance the performance of the software or in any way of enduring benefit to the assessee. Antivirus software is to protect the computer / mobiles and data stored therein from the attack of malware and is essentially an expenditure in the nature of Revenue expenditure. In view of this, ground No. 3 of the appeal is allowed and the disallowance made on account of purchase of aforesaid antivirus software is hereby ordered to be deleted.”
The facts and the issue involved being identical, ground No.4
of the appeal is accordingly allowed in favour of the assessee.
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Ground Nos. 5 & 6, as observed above, are respectively consequential and general in nature, hence, need no adjudication at this stage. The appeal of the assessee is, therefore, allowed for statistical purposes. Order pronounced in the Open Court on 20.08.2018
Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated :20.08.2018 Rkk Copy to: • The Appellant • The Respondent • The CIT • The CIT(A) • The DR