Forum
Read and express views
× Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India

These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.

08-01-2020, Shriram EPC, Section 32(1)(ii), 30(a)(i), Tribunal Chennai

  • amit
  • amit's Avatar Topic Author
  • Offline
  • Administrator
  • Administrator
More
1 week 4 days ago #12028 by amit
Section - 32(1)(ii), 30(a)(i), 37, 43A, 32
Order Date - 08-01-2020
Favouring - Partly allowed for statistical purposes
Court - Tribunal Chennai
Appellant - Shriram EPC Ltd
Respondent - DCIT
Justice - INTURI RAMA RAO AM & DUVVURU RL REDDY JM
Citation - 120Taxpundit85
Appeal No. - I.T.A. Nos.1604 & 1740/CHNY/2016
Asstt. Year - 2011-12 and 2012-2013

Order

PER : INTURI RAMA RAO

These are appeals and Cross appeals filed by the assessee and Revenue directed against different orders of the Commissioner of Income Tax (Appeals)-15, Chennai ( in short ‘CIT(A)’ for Assessment Years 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14.

2. First we take up Revenue appeal in ITA No 2011/CHNY/2016 for assessment year 2009-10 for adjudication.

3. The Revenue raised the following grounds of appeal.

‘’1. The order of the learned CIT(A) is contrary to law and facts of the case.

2. The Ld CIT(A) erred to direct the AO to allow the ESOP expenses for Rs 2, 52,80,000/-

2.1 The Ld CIT(A) failed to appreciate that ESOP expenditure is incurred in relation to issue of shares and is not relatable to regular business.

2.2 The Ld CIT(A) failed to appreciate the facts mentioned in the case of Brooke Bond India Ltd and Punjab State Industrial Development Corporation that expenditure incurred in relation to increase in share capital is not allowable.

2.3 The Ld CIT(A) erred to direct the AO to allow depreciation of Rs.64,16,093/- as depreciation on intangible assets.

2.4 The Id. CIT(A) erred in directing the AO to allow i.e depreciation based on his predecessor orders for A.Ys.05-06 to 08-09 since appeals have been filed against all the above order before ITAT on 24.03.2016 and the department’s appeal has not yet reached its finality on this issue on similar grounds 2.5. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored’’.

4. The respondent- assessee namely ‘’M/s. Shriram EPC Limited’’, is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of integrated designing, engineering, procurement, construction and projection management. The return of income for the AY 2009-10 was filed on 29.09.2009 disclosing total income of Rs.34 59,53,000/- and the same was revised on 05.01.2010 disclosing same total income as the original return of income filed. Against the said return of income, the assessment was completed by the Joint Commissioner of Income Tax, Company Range VI, Chennai (hereinafter referred as Assessing Officer) vide order dated 28.03.2013 passed u/s.143(3) r.w.s. 92CA(4) of the Income Tax Act, 1961 (in short ‘’the Act’’) at total income of D37,76,49,093/-. While doing so, the AO disallowed ESOP expenditure of D2,52,80,000/- and depreciation on intangible assets of D64,16,093/-.

5. The Assessing Officer disallowed ESOP expenditure giving reasons which are extracted at para 5.3 of the assessment order and Assessing Officer also took note of the fact that Hon’ble Jurisdictional High Court in the case of CIT vs. PVP Ventures, 211 Taxman 554, wherein it was held that ESOP expenditure allowable as revenue expenditure, but noting that the decision of Jurisdictional High Court in the case of PVP Ventures (supra) is appealed before the Hon'ble Supreme Court and disallowed the expenditure. The Assessing Officer also disallowed depreciation on intangible assets of D500 lakhs acquired on amalgamation of Shriram Engineering Construction Ltd during the previous year relevant to assessment year 2005-06 as same was disallowed its initial assessment year is 2005-06.

6. Being aggrieved by the above additions, the assessee-company preferred an appeal before ld. CIT(A), who vide impugned order allowed ESOP expenditure following the decisions of Hon’ble Jurisdictional High Court in the case of PVP Ventures Ltd (supra) and Hon’ble Delhi High Court in the case of CIT vs. Lemon Tree Hotel in ITA No.107/2015, dated 18.08.2015. As regards to the issue of depreciation, the ld. CIT(A) directed the Assessing Officer to allow depreciation on technical knowhow.

7. Being aggrieved, the Revenue is in appeal before us in the present appeal. The ld. Sr. Departmental Representative contested that ld. CIT(A) ought not have allowed ESOP expenditure as revenue expenditure as it is notional expenditure and capital in nature. He further submitted that the decision of Jurisdictional High Court in the case of PVP Ventures (supra) is being challenged before the Hon'ble Supreme Court. The ld. Sr. Departmental Representative also challenged the decision of ld. CIT(A) to allow depreciation on technical knowhow as identical issue in earlier years was restored to the file of the Assessing Officer.

8. On the other hand, ld. Authorised Representative submitted that ESOP cost debited to Profit and Loss account is not national loss but only business expenditure incurred wholly for the purpose of business and the same should be allowed as deduction, placing reliance on the decision of Hon’ble High Court of Madras in the case of PVP Ventures (supra). He further submitted that the Hon'ble Supreme Court had dismissed the SLP filed against the order of Jurisdictional High Court in the case of PVP Ventures(supra). As regards to depreciation, he submitted that the technical knowhow acquired under slump sale agreement is in the nature of business or commercial rights or right of similar nature are eligible for depreciation under Section 32(1) (ii) of the Act. He placed reliance on the decision of Co-ordinate Bench of the Tribunal in assessee’s own case in ITA

Click to view and download Full Free Judgement of Shriram EPC Ltd vs. DCIT

Unable to display Google Map.




Please Log in or Create an account to join the conversation.

Time to create page: 0.109 seconds

If You Appreciate What We Do Here On TaxPundit, You Should Consider:

We are thankful for your never ending support.

Latest Analysis - High Courts

CIT vs. Media World Wide Pvt. Ltd.

CIT vs. Media World Wide Pvt. Ltd.

CIT vs. Media World Wide Pvt. Ltd. Read More
CIT vs. NARODA ENVIRO PROJECTS LTD.

CIT vs. NARODA ENVIRO PROJECTS LTD.

CIT vs. NARODA ENVIRO PROJECTS LTD. Read More
CIT vs. Zuari Industries Ltd.

CIT vs. Zuari Industries Ltd.

CIT vs. Zuari Industries Ltd. Read More
INTEC CORPORATION vs. ACIT

INTEC CORPORATION vs. ACIT

INTEC CORPORATION vs. ACIT Read More
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46

Forum Features

Latest Case Laws
Latest Case Laws are instantly updated in the Forum into their respective section
Latest from CBDT
Latest Circulars, Notifications, Orders etc. from CBDT is updated in the Forum
Ask Experts
You can ask questions to the community
Support
Support queries are either replied via mail or in the Forum so that others can be benefited
Press Releases
Latest Press Notes and Press Releases are updated in the Forum
Connect with Members
You can connect with our community members by replying to their queries

Recommended Articles

 

SITE INFORMATION

All content herein is the copyright of Taxpundit. No images, text, or any other content may be, reproduced or redistributed without the express written consent of Taxpundit.

All Rights Reserved. All Content Copyright.

Newsletter

Subscribe to our newsletter and stay updated on the latest developments and special offers!

Company Master Data Since 1900. More than 1.75 Million Records. Register/Login to get FREE access. Read more
Toggle Bar