×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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These two appeals are preferred by the Revenue against two separate orders of ld. Commissioner of Income Tax (Appeals)-6, Kolkata for assessment years 2007-08 and 2010-11 and the same have been heard together and are being disposed of by a single consolidated order.
2. First we take up the appeal of the Revenue for A.Y. 2007-08 being ITA No. 1020/KOL/2017, which is directed against the order of ld. CIT(Appeals)-6, Kolkata dated 13.02.2017 and the ground raised therein by the Revenue reads as under:-
“The ld. CIT(A), Kolkata has erred both in fact and law by deleting the addition made on the grounds of disallowance of expenditure under the head “interest paid on delayed payment of taxes, personal use of telephone, PWC Global Services Charges & Software licence fee”.
3. The assessee in the present case is a firm of Chartered Accountants. The return of income for the year under consideration, i.e. A.Y. 2007-08 was filed by it on 31.10.2007 declaring total income of Rs.51,94,80,507/-. In the Profit & Loss Account filed along with the said return, a sum of Rs.1,73,456/- was debited by the assessee on account of interest on late payment of taxes. The said amount included a sum of Rs.94,992/- incurred on account of interest paid on delayed deposit of service tax, which was claimed by the assessee as a deductible expenditure. The Assessing Officer disallowed the said amount on the ground that interest on delayed payment of tax was not allowable. The ld. CIT(Appeals), however, deleted the said disallowance made by the Assessing Officer on the ground that the interest paid by the assessee on delayed deposit of service tax was compensatory in nature.
4. During the year under consideration, the assessee had incurred telephone expenses of Rs.18,29,339/-. The Assessing Officer disallowed the said expenses to the extent of 10% on the ground that the personal use of telephone could not be ruled out. On appeal, the ld. CIT(Appeals) deleted the said disallowance made by the Assessing Officer on adhoc basis.
5. During the year under consideration, the assessee had incurred a total expenditure of Rs.1,81,41,550/- on account of PWC Global Service Charges paid to M/s. Price Water House Coopers Services BV Netherlands in terms of Firm Service Agreement entered into by the assessee with the overseas entity. In the assessment completed under section 143(3), the Assessing Officer disallowed the said expenditure holding it to be capital in nature. On appeal, the ld. CIT(Appeals) deleted the disallowance made by the Assessing Officer on this issue by observing that there was no evidence of any underlying assets having come into existence which might provide enduring benefits to the assessee.
6. During the year under consideration, the assessee had incurred a total expenditure of Rs.10,98,467/- on account of payment made to M/s. Wipro Limited for renewal of software licence for personal computers. The Assessing Officer disallowed the said expenditure on the ground that payment made towards software licence fees was a capital expenditure as it resulted into enduring benefit to the assessee. On appeal, the ld. CIT(Appeals) deleted the disallowance made by the Assessing Officer on this issue holding that the expenditure incurred on payment of software licence fees was a revenue expenditure.
7. Aggrieved by the order of the ld. CIT(Appeals) giving relief to the assessee on these four issues, the revenue has preferred this appeal before the Tribunal raising a consolidated ground as Ground No. 1.
8. We have heard the arguments of both the sides and also perused the relevant material ava lable on record. As agreed by the ld. Representatives of both the sides, all the four issues involved in this appeal of the Revenue are covered in favour of the assessee by thevarious decisions of the Tribunal. As regards the issue relating to disallowance of interest paid on delayed deposit of service tax, it is observed that a similar issue involved in the case of DCIT –vs.- M/s. Webel Consumer Electronics Limited has been decided by the Tribunal in favour of the assessee vide its order dated December 28, 2012 passed in ITA No. 392/KOL/2012, wherein interest paid on delayed payment of sales tax was held to be a deductible expenditure by the Tribunal. To the similar effect is another decision of the Tribunal in the case of ACIT –vs.- Price Water House (ITA No. 611/KOL/2011). Respectfully following these decisions of the Coordinate Bench of this Tribunal, we uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made