2016 (5) TMI 248 - AT - Income Tax

Appeal partly allowed for statistical purposes with Tribunal upholding deletion of various additions. Decision on 28/03/2016.

Asstt. Commissioner of Income Tax, Circle -17 (1), New Delhi Versus M/s. Virtual Soft Systems Ltd.

The appeal filed by the Revenue was partly allowed for statistical purposes, with the decision pronounced on 28th March, 2016. The Tribunal upheld the ... Depreciation claimed on the computers - Held that:- After going through the depreciation chart, there is no error in the claim made by the appellant. The deprecation disallowance is hereby deleted. - Decided against revenue Addition on unexplained credits in the name of Sh. Gokul Tandon - Held that:- As the additional evidences are filed by the assessee in respect of genuineness of the transaction and creditworthiness, before us, in the interest of justice, we feel it appropriate to remit the matter back to the file of the Assessing Officer, to examine all the additional evidences submitted by the assessee before the Tribunal and decide the issue in accordance to law Addition on account of unexplained cash credit in the name of M/s Go To Customer services private limited - Held that:- We find that the amount of unsecured loan received and paid as per the details filed by the assessee prepared on the basis of its books of accounts were matched with the ‘ledger accounts’ confirmed by the loan creditor M/s Go To Customer services private limited, then there was no basis for the Assessing Officer for holding the loan amount appearing in tax audit report as correct and making addition for unexplained cash credit on that basis, was not justified. In view of above, we find that order of the ld. Commissioner of Income-tax (Appeals) on the issue in dispute is well reasoned and we uphold the finding of Commissioner of Income-tax (Appeals) on the issue in dispute - Decided against revenue Disallowance of various expenses claimed by the assessee - Held that:- We find that not only the assessee has averred that books of account were produced before the assessing officer but also the books of accounts of the assessee company were audited by the auditor as per company law as well as by the tax auditor. In our opinion, the findings of the ld. Commissioner of Income-tax (Appeals) on the issue in dispute are well reasoned and no interference on our part is required. Thus, we uphold the finding of the ld. Commissioner of Income-tax (Appeals) on the issue in dispute. - Decided against revenue Issues Involved:1. Deletion of addition of Rs. 42,34,269/- out of depreciation.2. Deletion of addition of Rs. 92,38,635/- made as unexplained credits.3. Deletion of addition of Rs. 12,33,000/- on account of unexplained cash credit.4. Deletion of addition of Rs. 10,00,000/- out of various expenses.5. General ground for amending, modifying, altering, adding, or foregoing any grounds of appeal.Issue-wise Detailed Analysis:1. Deletion of Addition of Rs. 42,34,269/- out of Depreciation:The Revenue challenged the deletion of Rs. 42,34,269/- disallowed by the Assessing Officer (AO) out of the depreciation claimed on computers. The AO argued that computers worth Rs. 1,41,14,232/- were put to use only on 25/03/2004, hence entitled to 50% of the total claim. The respondent countered that depreciation was claimed based on the Tax Auditor's report in Form No. 3CD. The Tribunal found no specific date mentioned in the depreciation chart and upheld the Commissioner of Income-tax (Appeals) [CIT(A)]'s decision, finding no error in the claim. The ground was dismissed.2. Deletion of Addition of Rs. 92,38,635/- as Unexplained Credits:The Revenue contested the deletion of Rs. 92,38,635/- added as unexplained credits in the name of Sh. Gokul Tandon. The AO claimed the assessee failed to explain the source of these credits. The respondent submitted additional evidence, including balance sheets and tax returns of sub-creditors, which were not initially provided the opportunity to submit. The Tribunal admitted the additional evidence and remitted the matter back to the AO for re-examination. The ground was allowed for statistical purposes.3. Deletion of Addition of Rs. 12,33,000/- on Account of Unexplained Cash Credit:The Revenue disputed the deletion of Rs. 12,33,000/- added as unexplained cash credit in the name of M/s Go To Customers Services (P) Ltd. The AO noted discrepancies between the loan amounts as per the assessee's details and the tax audit report. The respondent explained these discrepancies as typographical errors. The CIT(A) accepted this explanation, supported by evidence from the creditor. The Tribunal found the AO's reliance on the tax audit report without further verification unjustified and upheld the CIT(A)'s decision. The ground was dismissed.4. Deletion of Addition of Rs. 10,00,000/- out of Various Expenses:The Revenue challenged the deletion of Rs. 10,00,000/- disallowed out of various expenses claimed by the assessee. The AO argued the assessee failed to produce books of accounts and vouchers for the expenses. The respondent contended that complete books and vouchers were produced, as evidenced by a letter dated 22/09/2006. The CIT(A) found the AO's disallowance on an ad-hoc basis unjustified, noting that the books were audited and details furnished. The Tribunal upheld the CIT(A)'s decision, finding no need for interference. The ground was dismissed.5. General Ground for Amending, Modifying, Altering, Adding, or Foregoing Any Grounds of Appeal:This ground was general in nature and not required to be adjudicated upon. It was dismissed as infructuous.Conclusion:The appeal filed by the Revenue was partly allowed for statistical purposes, with the decision pronounced in the open court on 28th March, 2016.