TaxTMI 
TaxTMI 
2022 (11) TMI 1293
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....led an appeal before the Tribunal on February 27, 2018, which is fixed for hearing on September 17, 2019. In relation to the same, the assessee raised an additional ground in the captioned appeal. The ld.AR requested to admit the additional ground for reason that during the course of the impugned proceedings, the assessee had challenged the re-opening of assessment under section 148 of the Act, as the same was based on audit objection raised and not based on any fresh material. He further stated that this claim is already covered in the Ground 2.1 in the original grounds of appeal filed by the assessee, however in order to include a specific ground on this contention, the assessee wishes to include the same as a separate ground of appeal. The Ld.AR further submitted that that all facts relevant for adjudication of the additional ground is placed on record before the Hon'ble ITAT. He relied on the following decisions for admissibility of additional grounds:- Jute Corporation of India [1991] 187 ITR 688 (SC) National Thermal Power Co Ltd (229 ITR 383 (SC) Pruthvi Brokers & Shareholders [TS-463-HC-2012 (BOM)] The assessee hs raised the additional grou....
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..... 1004680.46 IST expenses SLE : Rs. 352984203.90 EDP consumables : Rs. 20944585.07 PC Software : Rs. 4962.50 Data processing charges : Rs. 668741.00 Rs.441985228.93 The assessee was not engaged in the production of computer software. So, excluding the expenditure on computer stationery, EDP consumables and data processing charges, the other expenses relating to Software Development Charges (Rs. 66378056) and IST expenses SLE (RS. 352984204) needs to be considered as capital expenditure only. Further, these payments are intended for enduring benefit. The claim of the assessee shall be disallowed and brought to taxation. 2. The assessee had deducted an amount of Rs.44,21,19,000 towards relocation expenses. The expenses were incurred in respect of the following three facilities which were relocated. Factory at Kolkata to Baroda Factory at Bangalore to Hosur Factory at Perungudi to Padappai The moving out expenses relates to the existing facility being located to another location for ease of administration. In this case the shifting of the factory produced an enduring advantage in the shape of tr....
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....ng of the assessment. Hence respectfully following the above stated decision of the hon'ble High Court of Madras, ground of appeal that the reopening was based audit objection was also dismissed. Aggrieved, assessee came in appeal before the Tribunal. 6. Before us, the ld.AR drew our attention to the letter issued by Principal Director of Audit (Central) vide No.PDA(C)/Legal/25- 02(202)/2019-20/82 dated 19.08.2019 supplying the information u/s.RTI Act giving the details of Revenue audit objection in respect of assessee's case for relevant assessment year 2010-11 as under:- Sl.No. Information Sought Information furnished 1 Copy of the Revenue Audit Objection Two audit observations were raised in respect of M/s GE T&D India Ltd (formerly known M/s Areva T&D India Ltd and were issued as para No.11/IIA and Para No.20/IIA in LAR No. 11/87-62/20 14-15 runing to 5 pages is enclosed 2 Copy of the report sent by the Commissioner of Income tax concurring/denying with the method followed by the Company and accepting/not accepting the view expressed by the Revenue Audit or otherwise Copy of communications, sent by Income Tax Department to this offi....
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....h 2010 that under 'Other manufacturing, administration and selling expenses', the assessee has debited a sum of Rs. 4419.85 lakh towards "Data management Charges. Under SAP description, the details of such ELDP expenses as furnished by the assessee were as under:- Software Development charges : Rs. 66378056.00 Computer Stationery : Rs. 1004680.46 IST expenses SLE : Rs. 352984203.90 EDP consumables : Rs. 20944585.07 PC Software : Rs. 4962.50 Data processing charges : Rs. 668741.00 Rs.441985228.93 The assessee was not engaged in the production of computer software. So, excluding the expenditure on computer stationary, EDP consumables and data processing charges, the other expenses relating to Software Development Charges (Rs. 66378056) and IST expenses SLE (Rs. 352984204) needs to be considered as capital expenditure only. In reply, it was stated that the software development charges were routine .....nce expenses towards ERP software like SAP. As regards IST expenses, it was ....... that the assessee had entered into an Information Technology Sharing Service Agreement with Alstom Grid SAS of France. According....
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....nical knowledge experience to the Applicant. In perfect Van Melle Holding B. (AARR69/2010) this authority held the view that "the expression 'make available' only, means that the recipient of the service should be in a position to derive an enduring benefit and be in a position to utilize the knowledge or know-how in future on his own". Here information technology relating to design, engineering, manufacturing and supply of electric equipment that help in transmission and distribution of power, commissioning and servicing of transmission and distribution system is provided to the Indian entity which applied in running the business of the Applicant and the employees of the Applicant would get equipped to carry on these systems on their own without reference to the French company, when the IT Agreement comes to an end, It is not as if for making available, the recipient must also be conveyed specifically the right to continue the practice put into effect and adopted under the agreement on its expiry. We are of the view that the services provided under the IT Agreement are in the nature of Fees for Technical Services and taxable under the DTAA as well as under the Act....
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....ion in the case of Sitalpur Sugars, was regarding relocation of sugar factory which was a seasonal industry and entirely different from engineering industry to which the assessee company belonged whereas the manufacturing activity of an engineering industry is closely comparable with automobiles in terms of their job execution/assembling. It was contended that the decision of the jurisdictional High Court in the case of Rane Madras is more appropriate. In this connection, it is to be pointed out that the decision rendered in Rane Madras was on different context and relates to the expenses pertaining to the setting up of a new industrial undertaking at Pondicherry which was an expansion of the existing business of the assessee. It is to be mentioned that the Madras High Court in CIT vs. Lyord Super Fabrics (308 TTR 78) has held that the expenditure incurred on shifting the factory premises under compelling circumstances, viz., for very survival of the, factory itself could be allowed as revenue expenditure. But, in the case of the assessee, the moving out expenses relates to the existing facility being located to another location for ease of administration. The Hon'ble ....
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....t issue, the Courts have held that the Assessing Officer cannot blindly follow the opinion of an audit authority. Therefore, by applying the law laid down by the various courts, it has to be held that the impugned reopening proceedings is clearly a change of opinion and liable to be set aside. Moreover, in the assessee's own case for the assessment year 2009-10, the Commissioner (Appeals) by taking note of the objections filed by the CBDT to the audit report has held in favour of the assessee and the appeal has been allowed. As on date, it appears that no further appeal has been preferred by the department and finally, the Hon'ble High Court held in para 5 as under:- "5.What is interesting to note is that the reasons for re-opening is verbatim repetition of the audit objections filed by the audit party. This position was clearly demonstrated by the learned counsel for the petitioner by comparing the audit objection and the reasons for re-opening. Thus, it is clear that the assessing officer did not have any independent material to re-open the assessment, but merely proceeded to re-open the assessment on the ground that there was an audit objection. Thus, two issues ari....