In the case of ITA 162/DEL/2019, the appellant, DCIT, Circle-21(1), New Delhi, filed an appeal against the respondent, Rapipay Finvest P. Ltd., New Delhi, for the assessment year 2014-15. The case was filed on January 10, 2019, and the final tribunal order was pronounced on December 28, 2022. This article provides an in-depth analysis of the case, the grounds of appeal, and the tribunal’s decision.
The case involves disallowance of expenses related to the printing of voter lists amounting to Rs. 3,02,24,520/- and a depreciation claim of Rs. 1,67,58,000/- on fixed assets, specifically software purchased by the assessee from M/s. Virgo Softech Limited. Additionally, there was an issue of a lumpsum disallowance of Rs. 50,000/- on actual expenses towards subscription and membership amounting to Rs. 2,05,369/-.
The revenue department raised the following grounds of appeal:
The facts and issues in this case are similar to those involved in the case for the assessment year 2013-14 (ITA No. 161/DEL/2019). Hence, the decision on these grounds was consistent with the previous year’s decision, and grounds No. 1 & 2 were dismissed.
The third ground of appeal pertained to the depreciation claim of Rs. 1,67,58,000/- on fixed assets, specifically software purchased by the assessee from M/s. Virgo Softech Limited. The AO disallowed the depreciation mainly on the grounds that a similar disallowance was made in the earlier year and that the fixed assets were not used during the year under consideration.
The AO held that the transaction of purchase of software was non-genuine, and the claim of depreciation was disallowed. Additionally, the AO noted that the fixed assets were not used during the year under consideration, and no revenue was generated using the software.
The assessee challenged the addition before the Ld. CIT(A), who allowed the depreciation and deleted the disallowance. The Ld. CIT(A) observed that the software was put to use in the earlier year itself, and revenue was generated utilizing the same. The inability of the assessee to generate revenue using the software during the year under consideration could not be the basis for disallowing the depreciation claimed.
The Tribunal heard the parties and perused the material on record. It observed that the Ld. CIT(A) thoroughly considered all factual aspects and the submission of the assessee. The Tribunal upheld the decision of the Ld. CIT(A) and dismissed ground No. 3.
The fourth ground of appeal was general in nature and required no independent adjudication.
In conclusion, the Tribunal dismissed all the grounds of appeal raised by the revenue department. The appeals filed by the revenue department were dismissed, and the order pronounced in the open court on December 28, 2022, was upheld.
Signed by:
ANIL CHATURVEDI (ACCOUNTANT MEMBER)
N.K. CHOUDHRY (JUDICIAL MEMBER)
Dated: 28/12/2022
Assistant Registrar, ITAT, New Delhi
ITA 162/DEL/2019: Appeal Against Disallowance and Depreciation for Assessment Year 2014-15
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