2015 (12) TMI 1764 - HC - Income Tax

Claim of assessee with respect to club charges (one time entry fees) - revenue v/s capital expenditure - Held that - Revenue does not dispute that Issue (iv) concerning one time club entry charges has been held to be a revenue expenditure and is covered in favour of the Assessee by the decision of this Court in CIT v. Samtel Color Ltd. 2009 (1) TMI 26 - DELHI HIGH COURT . Rate of depreciation on computers and peripherals is covered in favour of the Assessee by the decision of this Court in Commissioner of Income Tax v. BSES Yamuna 2010 (8) TMI 58 - DELHI HIGH COURT . TPA - ITAT allowing the exclusion of Vapi and WAPCOS as comparables and holding that they are not functionally comparable - Held that - Court finds that while the Assessee provides marketing support services the first excluded company WASCOS as a comparable provides engineering consultancy services and the second excluded company Vapi provides consultancy for water resource management. The reasons given by the ITAT for exclusion of those two entities as comparables appears therefore to be fully justified on facts as well as in law. No substantial question of law arises.

Summary

Issues: Condonation of delay in re-filing the appeal, Exclusion of comparables, Depreciation rate on specific items, Treatment of club charges, Perversity of ITAT's order

In the judgment by the Delhi High Court, the Court addressed the delay of 678 days in re-filing the appeal. The explanation provided for the delay was related to the practice directions for e-filing appeals issued by the Court. The Court noted that the delay was unacceptable, emphasizing that the practice directions were well-known to the bar. Despite examining the case on merits, the Court was not inclined to condone the significant delay in re-filing the appeal. Moving on to the substantive issues raised in the appeal, the Court considered four questions urged by the Revenue against the ITAT's order. These questions included the exclusion of certain companies as comparables, the depreciation rate on specific items, treatment of club charges, and the alleged perversity of the ITAT's order. The Court analyzed each question in detail.

Regarding the exclusion of comparables, the Court found that the reasons given by the ITAT for excluding the companies as comparables were justified both factually and legally. The Court determined that no substantial question of law arose in this regard. The Court also addressed the issue of depreciation rate on specific items, pointing out that previous decisions favored the Assessee on this matter. The Court referenced specific cases to support its decision. Furthermore, the Court noted that the treatment of club charges as revenue expenditure had been previously decided in favor of the Assessee by a previous decision of the Court.

In conclusion, the Court dismissed the appeal based on two grounds. Firstly, due to the extraordinary delay of 678 days in re-filing the appeal, and secondly, on the merits of the case. The Court's detailed analysis of each issue raised by the Revenue provided a comprehensive understanding of the reasoning behind the dismissal of the appeal.