2016 (7) TMI 1637 - AT - Income Tax

Revision u/s 254 - HELD THAT - Ground No.3 raised by the AO i.e. disallowance u/s. 40(a)(i) remained unadjudicated that the alternative plea taken by the assessee was accepted. Therefore we are of the opinion that matter should be placed before regular Bench to decide the issue(GOA-3) afresh.

Summary

Issues involved: Rectification of mistakes in the order of the Tribunal under section 254(2) of the Act regarding Grounds 1 and 2, rectification of Ground No.3 about allowing expenses on imported software and disallowance under section 40(a)(ia) for non-deduction of TDS.

Analysis:

1. The Assessing Officer (A.O) filed an application stating that mistakes had crept into the Tribunal's order dated 4.11.15 regarding Grounds 1 and 2. The A.O mentioned that the Tribunal had adjudicated the issues against the assessee, which should have been in favor of the A.O. During the hearing, it was acknowledged that there were typographical errors in the order, and both Grounds 1 and 2 were to be decided in favor of the A.O. The Tribunal rectified the order accordingly, allowing both grounds as per the contentions presented during the hearing.

2. The A.O also pointed out errors in Ground No.3 related to allowing expenses on imported software and disallowance under section 40(a)(ia) for non-deduction of TDS. The A.O argued that the Tribunal should amend the order concerning the treatment of depreciation on software expenses. The Departmental Representative reiterated the A.O's arguments, while the Authorized Representative contended that there was no apparent mistake to be rectified. The Tribunal reviewed the issue and found that the expenses on software, whether locally acquired or imported, were capital expenditures eligible for depreciation. The Tribunal directed the A.O to allow depreciation on the imported software. The Tribunal concluded that Ground No.3 remained unadjudicated, and the alternative plea by the assessee was accepted, necessitating a fresh decision by the regular Bench on this issue.

In conclusion, the Tribunal allowed the rectification of mistakes in the order under section 254(2) of the Act for Grounds 1 and 2, deciding them in favor of the A.O. Additionally, the Tribunal addressed the issue of expenses on imported software and disallowance under section 40(a)(ia), directing the A.O to allow depreciation on the imported software and referring the matter to the regular Bench for a fresh decision on Ground No.3. The Miscellaneous Application filed by the A.O was allowed, and the order was pronounced on 29th July 2016.