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TMI Blog2014 (11) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... ng penalty u/s.271(1)(c) of the Act has been passed by the Assessing Officer. In this view of the matter, as no cause of action / grievance arises to the assessee by mere issue of the said notice, this ground is not maintainable and is accordingly dismissed. Deduction claimed u/s.80 JJA - AO disallowed the assessee s claim for deduction under section 80 JJA of the Act as the assessee could not substantiate the claim, particularly with respect to the definition of workmen as it appeared in the Industrial Disputes Act, 1947 - HELD THAT:- Following the above referred decision of the co-ordinate bench of this Tribunal in the assessee s own case for A.Y. 2007-08 (supra), we are of the considered view that it would be just and fair to restore this issue, of deduction u/s. 80 JJA of the Act, back to the file of the A.O. with the direction to re-examine and re-adjudicate this issue by passing a reasoned and speaking order; only after affording the assessee adequate opportunity of being heard and to file required details. The assessee is also hereby directed to co-operate in the matter by producing / filing the details / explanations called for by the A.O. It is ordered accordingly. Deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowances made : i) Software expenses disallowed : ₹ 10,22,55,000. ii) Disallowance of deduction u/s.80JJA : ₹ 91,01,72,212. iii) Deduction u/s.10A of the Act was also restricted to ₹ 89,56,43,144 as against ₹ 92,54,15,257 claimed by the assessee. 2.2 Aggrieved by the order of assessment for Assessment Year 2008-09 dt.28.12.2011, the assessee preferred an appeal in respect of the above issues before the CIT(Appeals) - I, Bangalore. The learned CIT (Appeals) disposed off the assessee's appeal by order dt.27.3.2013 allowing the assessee partial relief. In this impugned order, the learned CIT (Appeals), (i) deleted the disallowance made by the Assessing Officer in respect of the assessee's claim for deduction under section 80 JJA; (ii) as far as software expenses was concerned, the learned CIT (Appeals) allowed the expenditure claimed to the extent of ₹ 2,40,63,523 as these payments were towards Annual Maintenance Contracts ('AMC') and disallowed an amount of ₹ 7,73,99,445 by holding them to be in the nature of capital expenditure; and (iii) in respect of its claim for deduction under section 10A, allowed the assessee partial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, dismiss this ground for non-prosecution. 6. Ground No.2 : Software Expenses held as capital expenditure. 6.1 In Ground No.2 of its appeal, the assessee has challenged the action of the learned CIT (Appeals) in upholding the finding of the Assessing Officer in capitalising software expenses amounting to ₹ 7,73,99,445, by holding these expenses to be in the nature of capital expenditure. 6.2 Before us, the learned Authorised Representative of the assessee submitted that the assessee itself had capitalised those software expenses which are capital in nature and only those software expenses which do not provide any enduring benefit have been debited to profit and loss account and claimed as revenue expenditure. To substantiate its claim that these expenses do not result in any enduring benefit, the assessee submitted additional evidences containing the description of the expenses and copies of invoices of software purchases of value exceeding ₹ 10,00,000. The learned Authorised Representative also placed reliance the following judicial decisions in support of his submissions on this issue including that of the co-ordinate bench of this Tribunal in the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer to examine and reappraise the additional evidence filed by the assessee in respect of expenditure incurred on purchase of software of ₹ 10 lakhs and above and decide the issue in accordance with the decisions of the Hon'ble High Court of Karnataka in the case of Toyota Kirloskar Motors P. Ltd. (supra) and of the Hon'ble High Court of Delhi in the case of Amway India Enterprises (supra), after affording the assessee adequate opportunity of hearing and to file required details in the matter. It is ordered accordingly. Thus, the assessee's Ground No.2 is treated as allowed for statistical purposes. 7. Ground No.3 : Initiation of penalty proceedings u/s.271(1)(c) of the Act. 7.1 In the Ground at S.No.3, the assessee challenges the action of the Assessing Officer in initiating penalty proceedings u/s.271(1)( c ) of the Act. This ground of appeal is premature as no order levying penalty u/s.271(1)(c) of the Act has been passed by the Assessing Officer. In this view of the matter, as no cause of action / grievance arises to the assessee by mere issue of the said notice, this ground is not maintainable and is accordingly dismissed. 8. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red. 10. The appellant craves leave to add, to alter, amend or delete any of the grounds that may be urged at the time of hearing of the appeal." 10. The grounds raised at S.Nos.1, 9 and 10 of revenue's appeal are general in nature and therefore no adjudication is called for thereon. 11. Grounds No.2 to 5 : Deduction claimed u/s.80 JJA of the Act. 11.1 In the course of assessment proceedings, the Assessing Officer noted that during the year the assessee had claimed an amount of ₹ 19,01,72,212 as deduction under section 80 JJA of the Act. The Assessing Officer disallowed the assessee's claim for deduction under section 80 JJA of the Act as the assessee could not substantiate the claim, particularly with respect to the definition of "workmen" as it appeared in the Industrial Disputes Act, 1947. 11.2 On appeal, the learned CIT (Appeals) held that the assessee is entitled to the deduction under section 80 JJA of the Act and deleted the disallowance made by the Assessing Officer relying on the decision of the co-ordinate bench of this Tribunal in the case of Texas Instruments India (P) Ltd reported in 115 TTJ 976. The learned CIT (Appeals) noted that the said company (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure to the company. Further, the deduction would be allowable for three years including the Assessment Year relevant to the previous year in which such employment is provided to the assessee company. (iv) The basis for deduction under section 80 JJA of the Act is the salary paid to the 'new regular workmen'. The section contains the definition of 'workmen', and is defined to have the same meaning assigned to it in clause (5) of section 2 of the Industrial Disputes Act, 1947. (v) The term 'Workmen' is defined in the Industrial Disputes Act as under :- " Workmen" means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act, in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with or as a consequence of that dispute or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person - (i) who is the subject of the Air Force Act, 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ires that the following conditions are to be fulfilled for a person to be excluded from the definition of a 'workman', namely : (a) he has to be employed mainly in a managerial or administrative capacity; or (b) he has to be employed in a supervisory capacity and should be drawing wages exceeding one thousand six hundred rupees per mensem. (xi) Based on the above exclusion conditions, the assessee submitted that it excludes employees engaged in a managerial or administrative capacity, or those engaged in a supervisory capacity and drawing wages exceeding ₹ 1,600 per month. It was further submitted that the mere fact that a person draws wages exceeding ₹ 1600 p.m. does not by itself disentitle that person from being regarded as a 'workman'. The person must be necessarily also employed in a 'Supervisory Capacity.' (xii) The determination of whether an employee qualifies as a 'workman' should be with reference to his principal nature of duties and functions, which is required to be determined having regard to the circumstances in each case. (xiii) The Hon'ble Apex Court in the case of Ananda Bazar Patrika Pvt. Ltd. V Its Workmen (1969) (2 LLJ 670-71) also l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.1/Bang/2011, dt.7.9.2012, for the assessment year 2005-06, at para No.10.7, has remitted the matter back to the CIT(A) for fresh consideration. Hence, we are inclined to restore this issue back to the file of the A.O. with a direction to reduce the issue be passing a speaking order, of course, after giving effective opportunity of hearing to the assessee. The assessee is also hereby directed to co-operate with the A.O. by producing the details as called for by him. It is ordered accordingly." 11.5.2 Following the above referred decision of the co-ordinate bench of this Tribunal in the assessee's own case for A.Y. 2007-08 (supra), we are of the considered view that it would be just and fair to restore this issue, of deduction u/s. 80 JJA of the Act, back to the file of the A.O. with the direction to re-examine and re-adjudicate this issue by passing a reasoned and speaking order; only after affording the assessee adequate opportunity of being heard and to file required details. The assessee is also hereby directed to co-operate in the matter by producing / filing the details / explanations called for by the A.O. It is ordered accordingly. 12. Deduction u/s.10A of the Act. 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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