Commissioner of Income Tax-I vs Actis Advisors Pvt. Ltd.

CM No. 30737/2015 (for condonation of delay in re-filing the appeal) & ITA No. 952/2015

There is a delay of 678 days in re-filing the appeal. The explanation offered is the standard one regarding the practice directions issued by this Court for e-filing of the appeals. As has already been observed by this Court in several orders, the practice directions were issued after consultation with the bar and after giving sufficient time for the bar to get acquainted with the requirement of e-filing. Additionally, the Court has also provided scanning machines at the filing counter so that no difficulty is caused to the bar for switching over to the system of e-filing. In any event, the delay of over one and a half years on this ground is wholly unacceptable. Consequently, the Court is not persuaded to condone the extraordinary delay of 678 days in re-filing the appeal.

Nevertheless, the case has also been examined on merits.

The following four questions urged in this appeal by the Revenue against the order dated 5th July 2013 passed by the Income Tax Appellate Tribunal (''ITAT'') in ITA No. 6390/Del/2012 for Assessment Year (''AY'') 2008-09:

"(i) Whether the ITAT has not erred in allowing the exclusion of Vapi and WAPCOS as comparables and holding that they are not functionally comparable?

(ii) Whether the ITAT has not erred in allowing depreciation on Docking stations and Rack 42u at the rate of 60% when such items do not form part of ''Computers'' which are depreciable @ 60% but form part of ''plant and machinery'' which are depreciable @ 15%?

(iii) Whether the ITAT has not erred in allowing depreciation on computer and peripherals @ 60% when the assessing officer and DRP made disallowance of Rs. 2,58,110 i.e. 45% of the total opening WDV of the block of the computers as the same contained items in the nature of plant and machinery entitled to depreciation @ 15% only?

(iv) Whether the ITAT has not erred in allowing the claim of assessee with respect to club charges (one time entry fees) i.e. 7,00,000 as a revenue expenditure even though the said expenses are capital in nature?

(v) Whether the order of ITAT is perverse both in facts and law since it ignores the relevant and material facts?

(vi) Whether the order of ITAT is erroneous since it ignores the settled position of law?"

Mr. Rohit Madan, learned Senior Standing counsel for the 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 Commissioner of Income Tax Vs. Samtel Color Limited, .

Issues (ii) and (iii) concerning the 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 Vs. BSES Yamuna Powers Ltd., .

As far as Issue (i) is concerned, the 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.

The appeal is accordingly dismissed both on grounds of extraordinary delay of 678 days in re-filing the appeal as well as on merits.