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Mynd Solutions P. Ltd., Plot No.280, Udyog Vihar, Phase-IV, Gurgaon. vs. ACIT, Circle-17(1), New Delhi.
March, 14th 2019
                DELHI BENCH : E : NEW DELHI

                               ITA No.6633/Del/2018
                              Assessment Year: 2010-11

Mynd Solutions P. Ltd.,                    Vs.       ACIT,
Plot No.280, Udyog Vihar, Phase-IV,                  Circle-17(1),
Gurgaon.                                             New Delhi.


      (Appellant)                                (Respondent)

            Assessee by                :         Shri Afsar Jamil, CA
            Revenue by                 :         Ms Rinku Singh, Sr.DR

            Date of Hearing       :              12.03.2019
            Date of Pronouncement :              13.03.2019



      This appeal by the assessee is directed against the order dated 25th September,

2018 of the CIT(A)-6, Delhi, relating to Assessment Year 2010-11.

2.    Although a number of grounds have been raised by the assessee, they all relate

to the order of the CIT(A) in confirming the action of the Assessing Officer in treating

the project expenses of Rs.1,48,28,489/- as capital expenditure as against revenue

expenditure treated by the assessee.
                                                                      ITA No.6633/Del/2018

3.    The facts of the case, in brief, are that the assessee is a company engaged in the

business of providing consultancy and professional services. It filed its return of

income on 11th October, 2010 declaring total income of Rs.1,78,29,443/-.             The

assessment was completed u/s 143(3) on 2nd March, 2013. Subsequently, on the basis

of information received that the assessee in its computation of income has claimed

100% deduction on account of capitalized project expenses of Rs.1,48,28,489/- as

revenue expenditure, the case of the assessee was reopened by issue of notice u/s 148.

The Assessing Officer completed the assessment u/s 143(3)/147 wherein he made an

addition of Rs.1,48,28,489/- treating the project expenses as capital expenditure in


4.    In appeal, the ld.CIT(A) upheld the action of the Assessing Officer.

5.    Aggrieved with such order of the CIT(A), the assessee is in appeal before the


6.    The ld. counsel for the assessee, at the outset, submitted that identical

expenditure has been treated by the Assessing Officer in the subsequent assessment

years as revenue expenditure in nature. Therefore, he has no objection if the matter is

restored to the file of the Assessing Officer with a direction to consider the issue

afresh in the light of his findings in the subsequent years.

7.    The ld. DR, on the other hand, strongly opposed the arguments advanced by the

ld. counsel for the assessee and heavily relied on the order of the Assessing Officer

                                                                        ITA No.6633/Del/2018

and CIT(A). She submitted that the facts of this year are different from the facts of

the subsequent years. Further, the ld.CIT(A) has given a categorical finding as to why

the said expenditure should be treated as capital expenditure in nature.               She

accordingly submitted that the order of the CIT(A) should be upheld and the grounds

raised by the assessee should be dismissed.

8.    We have considered the rival submissions made by both the sides and perused

the material available on record. The Assessing Officer, in the assessment order has

considered the project expenditure of Rs.1,48,28,489/- as capital in nature on the

ground that the assessee has treated these assets as capital assets and has duly made

addition to Fixed Assets Schedule and has claimed depreciation. However, we find

the assessee has claimed capitalized project expenses of Rs.1,48,28,489/- as revenue

expenses in the computation of income. The explanation given by the assessee,

according to the Assessing Officer, is not satisfactory for which he treated the

expenditure as capital in nature which has been upheld by the CIT(A). It is the

submission of the ld. counsel for the assessee that under identical circumstances, the

Assessing Officer in the subsequent years in the order passed u/s 143(3) has

considered the expenditure as revenue expenditure in nature. We, therefore, deem it

appropriate to restore the matter to the file of the Assessing Officer with a direction to

adjudicate the issue afresh in the light of his findings in the subsequent years so as to

maintain consistency in his approach. The Assessing Officer shall decide the issue as

per fact and law, after giving due opportunity of being heard to the assessee. We hold

                                                                       ITA No.6633/Del/2018

and direct accordingly. The grounds raised by the assessee are accordingly allowed for

statistical purposes.

9.      In the result, the appeal filed by the assessee is partly allowed for statistical


        The decision was pronounced in the open court on 13.03.2019.

             Sd/-                                                       Sd/-

  (KULDIP SINGH)                                             (R.K. PANDA)
 JUDICIAL MEMBER                                         ACCOUNTANT MEMFBER

Dated: 13th March, 2019


Copy forwarded to

1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(A)
5.    DR
                                                    Asstt. Registrar, ITAT, New Delhi

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