Mynd Solutions P. Ltd., Plot No.280, Udyog Vihar, Phase-IV, Gurgaon. vs. ACIT, Circle-17(1), New Delhi.
March, 14th 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : E : NEW DELHI
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
SHRI KULDIP SINGH, JUDICIAL MEMBER
Assessment Year: 2010-11
Mynd Solutions P. Ltd., Vs. ACIT,
Plot No.280, Udyog Vihar, Phase-IV, Circle-17(1),
Gurgaon. New Delhi.
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
PER SHRI R.K. PANDA, AM:
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.
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
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
and direct accordingly. The grounds raised by the assessee are accordingly allowed for
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.
(KULDIP SINGH) (R.K. PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMFBER
Dated: 13th March, 2019
Copy forwarded to
Asstt. Registrar, ITAT, New Delhi