The Tax Publishers2020 TaxPub(DT) 5531 (Karn-HC)

Income Tax Act, 1961

Section 195

Where revenue challenged order of Tribunal holding that assessee was entitled for depreciation claimed under section 32 on an capitalized expenditure on imported software which was purchased without deducting tax at source as required under section 195, considering fact that Tribunal did not consider decision rendered in Wipro Ltd. and did not assign any reasons or placed reliance on decision of the Coordinate Bench, matter was remanded back to Tribunal for deciding it afresh.

Tax deduction at source - Under section 195 - Claim of depreciation on capitalized assets whether subject to disallowance under section 40(a)(i) -

Revenue challenged order of Tribunal holding that assessee was entitled for depreciation claimed under section 32 on an capitalized expenditure on imported software which was purchased without deducting tax at source as required under section 195. Revenue contended that Tribunal failed to understand that section 40 starts with a non-obstante clause overruling sections 30 to 38 of the Act and therefore, the claim of depreciation on the capitalized assets is also subject to disallowance under section 40(a)(i). Held: Tribunal did not consider decision rendered in Wipro Ltd. and did not assign any reasons or placed reliance on decision of the Coordinate Bench. Therefore, in peculiar facts of the case, order passed by the tribunal was quashed and the matter was remitted to Tribunal for decision afresh and in accordance with law in the light of rival contentions made by the parties. Therefore, it was not necessary to answer the substantial question of law.

Relied: Wipro Ltd. v. Dy. CIT (2016) 383 ITR 179 (Karn-HC) : 2016 TaxPub(DT) 327 (Karn-HC).

REFERRED : Shree Choudhary Transport Company v. ITO (2020) 118 Taxmann.com 47 (SC) : 2020 TaxPub(DT) 3083 (SC), Nectar Beverages Pvt. Ltd. v. Dy. CIT (2009) 182 Taxman 319 (SC) : 2009 TaxPub(DT) 1871 (SC), Mysore Minerals Ltd. v. CIT (1999) 106 Taxman 166 (SC) : 1999 TaxPub(DT) 1421 (SC) and CIT v. Mark Auto Industries Ltd. (2013) 40 Taxmann.com 482 (P&H) : 2013 TaxPub(DT) 2663 (P&H-HC).

FAVOUR : Matter remanded.

A.Y. : 2009-10



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