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2009 (4) TMI 943 - AT - Income TaxAddition on expenses incurred on legal and professional expenses as capital expenditure - enduring benefit - CIT(A) allowed the claim of the assessee as the expenditure was incurred for increasing the efficiency and import of the assessee in getting the work done for the clients and the assessee did not acquire any asset out of the said payment. HELD THAT:- No enduring benefit can be said to have obtained by the assessee. The consultancy charges were paid to Laxmi and Associates for brokerage charges for obtaining office space on lease for acquiring office space on lease and not for acquiring any capital asset. The consultancy charges were paid to Bharat S. Raut and Co. for preparation of agreement for legal costs cross charges, marketing cost cross charge, advice on exchange control issues for the aforesaid agreement, advice on withholding tax for remittance of the aforesaid agreement for preparing cost sharing arrangement of legal cost and marketing cost with the parent company in USA. The company has also incurred a total amount. It comprises of payment to M/s QSYS Constants for implementing ISO 9001: 2000 based Quality Management System as the major part of the amount was paid for professional fee to M/s QSYS. In this connection, reliance was placed on various decisions of the Hon'ble High Court in which it has been that any expenditure which improves efficiency and does not lead to any additional asset is a revenue expenditure. Therefore, this expenditure, in our opinion, cannot be treated as capital expenditure. The consultancy charges paid to Design and Development for planning, designing the interiors, a leased premises. This expenditure also, is to be treated as a revenue expenditure and cannot be said to be capital expenditure as no enduring benefit has been obtained by the assessee. The consultancy charges paid to Keystone for architectural services such as layout plans, work station details, toilet details, false ceiling plan etc. A similar view in this regard was held in B and A Plantation vs. CIT [1999 (12) TMI 43 - GAUHATI HIGH COURT] and Modi Spinning and Weaving Mills Co. Ltd. vs. CIT,[1992 (10) TMI 76 - DELHI HIGH COURT] observing that expenditure on items like fixing false ceiling, painting, making some structural charges are of a revenue nature. Therefore, the decision of the CIT(A) deserves to be upheld and we do so. Therefore, this ground of the revenue is dismissed. Disallowance of depreciation on computer peripherals and computers accessories - claimed a depreciation @ 60% - AO did not accept the claim of the assessee and reduced the said deprecation to 25% - CIT(A) accepted the plea of the assessee that the "Router" which is an integral part of the computer system without which it is unable to connect the high speed computers with the internet and also with the internal Local Area Network and allowed the depreciation claimed. HELD THAT:- We are of the considered view that the decision taken by the CIT(A) in this regard is correct and deserves to be upheld. A "Router" is a device that forwards data packets along networks and is connected to at least two networks, commonly known as Local Area Network (LAN) or Wireless LAN (WAN) and its ISP's network. The usage of the "Router" in the computer is not only required for its functioning, but is an important and an integral part of the computer for increasing the high speed with the interned efficiently. The order of the CIT(A) is, therefore, upheld and the ground of the revenue is dismissed. The appeal of the revenue is dismissed.
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