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2018 (1) TMI 78 - AT - Income TaxNature of expenditure - technology upgradation expenses - capital or revenue expenses - Held that:- Hon’ble Supreme Court in the case of Empire Jute Co. vs CIT (1980 (5) TMI 1 - SUPREME Court), where their Lordships had duly distinguished the enduring benefit in the revenue field and enduring benefit in the capital field. They had held that pursuant to incurrence of expenses, if there is some enduring benefit in the revenue field, then the same would only amount to revenue expenditure. We hold that the expenditure incurred by the assessee towards technology upgradation charges which requires frequent replacement due to rapid change in technology and constant need for upgradation would only be revenue in nature. Hence we do not find any infirmity in the order of the ld CITA in this regard. Accordingly, the Ground No. 1 raised by the revenue is dismissed. Software expenses - revenue or capital expenditure - Held that:- We find that the ld CITA had given a categorical finding on verification of the bills for these expenditure that software expenses were incurred by way of renewal of licence fees to the vendor on an annual bais which does not accrue any enduring benefit to the assessee and that the same were paid towards smooth functioning of business of the assessee and not paid for acquiring any capital assets. These findings were not controverted by the ld DR before us. Hence we do not find any infirmity in the order of the ld CITA in this regard. Accordingly, the Ground No. 2 raised by the revenue is dismissed. Optical fibre expenses - revenue or capital expenditure - Held that:- Expenses towards the same towards replacement on a monthly basis, which itself goes to prove that the same is incurred on a recurring basis and there is no enduring value benefit to the assessee on the previously replaced cable wires. Moreover, we find that the assessee had incurred a sum of ₹ 14,56,604/- in the previous year ended 31.3.2009 relevant to Asst Year 2009-10, which the ld AR stated that the same was allowed by the ld AO as revenue expenditure. This was not controverted by the revenue before us. - Decided against revenue
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