TMI Blog2010 (12) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of material available on record and after hearing the learned DR. 3. The grounds of appeal no. 1 2 by the Revenue read as under:- 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that the software expenses were not capital expenditure but allowable business expenditure despite holding that the expenses were incurred to customize the acquired software as per assessee s requirement. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that the software expenses were not capital expenditure but allowable business expenditure without appreciating that the documentary evidences, as were called for, were neither furnished by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n entered into by the company with its plants since inception. It is used by the company for the purpose of day to day functioning of the in-house ERP system. This software was developed in Australia and due to the different business environment in India, certain utilities in RIMS were required to be debugged to have optimum utilities of the system in India. The decision of the special bench of the Tribunal in the case of Amway India Enterprises Vs. DCIT reported in 301 ITR (A.T.) 1 was relied upon. 6. Based on the arguments advanced by the assessee, the CIT (Appeal) treated the expenditure as revenue in nature as against capital in nature held by the AO by holding as under: 3.3 I have carefully considered the facts of the case. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a system software. We find the AO had disallowed the expenditure on the ground that the assessee did not produce any such documentary evidence to show that the software license was for a period of less than one year and did not give any enduring benefit to the assessee. We find the assessee before the learned CIT (Appeals) had stated that copy of invoice raised by M/s. Comsoft Infotech Pvt. Ltd. was furnished before the AO and it was explained that the expenditure was for the purpose of upgradation of existing software and no new assets has resulted because of upgradation. The above submission of the assessee before the learned CIT (Appeals) remains uncontroverted by the learned DR. Further the learned CIT (Appeals) had given a categori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al travel expenditure was quarterly review meeting held at abroad. The AO asked the assessee to produce the evidences of the meetings abroad and to prove that the expenditure incurred was for the purpose of business. He also asked to explain the reason why the quarterly meeting of the board of directors was held abroad and the business needs of holding such meetings abroad. In absence of production of any documentary evidence in support of the business meeting abroad and in absence of any satisfactory reason for holding the quarterly meeting of the board abroad the AO disallowed the entire expenditure of international travel amounting to ₹ 3,12,468/- and accommodation expenses of ₹ 87,665/-. 11. Before the learned CIT (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the above purposes. It was submitted that the proof of expenditure incurred along with necessary explanations were duly furnished by the Company vide its letter dated 15 December, 2008 before the Addl. CIT. The Add. CIT during the course of assessment proceedings had not asked for any further evidence of the expenditure after submission of the said letter. The Company could have easily explained the above reasons in more detail, if further details were requested for. It was submitted that in addition to the above, the proof of expenditure submitted along with letter dated 15 December, 2008 were itself sufficient evidence to allow deduction towards travel cost. These are the regular expenditure incurred by the Company every year during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. Aggrieved with such order of the learned CIT (Appeals) the revenue is in appeal before us. 13.1 After hearing the learned DR and on perusal of the orders of the AO and the learned CIT(Appeal) we do not find any infirmity in the order of the learned CIT (Appeals). The submission of the assessee before the learned CIT (Appeals) that the assessee is 100% subsidiary of the parent company based in Mauritius and the assessee is having three foreign directors, out of which two are based in Australia remain uncontroverted. Therefore, the submission of the assessee before the CIT(Appeal) that it is economical to hold the Board meetings abroad finds some force in it. The submission of the assessee that it was regularly purchasing material fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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