TMI Blog2018 (4) TMI 1534X X X X Extracts X X X X X X X X Extracts X X X X ..... 415/2017, ITA 56/2018, ITA 414/2017 - - - Dated:- 17-4-2018 - MR. S. RAVINDRA BHAT AND MR. A.K. CHAWLA JJ. Appellant Through: Mr. Rajat Navet, Ms. Sanya Talwar and Mr. Kushagra Pandit, Advs. Respondent Through: Ms. Vibhooti Malhotra and Mr. Rahul Chaudhary, Advs and Mr. Puneet Rai, Adv. MR. JUSTICE S. RAVINDRA BHAT (Open Court) 1. The questions of law urged in these appeals are the following:- (i) Whether in the facts and circumstance of the case, the Tribunal was correct in law in holding that software expenses incurred by the Appellant during the assessment year were in the nature of capital expenditure? (ii) Whether expenditure incurred towards software, which results in fine tuning of business operations a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een allowed by the ld. CIT( A) as revenue expenditure, but in case of license fee for oracle database, antivirus software etc., the appellant could not establish that the same were for a particular period. The case laws relied upon by the appellant has rightly been distinguished by the ld. CIT( A). We, therefore, find that the ld. CIT(A) has passed a good order which needs no interference on this issue. Accordingly, grounds No. 7 in both the appeals of the assessee are dismissed. 3. It is contended on behalf of the assessee that the software in issue by and large were specialized and meant for banking and bank related operation and the motive for acquiring them was to optimize performance and streamline the efficiency of the bank. Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the previous judgments including Alembic Chemicals Works (supra) enunciated the correct test and principles as follows: It is important to bear in mind that what is required to be seen is not whether the advantage obtained lasts forever but whether the expense incurred does away with a recurring expense(s) defrayed towards running a business as against an expense undertaken for the benefit of the business as a whole. In other words, the expenditure which is incurred, which enables the profitmaking structure to work more efficiently leaving the source of the profit-making structure untouched, would, in our view, be an expense in the nature of revenue expenditure. Fine tuning business operations to enable the management to run its busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as it placed limitations on the right of the assessee in dealing with the know-how and the conditions as to the non-partibility, confidentiality and secrecy of the know-how incline towards the inference that the right pertained more to the use of the know-how than to its exclusive acquisition. 7. The mere circumstance that the depreciation rate is spelt out in the Schedule to the Income-tax Act in our opinion is not conclusive as to the nature of the expenditure and whether it resulted an enduring advantage to a particular assessee. It is nobody s case that assessee is dealing with computer softwares or is in the business of any related services. Rather it uses specific customized software, which is specific to its banking activities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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