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TMI Blog2016 (4) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial Bench of Delhi Tribunal in the case of Amway India Enterprises [2008 (2) TMI 454 - ITAT DELHI-C] held the use of any ERP package in the case of manufacturer like the assesese-Company is generally for coordinating and rationalizing its functions and business process in order to ensure that the business is carried on more efficiently and effectively and by applying the functional test, the expenditure incurred on ERP package, in our opinion, cannot be treated as capital expenditure as it does not result in creation of any new asset or advantage of enduring nature in the capital field. We, therefore, direct the Assessing Officer to allow the deduction claimed by the assessee on account of expenditure incurred on upgradation of ERP and implementation thereof treating the same as revenue in nature Disallowance made on account of capital work in progress - Held that:- We hold that the disallowance of interest has been made by the Learned AO merely based on surmise and conjecture. In view of the aforesaid facts and circumstances, we find no infirmity in the order of the Learned CIT -A in deleting addition - Revenue appeal dismissed. - ITA No. 1347/Kol/2013 - - - Dated:- 13-4-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is found that none of the decisions of the Supreme Court are exactly on the same issue. After insertion of section 145A w.e.f. 04.04.1999, the valuation of inventory has to be adjusted to include the amount of any tax, duty, actually paid or incurred by the assessee to bring the goods' to the place of its locations and conditions as on the date of valuation. Therefore, the assessee has correctly included the Excise Duty paid, in valuation of Branch Stock and Excise Duty payable at the year-end in the valuation of Factory Stock. The provisions of S.43B which provides that any sum payable by the assessee by way of tax or duty shall be allowed in that previous year in which such sum of actually paid as per proviso to section 43B. By proviso to Section 43B, relaxation for payment has been allowed upio the due 'date of filing-return . 3.4 The assessee in its computation- has. suo-motto added Excise Duty of ₹ 27, 76,30,829/ - which represents Excise Duty liability on Closing Stock as on 31.03.2007. The assessee has added back the aforesaid sum since it was claimed by the assessee in Assessment Year 2007-08. However, the department has not allowed the aforesaid claim in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing ground:- 1 That the Ld CIT(A) has erred and not justified in deleting the disallowances made on account of excise duty amounting to ₹ 2,94,52,808/- 3.2. The Learned AR stated that against the tribunal order passed for Asst Year 2006- 07 in ITA No. 1640/Kol/2012 dated 19.4.2013 in favour of the assessee, the revenue preferred further appeal before the Hon ble Calcutta High Court. He stated that this appeal has been dismissed by the High Court in GA 3187 of 2013 , ITAT No. 158 of 2013 dated 20.1.2014. 3.3. We have heard the Learned AR and perused the orders relied upon by the Learned AR. We find that the issue is squarely covered by the decision of Hon ble Calcutta High Court in assessee s own case for Asst Year 2006-07 in GA 3187 of 2013, ITAT No. 158 of 2013 dated 20.1.2014, wherein it was held that :- The Court : Learned advocate for the appellant fairly submitted that all the points urged by the revenue in this appeal are now covered either by the judgement of the Supreme Court or of the Tribunal itself. In that view of the matter, there is nothing for us to examine. The appeal is thus dismissed. Respectfully following the aforesaid judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduction line, certain assets were dismantled and transferred to an existing plant. Therefore the shifting had not been done to increase the profit earning capacity of the assessee or an enduring benefit of the asset as such. We find that this aspect is considered by the Hon ble Apex Court in the case of Empire Jute Company Ltd vs CIT reported in 124 ITR 1 (SC) , where the Hon ble Supreme Court had held that : there are cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, nonetheless, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle of the said test. If the advantage obtained by the assessee consists merely in facilitating its trading operations or enabling the management and conduct of its business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. 4.3.1. We find that the issue is squarely covered by the decision of Special Bench of Kolkata Tribunal (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 That the Ld CIT(A) has erred and not justified in deleting the disallowances made on account of software expenses amounting to ₹ 1,36,32,019/- 5.2. The Learned AR stated that this issue has been decided in favour of the assessee in assessee s own case by the order of this Tribunal in ITA No. 189 1414/Kol/2007 dated 20.1.2016 for Asst Years 2003-04 2004-05 respectively which had relied on the principle laid down by the by the Special Bench of Delhi Tribunal in the case of Amway India Enterprises Ltd vs DCIT reported in 111 ITD 112 (DEL) (SB). 5.3. We have heard the Learned AR and perused the materials available on record. We find that the issue is squarely covered by the decision of Co-ordinate Bench of this Tribunal (supra) wherein it was held that :- 23. We have heard the arguments of both the sides and also perused the relevant material available on record. It is not in dispute that the ERP package was originally purchased and installed by the assessee in the earlier years and the expenditure incurred thereon in the earlier years was finally treated as capital in nature. During the year under consideration, the said ERP package was upgraded by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or advantage of enduring nature in the capital field. We, therefore, direct the Assessing Officer to allow the deduction claimed by the assessee on account of expenditure incurred on upgradation of ERP and implementation thereof treating the same as revenue in nature. Respectfully following the aforesaid judicial precedent, we dismiss ground no.3 raised by the revenue. 6. The last issue to be decided in this appeal is as to whether the Learned CIT(A) is justified in deleting the disallowance made on account of capital work in progress amounting to ₹ 89,20,627/-. 6.1. The brief facts of this issue is that the Learned AO had allocated proportionate interest expenditure towards capital work in progress by holding that the assessee copany has taken borrowed capital for the purpose of capital work in progress. The assessee pleaded that the borrowings were specifically meant only for working capital requirements of the assessee company and not for capital expenditure. It was also argued that the assessee company has a clear laid down policy of allocating all expenses, direct and indirect including interest expenditure to capital work in progress / fixed assets which is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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