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TMI Blog2018 (9) TMI 1548X X X X Extracts X X X X X X X X Extracts X X X X ..... he action of the learned ACIT, Circle 11(2), Pune (hereinafter referred to as the learned AO) in treating the enrollment expenditure of Rs. 19,82,32,378/- incurred by the appellant towards Rashtriya Swasthya Bima Yojana (RSBY Scheme) as deferred revenue expenditure, liable for amortization over a period of three (3) years. 2. The learned CIT(A)-7, Pune erred in law and on facts in not appreciating the fact that the same Insurance company or Third Party Administrator (TPA) may or may not operate in the same district, next year for enrollment of Below the Poverty Line (BPL) family under RSBY scheme. As such, there is no any long term benefit accruing to the appellant per se. 3. The learned CIT(A)-7, Pune further erred in law and on facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on facts in not granting the depreciation on the alleged capital expenditure. 8. The appellant craves, leave to add / modify / delete all or any of the grounds of appeal." 3. Shri Kishor Phadke appearing on behalf of the assessee submitted at the outset that the grounds of appeal No. 1 to 5 relate to the single issue of disallowance of expenditure Rs. 19,82,32,378/- incurred by the assessee towards making of enrollment cards under Rashtriya Swasthya Bima Yojana (RSBY Scheme). The ld. AR submitted that similar expenditure was disallowed by the Assessing Officer in assessment years 2009-10 and 2010-11. The matter travelled to the Tribunal in both the aforesaid assessment years. The Tribunal in ITA No. 2585/PN/2012 for assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax reported as 77 taxmann.com 284 and the decision of Kolkata Bench of the Tribunal in the case of ITO Vs. M/s. MPR Marketing Pvt. Ltd. in ITA No. 1514/Kol/2012 for assessment year 2009-10 decided on 14-03- 2013, the ld. AR submitted that payment of Rs. 10,00,000/- to Microsoft Corporation is allowable as business expenditure in the hands of assessee. 4. On the other hand Shri J.P. Chandrakar representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. 5. We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The ground Nos. 1 to 5 relate to the single issue of expenditure of Rs. 19,82,32,378/- incurred by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A). Merely because the amount appears to be huge cannot be a ground to disallow the same on the ground of enduring benefit to the assessee when the corresponding revenue earned has been considered as income of the impugned year. In this view of the matter and in view of the detailed reasoning given by the CIT(A) we find no infirmity in the same. Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed." 6. On similar set of facts the Tribunal deleted the addition in assessment year 2010-11 as well. In the assessment year under appeal the ld. DR has failed to point out any distinguishing factor. Since, the nature of expenditure is same, following the order of Tribunal in assessee's own case in preceding assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Microsoft Corporation and others, civil suit was filed against the assessee before the Hon'ble High Court of Delhi. As per the settlement of the suit, the assessee and others in the group company were directed to pay compensation to the tune of Rs. 35 lakhs. The share of assessee in the said Rs. 35 lakhs worked out to Rs. 23,33,278/-. 11. The question which arises for adjudication before us is whether the said amount paid by the assessee which is claimed to be in accordance with the terms of settlement between Microsoft Corporation & others and the assessee & its group companies, before the Hon'ble High Court of Delhi, is in infraction of law and hence, hit by Explanation under section 37(1) of the Act or the same is allowable expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment and the connotation of payment of penalty cannot arise when there is an understanding between two private parties. As far as payment which is prohibited by law is concerned, then the same refers to speed money, hafta money, etc., but the same is not to be applied in cases where one party agreed to compensate the other party for loss of its business. 12. In the facts of the present case, use of pirated software by the assessee and its group companies which is the property of Microsoft Corporation and others admittedly, resulted in loss of business of Microsoft Corporation. Where because of civil suit between the parties, there was compromise entered into between the parties for payment of compensation for loss of business and als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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