TMI Blog2019 (1) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Oriental Bank of Commerce Vs. Additional CIT reported [2018 (4) TMI 1534 - DELHI HIGH COURT] has held that expenditure incurred by assessee on acquiring licenses to use software which did not confer any enduring benefit on assessee was to be allowed as deduction u/s 37 (1). Since the Ld. CIT (A) in the instant case has given a finding that the expenditure is recurring in nature and not a onetime expenditure, therefore, in absence of any contrary material brought to our notice on this factual finding, the order of the CIT(A) on this issue is justified - decided against revenue - ITA No.3812/Del/2015 - - - Dated:- 7-1-2019 - SH. R.K. PANDA, ACCOUNTANT MEMBER AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Appellant : Sh. Rinku Singh, Sr. DR For The Respondent : Sh. Satyam Sethi, Advocate ORDER PER R.K. PANDA, AM: This appeal filed by the revenue is directed against the order dated 09.03.2015 passed by the CIT (A)-7, New Delhi to A. Y. 2009-10. 2. Ground of appeal No.1 by the revenue reads as under :- 1. On the facts and under the circumstances of the case, the Ld. CIT (A) has erred in deleting the disallowance of deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oftware in one time .But POS is simply an electronic device, works on only one specific preloaded software. (c) Compute! can perform on multiple software and can, be uploaded different data and software, whereas POS Terminal works on one software and cannot be uploaded with multiple software d) As given by the assessee in its reply itself that The POS Terminal can be used only in conjunction with the server of the company. It has no alternate utility. It works as a terminal to the central host server of the company and needs to be connected to the host server for enabling transactions' Whereas computer can perform in multiple applicability without any restrictions and the scope of functioning is much wider. e) The life span of computer is very short, reason being the depreciation is allowed @60% Whereas the life span and utility of POS Terminals are long and the usage is unspecified years. f) The POS Terminal works on a specified usage like 'the company retailer enters the products details, quantity, customer mobile no etc through the keyboard, which the POS send the Host after validating the Retailer, It then receives back an encrypted response fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e semi conductor devices. The usage of POS terminal are {specified and connected to the server of Assessee Company directly. More importantly, the POS terminal can be used only in conjunction with the server of the company, it has no alternate utility. It works as a terminal to the central host server of the company and needs to be connected to the host server for enabling transactions. Whereas computer can perform in multiple applicability without any restriction and the scope of functioning is much wider. 4. In appeal the Ld. CIT(A) following the decision of the Tribunal in the case of Pr. CIT Vs. M/s. Connaugth Plaza Restaurant (P) Ltd. allowed the claim of the assessee of depreciation @ 60% on such POS TERMINALS. The relevant observation of the CIT(A) at para 8.4 and 8.5 of his order reads as under :- 8.4 I have perused the order of the Hon'ble ITAT in the case of ACIT vs. M/s. Connaught Plaza Restaurants (P). Ltd. The Hon'ble ITAT observed as under: 6.1 Through the submissions made during the appellate proceedings the A.R.s for the appellant have contested the aforesaid action of the assessing officer. It has inter alia been submitted by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5466/0e!/2013 Authority. Hence, we affirm the Order of the Ld. CIT(A) and dismiss the present appeal filed by the Revenue. 8. In the result, the Appeal filed by the Revenue stands dismissed. 8.5, In view of the above decision of the Hon'ble ITAT the appellant is allowed depreciation on POS Terminals at the rate of 60% which is the rate applicable for block of computers. The addition of ₹ 2,24,22,212/- is deleted and the ground of appeal is ruled in favour of the appellant. 5. Aggrieved with such order of the CIT(A), the revenue is in appeal before the Tribunal 6. The Ld. DR strongly supported the order of the Assessing Officer. Referring to the decision of the Mumbai Bench of the Tribunal in the case of Venture Infotek Global (P.) Ltd. Vs. DCIT reported in 25 SOT 184 (Mumbai), he submitted that the Tribunal in the said decision has held that POS TERMINALS and ATMs are neither a data processing nor a composite system output of which is data processing and therefore they are not eligible for depreciation at rate of 60 percent as provided for computers in Appendix I of the IT Act. Referring to the decision of Mumbai Bench of the Tribunal in the case of HDF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under section 260A. The appeal is therefore dismissed. 9. Since the issue has been decided in favour of the assessee by the decision of the jurisdictional High Court cited (supra), therefore, the order of the CIT(A) on this issue is upheld and the ground raised by the revenue is dismissed. 10. Ground of appeal No.2 by the revenue reads as under :- On the facts and under the circumstances of the case, the Ld. CIT (A) has erred in disallowance of ₹ 74,16,371/- on account of legal, professional and consultancy expenses treating it as business expenditure instead of expenses incurred in the nature of capital expenditure without appreciating the facts that the expenses so claimed are in the nature of software development services and the same is capital in nature giving enduring benefit to the assessee. 11. Facts of the case in brief are that the Assessing Officer during the course of assessment proceedings observed from the legal and professional consultancy chart that the assessee company has made the following payments which according to him are capital in nature. Sl. No. Name of Party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed as a business expenditure and the addition is deleted. The ground of appeal is ruled in favour of the appellant. 16. Aggrieved with such order of the CIT(A), the revenue is in appeal before the Tribunal. 17. The Ld. DR strongly supported the order of the Assessing Officer. He submitted that the Ld. CIT(A) has erred in treating the expenditure as revenue in nature as against capital in nature treated by the Assessing Officer. She also relied on the decision of Hon ble Bombay High Court in the case of CIT Vs. UHDE India Private Limited reported in 46 Taxmann.com 259. 18. The Ld. Counsel for the assessee on the other hand strongly supported the order of the CIT(A). He submitted that Interglobe Technologies Wipro Ltd did not provide software development services. They provided support services. Wipro Ltd. inter-alia provided server management monitoring services, backup and restoration management, network, database management, antivirus and security management and vendor management services etc. Similarly, Interglobe provided IT support services. It placed its staff at assessee s disposal to provide uptime for IT platform, escalation of customer complaints and trou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional CIT reported (2018) 256 Taxman 24 (Del) has held that expenditure incurred by assessee on acquiring licenses to use software which did not confer any enduring benefit on assessee was to be allowed as deduction u/s 37 (1) of the IT Act. Since the Ld. CIT (A) in the instant case has given a finding that the expenditure is recurring in nature and not a onetime expenditure, therefore, in absence of any contrary material brought to our notice on this factual finding, the order of the CIT(A) on this issue is justified in view of the decisions cited (supra). The ground raised by the revenue on this issue is accordingly dismissed. 22. Ground of appeal No.3 by the revenue reads as under :- On the facts and under the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of ₹ 1,71,08,949/- on account of advertisement and marketing expenses treating it as revenue expenditure instead of capital expenditure without appreciating the facts that the bills produced by the assessee before the Assessing Officer establishing that the expenses are relating to capital in nature. 23. Facts of the case in brief are that the Assessing Officer during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Del). The issue is squarely covered in favour of the assessee by the decision in the case of Pepsico India Holdings (P) Ltd (supra). Reliance is also placed on CIT v. Orient Ceramics and Industries Ltd. (2013) 358 ITR 49 (Del). 28. We have considered the rival arguments made by both the sides and perused the material available on record. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case considered the advertisement and market expenditure of ₹ 3,90,82,609/- incurred by the assessee as capital expenditure in nature as against revenue expenditure treated by the assessee and allowed depreciation on the same. He accordingly made addition of ₹ 1,71,08,949/-. We find the Ld. CIT (A) treated such advertisement expenditure as revenue in nature and is allowable u/s 37 (1) of the IT Act. We do not find any infirmity in the order of the CIT(A) on this issue. The Hon ble Delhi High Court in the case of CIT (A) Vs. Pepsico Holdings India Private Limited has held that expenditure incurred on glow sign and neon sign are expenditure on advertisement and publicity allowable as deduction u/s 37 (1) of the IT Act. While ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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