TMI Blog2021 (3) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... on of mind. Even the contention by the revenue that the decision rendered in IBM India Ltd. [ 2013 (10) TMI 1225 - KARNATAKA HIGH COURT ] does not apply to the case of the assessee has not been considered. No reasons have been assigned for holding that decision rendered in the case of IBM India Ltd. Applies to the facts of the case of the assessee. Therefore, in view of contentions raised by both the parties before us, we deem it appropriate to quash the order passed by the tribunal so far as it pertains to findings of substantial question of law No.1 and remit the matter to the tribunal for decision afresh in accordance with law after considering the rival submissions made on both sides. Deduction u/s 36(1)(vii) - assessee did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LOK ARADHE J., This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment year 2001-02. The appeal was admitted by a bench of this Court vide order dated 31.07.2015 on the following substantial questions of law: (i) Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee is eligible for claim of ₹ 23,05,49,466/- as revenue expenditure without appreciating that the assessee has spent the same on networking of 125 branches with a centralized processing solution and the activity has a long term benefit, warranting capitalization o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed an order under Section 143(3) of the Act, and held that since, administrative expenses are to be incurred for earning exempt income, 50% of the exempt income has to be treated as expenses incurred to unexempt income. Thus, Assessing Officer added 50% of the amount to income of the assessee. The assessee debited the aforesaid amount as write off of non convertible debentures under 'provision and contingencies in the statement of computation of income'. The aforesaid claim was disallowed by the Assessing Officer. The assessee had also claimed the aforesaid amount as expenditure for computerization of its 125 branches which were networked with a centralized processing solution. The assessee claimed the aforesaid expenditure as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has acquired capital infrastructure in the form of code banking solution, integrated licence software, implementation software, hardware and internal licence related to manpower service, consultancy service, networking of computer, which amounts to acquisition of capital asset having enduring benefit and constitutes a capital expenditure. It is also urged that if an expenditure has resulted in acquisition of capital asset either tangible or intangible, the same would constitute capital expenditure. It is also pointed out that the fact that intangible asset has been provided for depreciation under Section 32(1)(ii) of the Act would demonstrate that intangible asset is capital asset eligible for depreciation. It is also pointed out that the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s branches and ultimately enabling the assessee in rendering quality services to its customers. (iii) The expenditure is incurred towards efficient management of day to day operations of the assessee and the same does not create any asset which is capital in nature. (iv) The expenditure incurred towards core banking solution software is a common expenditure in the banking industry to enable it to render quality services to its customers and Reserve Bank of India has made it mandatory for all the banks to have core banking solution software. (v) The core banking solution software effectively substitutes manpower costs and results in effective ultilization of the manpower and therefore, the expenditure incurred is revenue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenditure incurred by the assessee for computerization of its branches is revenue in nature, which is evident from para 7.3 of the order. The order passed by the tribunal is cryptic in nature and suffers from vice of non application of mind. Even the contention by the revenue that the decision rendered in IBM India Ltd. supra does not apply to the case of the assessee has not been considered. No reasons have been assigned for holding that decision rendered in the case of IBM India Ltd. Applies to the facts of the case of the assessee. Therefore, in view of contentions raised by both the parties before us, we deem it appropriate to quash the order passed by the tribunal so far as it pertains to findings of substantial question of law N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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