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TMI Blog2018 (7) TMI 2282X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia) Pvt. Ltd., vs. The Deputy Commissioner of Income Tax) for A.Y.2009- 10. 2. This appeal has been admitted on 24.10.2017 to consider the following substantial question of law formulated in the Appeal Memo:- "1. It is submitted that the Tribunal erred in excluding the comparables such Kals Information Systems Ltd and Bodhtree Consulting Ltd even though the said companies are similar to the assesses". 3. Learned counsel for the Appellants-Revenue Mr.E.I.Sanmathi has filed a Memo dated 29.07.2018 reframing the substantial questions of law Nos. 1 and 2, which are quoted below for ready reference:- "1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in excluding comparable's namely, Kals Informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of Commissioner of Income Tax vs. IBM India Ltd., reported in (2013) 357 ITR 88 (Kar) and answered the substantial question of law in favour of the Assessee and against the Revenue, treating the software expenses as revenue expenditure. The relevant portion of the aforesaid judgment is quoted below for ready reference:- "9. The second substantial question of law relates to application of the amount utilized for projects of Software in a sum or Rs.33,14,298/-. The Tribunal on consideration of the material on record and the rival contentions held, when the expenditure is made not only once and for all but also with a view to bringing into existence an asset or an advantage for the enduring benefit, the same can be properly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputer or software is less than two years and as such, the right to use it for a limited period, the fee paid for acquisition of the said right is allowable as revenue expenditure and these software's if they are licensed for a particular period, for utilizing the same for the subsequent years fresh license fee is to be paid. Therefore, when the software is fitted to a computer system to work, it enhances the efficiency of the operation. It is an aid in manufacturing process rather than the tool itself. Though certain application is an enduring benefit, it dos not result into acquisition of any capital asset. It merely enhances the productivity or efficiency and therefore, it has to be treated as revenue expenditure in that view of the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and hence it is not to be regarded as a comparable. 14. With respect to Bodhtree Consulting Ltd., the CIT(Appeals) had accepted the same as a comparable. The CIT(Appeals) relied on the decision of the Bangalore Bench decision in the case of Trilogy E-Business Software India (P.) Ltd. (supra) and 24/7 Customer.com (P) Ltd. 28 taxmann.com 258 (Bang). The CIT(A) observed that in the above decisions it has been made clear that there is no bar in considering companies with abnormal profits/losses as comparables unless the assessee demonstrates and establishes that some abnormal event took place which led to abnormal results. Hence, the CIT(A) rejected the contentions of the assessee for exclusion of Bodhtree Consulting Ltd. as a comparable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pretation of provisions of Double Taxation Avoidance Treaties (DTAA), interpretation of provisions of the Income Tax Act or Overriding Effect of the Treaties over the Domestic Legislations or the questions like Treaty Shopping, Base Erosion and Profit Shifting (BEPS), Transfer of Shares in Tax Havens (like in the case of Vodafone etc.), if based on relevant facts, such substantial questions of law could be raised before the High Court under Section 260-A of the Act, the Courts could have embarked upon such exercise of framing and answering such substantial question of law. On the other hand, the appeals of the present tenor as to whether the comparables have been rightly picked up or not, Filters for arriving at the correct list of comparab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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