TMI Blog2023 (12) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income Tax 1980 (5) TMI 1 - SUPREME COURT ]. The ratio of the judgment rendered in the Asahi India Safety Glass Ltd. [ 2011 (11) TMI 2 - DELHI HIGH COURT ] as held that the expenditure which is incurred, which enables the profit-making structure to work more efficiently leaving the source of the profit-making structure untouched, would in our view be an expense in the nature of revenue expenditure. Fine tuning business operations to enable the management to run its business effectively, efficiently and profitably; leaving the fixed assets untouched would be an expenditure in the nature of revenue expenditure even though the advantage may last for an indefinite period. Test of enduring benefit or advantage would thus collapse in such like cases. It would in our view be only truer in cases which deal with technology and software application, which do not in any manner supplant the source of income or added to the fixed capital of the assessee In our view, would apply to the facts of this case, and therefore, no substantial question of law arises with regard to the said issue. Amount expended on training its employees - capital or revenue expenses - ITAT Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by this Court: (i) Whether on the facts and circumstances of the case ld. ITAT erred in law in considering M/s Helios Matheson Information Technology ltd. as functionally non comparable without considered the finding of the TPO i.e. it satisfied all the qualitative and quantitative filters adopted by the TPO to be considered as comparable? (ii) Whether on the facts and circumstances of the case ld. ITAT erred in law in considering M/s Tata Elxsi Ltd. as functionally non comparable without considered the finding of the TPO i.e. it satisfied all the qualitative and quantitative filters adopted by the TPO to be considered as comparable? (iii) Whether on the facts and circumstances of the case ld. ITAT erred in law in considering M/s Persistent Systems Ltd. as functionally non comparable without considered the finding of the TPO i.e. it satisfied all the qualitative and quantitative filters adopted by the TPO to be considered as comparable? (iv) Whether on the facts and circumstances of the case ld. ITAT erred in law in considering that M/s Infosys Technologies Ltd. as functionally non-comparable without considered the finding of the TPO i.e. it satisfied all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the addition amounted to Rs. 1,36,03,473/- [albeit, after allowing for depreciation at the rate of 60%]. 10.1 On the other hand, the stand of the respondent/assessee was that the software was licensed to it. It was also the assertion of the respondent/assessee that the arrangements had a tenure of one (1) year. 10.2 In sum, the respondent/assessee contended before the statutory authorities that it had no ownership of the licensed software and that it was only a licensee. The thrust of the respondent s/assessee s submission was that the proprietary and intellectual property rights in the software in issue remained with the vendor and that the terms of the license prohibited commercial exploitation of the software. 11. The statutory authorities, which included the Assessing Officer (AO) and Dispute Resolution Panel (DRP), were not persuaded by the aforementioned submissions made on behalf of the respondent/assessee. As indicated hereinabove, the test applied by the AO and DRP was that the licensed software resulted in an advantage of enduring nature, and hence, the expenses incurred in purchasing the same could not be treated as revenue expenditure. 12. We may note th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and purpose of the expenditure and whether the expenditure results in creation of fixed capital for the assessee. It is important to bear in mind that what is required to be seen is not whether the advantage obtained lasts forever but whether the expense incurred does away with a recurring expense(s) defrayed towards running a business as against an expense undertaken for the benefit of the business as a whole. In other words, the expenditure which is incurred, which enables the profit-making structure to work more efficiently leaving the source of the profit-making structure untouched, would in our view be an expense in the nature of revenue expenditure. Fine tuning business operations to enable the management to run its business effectively, efficiently and profitably; leaving the fixed assets untouched would be an expenditure in the nature of revenue expenditure even though the advantage may last for an indefinite period. Test of enduring benefit or advantage would thus collapse in such like cases. It would in our view be only truer in cases which deal with technology and software application, which do not in any manner supplant the source of income or added to the fixed capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lass Ltd., in our view, would apply to the facts of this case, and therefore, no substantial question of law arises with regard to the said issue. 18. This brings us to the issue concerning the amount expended by the respondent/assessee on training its employees. The record shows that training expenses, amounting to Rs. 1,82,00,680/-, were incurred by the respondent/assessee during the period in issue towards venue cost, faculty charges, training material (which included manuals and books), equipment, and participation in seminars and conferences. Concerning this expense, as noticed hereinabove, the AO disallowed the deduction on the ground that they resulted in enduring benefit and hence, were incurred on the capital account. 19. The Tribunal, however, as alluded to hereinabove, has ruled in favour of the respondent/assessee. 20. The observations made by the Tribunal in this behalf are set forth hereafter: 40. So, following the aforesaid decision rendered by Hon'ble Delhi High Court, we are of the considered view that when training imparted by the taxpayer company to its executives, though increased its profitability, is not of any enduring benefit as the trai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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