ACIT, New Delhi v. M/s. Sietz Technologies India Pvt. Ltd., New Delhi

ITA 651/DEL/2010 | 2006-2007
Pronouncement Date: 21-01-2011 | Result: Allowed

Appeal Details

RSA Number 65120114 RSA 2010
Assessee PAN AIMIL2010T
Bench Delhi
Appeal Number ITA 651/DEL/2010
Duration Of Justice 11 month(s) 9 day(s)
Appellant ACIT, New Delhi
Respondent M/s. Sietz Technologies India Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted G
Tribunal Order Date 21-01-2011
Date Of Final Hearing 04-01-2011
Next Hearing Date 04-01-2011
Assessment Year 2006-2007
Appeal Filed On 11-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G DELHI) BEFORE SHRI A.D. JAIN AND SHRI A.K. GARODIA ITA 651 & 3080(DEL)2010 ASSESSMENT YEARS: 2006-07 & 2007-08 ASSTT.COMMISSIONER OF INCOME TAX SIETZ TECHN OLOGIES INDIA PVT.LTD. CIRCLE 8(1) NEW DELHI. V. 20 2 OKHLA INDL.ESTATE PHASE III NEW DELHI. ITA NO. 2592(DEL)2010 ASSESSMENT YEAR: 2007-08 SIETZ TECHNOLOGIES INDIA PVT.LTD. ASSTT.CO MMISSIONER OF INCOME TAX 202 OKHLA INDL. ESTATE PHASE III V. CIRCLE 8 (1) NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI KISHORE B. DR ASSESSEE BY: SHR I R.M. MEHTA ADVOCATE ORDER PER A.D. JAIN J.M. ITA 651(DEL)2010 : THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2006-07 RAISING THE FOLLOWING GROUNDS:- ITA 651 3080 & 2592 2 1. LD. COMMISSIONER OF INCOME TAX(APPEALS)ERRED I N LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING TH E ADDITION OF ` 3 32 132/- MADE BY THE AO ON ACCOUNT OF EXHIBITION EXPENSES. 2. LD. CIT(A) ERRED IN LAW AND ON THE FACTS AND C IRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF ` 6 39 960/- MADE BY THE AO ON ACCOUNT OF RECRUITMENT AND TRAINING EXPENSES. 3. LD. CIT(A) ERRED IN LAW AND ON THE FACTS AND CI RCUMSTANCES OF THE CASE DELETING THE ADDITION OF ` 4 66 390/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE ON DYES AND TOOLS. 2. APROPOS GROUND NO.1 DURING THE YEAR THE ASSESS EE HAD DEBITED EXHIBITION EXPENSES OF ` 3 32 132/-. OBSERVING THAT THESE EXPENSES PROVIDED THE ASSESSEE A BENEFIT OF ENDURING NATURE THE AO Q UERIED THE ASSESSEE. THE ASSESSEE FILED ITS REPLY VIDE LETTER DATED 8.12.200 8. THIS WAS CONSIDERED BY THE AO AND WAS FOUND TO BE NOT ACCEPTABLE. IT WAS OBSERVED THAT BY PARTICIPATING IN EXHIBITION THE ASSESSEE HAD INTEN DED TO GET THE BUSINESS NOT ONLY IN THE CURRENT YEAR BUT ALSO IN THE SUBSEQUEN T YEARS. 3. BY VIRTUE OF THE IMPUGNED ORDER THE LD. CIT(A) DELETED THE ADDITION MADE BY THE AO. 4. THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION RIGHTLY MADE BY THE AO OBLIVIOUS OF THE F ACT THAT A BENEFIT OF ENDURING NATURE HAD ACCRUED TO THE ASSESSEE BY THE INCURRENCE OF THE EXPENDITURE. ITA 651 3080 & 2592 3 5. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND HAS STRONGLY RELIED ON THE IMPUGNED ORDER. 6. IN THIS REGARD UNDISPUTEDLY AS OBSERVED BY THE LEARNED CIT(A) THE ASSESSEE COMPANY HAS BEEN INCURRING EXHIBITION EXPE NSES IN THE PAST ALSO. FOR ASSESSMENT YEAR 2005-06 ` 1 46 837/- WAS THE AMOUNT SPENT ON EXHIBITION EXPENSES. DURING THE YEAR UNDER CONSID ERATION THE ASSESSEE PARTICIPATED IN AN EXHIBITION HELD IN NOVEMBER 200 5 IN PRAGATI MAIDAN NEW DELHI. THE BETTER PART OF THE EXPENSES WAS DU E TO PARTICIPATION FEE. NOW ONCE SIMILAR EXPENSES HAVE BEEN ALLOWED IN THE EARLIER YEARS THE FACTS REMAINING THE SAME NO DISALLOWANCE IS CALLED FOR I N THE PRESENT YEAR. GROUND NO.1 IS THEREFORE REJECTED. 7. SO FAR AS REGARDS GROUND NO.2 HERE ALSO THE A O OBSERVED THAT THE RECRUITMENT AND TRAINING EXPENSES INCURRED BY THE A SSESSEE ON ITS STAFF PROVIDED A BENEFIT OF ENDURING NATURE TO THE ASSESS EE. THE LEARNED CIT(A) DELETED THE ADDITION OF ` 6 39 960/-. 8. THE LEARNED DR HAS CHALLENGED THE ACTION OF THE LEARNED CIT(A) CONTENDING AS FOR GROUND NO.1 THAT THE RECRUITME NT AND TRAINING EXPENSES PROVIDED A BENEFIT OF ENDURING NATURE TO THE ASSESS EE. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE IMPUGNED ORDER. ITA 651 3080 & 2592 4 9. THE LEARNED CIT(A) HAS OBSERVED THAT AS PER THE FURTHER BREAK UP OF RECRUITMENT EXPENSES GIVEN BY THE ASSESSEE ` 1 75 226/- WAS REGARDING RECRUITMENT EXPENSES OF 14 PARTIES WHEREAS ` 4 64 734/- WAS SPENT ON TRAINING EXPENSES ON THE STAFF. SUCH EXPENSES WER E INCURRED BY THE ASSESSEE REGULARLY IN THE EARLIER YEARS ALSO. NO DISALLOWA NCE WAS MADE. DURING THE YEAR THERE WERE ABOUT 400 EMPLOYEES/WORKERS IN THE COMPANY. 10. HERE ALSO SINCE SIMILAR EXPENDITURE MADE IN TH E EARLIER YEARS HAS BEEN ACCEPTED BY THE DEPARTMENT THERE BEING NO CHANGE I N THE FACTS AND CIRCUMSTANCES FOR THE YEAR UNDER CONSIDERATION NO ADDITION ON THIS COUNT IS CALLED FOR. THE ORDER OF THE LD. CIT(A) IN THIS R EGARD IS THUS CONFIRMED. GROUND NO.2 IS REJECTED. 11. WITH REGARD TO GROUND NO.3 DURING THE YEAR TH E ASSESSEE EXPENDED ` 4 66 390/- ON DYES AND TOOLS. IN THIS REGARD ALSO THE AO WAS OF THE OPINION THAT THE EXPENSES ON TOOLS AND DYES PROVIDED A BENE FIT OF ENDURING NATURE TO THE ASSESSEE. THE LD. CIT(A) AGAIN DELETED THE AD DITION. THE ARGUMENT OF THE DEPARTMENT IS SIMILAR TO THOSE RAISED FOR GROUN D NOS. 1&2. THE LEARNED COUNSEL FOR THE ASSESSEE HAS AGAIN RELIED ON THE IM PUGNED ORDER. 12. HERE ALSO THE EXPENDITURE IS INCURRING. IN T HE IMMEDIATELY PRECEDING ASSESSMENT YEAR THE EXPENDITURE ON DYES AND TOOLS WAS OF ` 2 01 688/-. THE EXPENDITURE INCLUDES AS OBSERVED BY THE LD. C IT(A) REPAIRING OF ITA 651 3080 & 2592 5 MOULDS AND BENCHING DYES. THE ASSESSEE MANUFACTUR ES SEAT ASSEMBLING AND AUTOMOBILE COMPONENTS ETC. UNDISPUTEDLY IN SUCH ACTIVITY EXPENSES ON DYES AND TOOLS ARE NORMAL EXPENSES INCURRED FOR THE PURPOSE OF MANUFACTURE. 13. IN THESE FACTS THE GRIEVANCE OF THE DEPARTMENT BY WAY OF GROUND NO.3 IS ALSO REJECTED. 14. IN THE RESULT ITA NO. 651(DEL)2010 IS DISMISSE D. ITA NO. 3080(DEL)2010 : 15. THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2007-08 RAISING THE FOLLOWING GROUNDS:- 1. LD. COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETIN G THE ADDITION OF ` 11 43 537/- MADE BY THE AO ON ACCOUNT OF DYES AND T OOLS. 2. LD. CIT(A) ERRED IN LAW AND ON FACTS AND CIRCU MSTANCES OF THE CASE IN RESTRICTING THE DISALLOWANCE OF ` 5 33 456/- MADE BY THE AO ON ACCOUNT OF SOFTWARE EXPENSES TO ` 3 08 060/-. 3. LD. CIT(A) ERRED IN LAW AND ON THE FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF ` 3 85 874/- MADE BY THE AO ON ACCOUNT OF RECRUITMENT AND TRAINING EXPENSES. 4. LD. CIT(A) ERRED IN LAW AND ON THE FACTS AND C IRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF ` 7 41 069/- MADE BY THE AO ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO ESI & PF. 5. LD. CIT(A) ERRED IN LAW AND ON FACTS AND CIRCUM STANCES OF THE CASE IN DELETING THE ADDITION OF ` 7 55 156/- MADE BY THE AO ON ACCOUNT OF PROVISION FOR GRATUITY. ITA 651 3080 & 2592 6 16. GROUND NO.1 CORRESPONDS TO GROUND NO.3 IN ITA NO. 651(DEL)2010(SUPRA) FILED BY THE DEPARTMENT FOR ASS ESSMENT YEAR 2006-07. IN THIS YEAR THE AO MADE AN ADDITION OF ` 11 43 537/- CLAIMED BY THE ASSESSEE ON ACCOUNT OF THE EXPENDITURE ON DYES AND TOOLS. THE FACTS UNDISPUTEDLY REMAINING THE SAME AS IN ASSESSMENT YE AR 2006-07. THE DYES AND TOOLS ARE NECESSARY REQUIREMENT FOR THE ASSESSE ES NATURE OF WORK I.E. MANUFACTURING OF SEAT ASSEMBLING AND AUTOMOBILE COM PONENTS. THEREFORE THERE IS NO MERIT IN GROUND NO.1 RAISED BY THE DEPA RTMENT. THE SAME IS REJECTED. 17 APROPOS GROUND NO.2 THE ASSESSEE DEBITED ` 7 62 080/- TO ITS PROFIT AND LOSS ACCOUNT REPRESENTING SOFTWARE EXPENSES. THE AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THESE EXPENSES BE NOT TREATED AS CAPITAL EXPENSES AS IN THE EARLIER YEAR SINCE THEY PROVIDE D THE ASSESSEE COMPANY WITH A BENEFIT OF ENDURING NATURE. THE ASSESSEE S UBMITTED THAT THE SOFTWARE EXPENSES HAD BEEN INCURRED TOWARDS USER CHARGES FOR SOFTWARE AND ALSO SERVICES AND SUPPORT CHARGES PAID TO VARIOUS PARTIE S FOR MAINTENANCE OF THE SOFTWARE; AND THAT THE EXPENSES WERE OF REVENUE NAT URE. THE AO HOWEVER REJECTED THIS EXPLANATION OBSERVING THAT THE LICEN CE CHARGES PAID FOR PROCUREMENT OF LICENCE OF SOFTWARE; AND THAT LICEN CE SOFTWARE IS DEFINED IN SCHEDULE 1 FOR DEPRECIATION IS A CAPITAL ASSET. THE AO ACCORDINGLY TREATED ITA 651 3080 & 2592 7 THE EXPENSES AS CAPITAL EXPENSES. DEPRECIATION WA S ALLOWED AS PER THE EXISTING RATE. 18. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE H AD GIVEN THE NEW BREAK UP OF EXPENSES ON COMPUTER SOFTWARE OF ` 7 62 086/-; THAT ` 2 50 000/- WAS TOWARDS ANNUAL MAINTENANCE CONTRACT; THAT ` 72 000/- WAS FOR LICENCE FEES FOR INTEGRAL ERP SOFTWARE; THAT AL L THE OTHER EXPENSES WERE OF SUCH A NATURE AS TO PROVIDE AN ENDURING BENEFIT TO THE ASSESSEE. ` 3 00 000/- WAS PAID FOR THE ACCOUNTING SOFTWARE THE BENEFIT WHEREOF SPILL OVER TO THE SUBSEQUENT YEARS ALSO; THAT ` 82 086/- WAS FOR ANTI VIRUS PROTECTION SOFTWARE WHICH WOULD ALSO PROVIDE AN EN DURING BENEFIT TO THE ASSESSEE; ` 58 000/- WAS FOR MODIFICATION APPLICATION WHICH WA S ALSO OF A LASTING NATURE; THAT THEREFORE IN VIEW OF AMWAY I NDIA ENTERPRISES V. DCIT 301 ITR (AT)1 (DEL) WHEREIN THREE TESTS HAVE BEEN PROVIDED TO DECIDE AS TO WHETHER A PARTICULAR EXPENDITURE IS CAPITAL OR REVE NUE I.E. TEST OF ENDURING BENEFIT OWNERSHIP TEST AND FUNCTIONAL TEST THE DI SALLOWANCE OUGHT TO BE RELATED TO THE ITEM OF ` 4 40 086/- AND DEPRECIATION WAS TO BE PROVIDED @ 30% AS SUCH ITEMS WERE USED FOR LESS THAN 180 DAYS. ACCORDINGLY THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO ` 3 08 060/- GIVING RELIEF OF ` 2 25 396/- TO THE ASSESSEE. ITA 651 3080 & 2592 8 19. IN THIS REGARD BOTH THE PARTIES ARE IN RESPECT IVE APPEALS. 20. THE LEARNED DR HAS CONTENDED THAT THE LD. CIT(A ) HAS ERRED IN RESTRICTING THE DISALLOWANCE OF ` 5 33 456/- MADE BY THE AO ON ACCOUNT OF SOFTWARE EXPENSES TO ` 3 08 060/- DESPITE THE FACT THAT THE EXPENSES INCU RRED HAD PROVIDED THE ASSESSEE COMPANY WITH AN ENDURING BENEFIT. 21. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OT HER HAND HAS CONTENDED THAT THE LD. CIT(A) HAS TREATED THE EXPENDITURE AS PART CAPITAL AND PART REVENUE IN NATURE; THAT THE SOFTWARE INVOLVED WAS A VIRUS PROTECTION SOFTWARE WHICH IS NOT LASTING IN NATURE; THAT THE MODIFICATION OF EXISTING IS ALSO NOT LASTING IN NATURE; THAT BOTH OF THESE EXPE NSES DO NOT PROVIDE ANY BENEFIT OF ENDURING NATURE TO THE ASSESSEE; THAT IT IS THESE TWO ITEMS WHICH HAVE BEEN DECIDED AGAINST THE ASSESSEE BY THE LD. C IT(A); THAT THE REST OF THE ITEMS HAVE RIGHTLY BEEN ALLOWED BY THE LD. CIT(A) A S ITEMS OF REVENUE EXPENDITURE. 22. THE LEARNED DR HAS ON THE OTHER HAND REITERAT ED THE CIT(A)S RELIANCE ON AMWAY(SUPRA) SO FAR AS REGARDS THE T HREE TESTS LAID DOWN THEREIN SO AS TO ENABLE DECISION ON THE ISSUE OF T HE NATURE OF THE EXPENSES. 23. IN THIS REGARD AMWAY (SUPRA) THE HONBLE DE LHI HIGH COURT HAS PROVIDED THAT THE TEST FOR ASCERTAINING THE NATURE OF THE EXPENDITURE WHETHER REVENUE OR CAPITAL ARE TEST OF ENDURING BENEFIT OWNERSHIP TEST AND ITA 651 3080 & 2592 9 FUNCTIONAL TEST. IN THE PRESENT CASE ` 3 00 000/- WAS PAID FOR ACCOUNTING SOFTWARE. ` 82 086/- WAS SPENT FOR VIRUS PROTECTION SOFTWARE AN D ` 58 000/- WAS SPENT FOR MODIFICATION APPLICATION. IT HAS NOT BEEN SHOWN AS TO HOW THIS EXPLANATION PROVIDED AN ENDURING BENEFIT TO THE ASS ESSEE. WE DO NOT FIND ANY JUSTIFICATION IN THE ACTION OF THE LD. CIT(A) I N DISALLOWING THE EXPENDITURE IN PART AS CAPITAL IN NATURE. SO FAR AS REGARDS THE GROUND RAISED BY THE DEPARTMENT THERE IS NO MERIT THEREIN AND TH E SAME IS REJECTED. 24. GROUND NO.3 CORRESPONDS TO GROUND NO.2 IN ITA N O. 651(DEL)20 AND FOR THE REASONS RECORDED THEREIN THIS GROUND IS RE JECTED. 25. APROPOS GROUND NO.4 THE LD. CIT(A) DELETED THE ADDITION OF ` 7 41 069/- MADE BY THE AO ON ACCOUNT OF EMPLOYEES C ONTRIBUTION TO ESI AND PF. 26. THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF AIMIL 2010 TIOL 125 HC(DEL). THE PROVISION IN THE EARLIER YE AR WAS NOT CLAIMED. THE TRIBUNAL HAS ALSO ALLOWED THE ASSESSEES CLAIM IN THIS REGARD FOR ASSESSMENT YEAR 2006-07. 27. ACCORDINGLY GROUND NO.4 IS ALSO REJECTED. ITA 651 3080 & 2592 10 28. AS PER ACCOUNTING YEAR 2005-06 THE LD. CIT(A) H AS ERRED IN DELETING THE ADDITION OF ` 7 55 156/- MADE BY THE AO ON ACCOUNT OF PROVISION F OR GRATUITY. 29. THE AO OBSERVED THAT FROM THE BOOKS OF ACCOUNT IT WAS OBSERVED THAT THE ASSESSEE HAS VALUED PROVISION FOR GRATUITY AS P ER ACTUARIAL VALUATION AT ` 1 01 71 141/- AS AGAINST PROVISION OF ` 1 09 26 297/- . IT WAS OBSERVED THAT THEREFORE THE EXCESS PROVISION OF ` 7 55 156/- HAD NOT BEEN WRITTEN BACK IN THE INCOME. THIS EXCESS PROVISION WAS THUS ADDE D BACK TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) DELETED THE ADDIT ION. IN THIS REGARD THE STAND OF THE ASSESSEE IS THAT IN FACT THERE WAS NO ACCOUNTING ENTRY REGARDING THE PROVISION; THAT THE PROVISION WRITTEN BACK IN T HE EARLIER YEAR WAS NOT CLAIMED. ATTENTION HAS BEEN DRAWN TO PAGE 19 OF T HE APB TO SHOW THAT THERE WAS NO ENTRY IN THE BOOKS OF THE ASSESSEE. ATTENTION HAS ALSO BEEN DRAWN TO APB 28 PARA 10 COMPRISING PART OF SCHEDU LE 14 THE SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOU NTS FOR THE YEAR ENDED 31.3.2007. THEREIN IT HAS INTER ALIA BEEN MENT IONED THAT:- 10. THE COMPANY HAS CHANGED THE ACCOUNTING POLICY IN RESPECT OF PROVISION OF LIABILITIES TOWARDS GRATUITY AND EARNE D LEAVE. THE LIABILITIES ON THESE ACCOUNTS WERE EARLIER ACCOUNT ED FOR ON THE BASIS OF ACTUAL LIABILITY AS AT THE CLOSE OF THE FINANCIA L YEAR CALCULATED FOR EACH EMPLOYEE. FOR THIS PURPOSE THE LIABILITY T OWARDS GRATUITY IS CALCULATED IRRESPECTIVE OF THE FACT WHETHER THE QUA LIFYING PERIOD ITA 651 3080 & 2592 11 COVERED UNDER THE PROVISIONS OF PAYMENT OF GRATUITY ACT 1972 HAS BEEN COMPLETED. DURING THE YEAR UNDER REVIEW THE SE LIABILITIES HAVE BEEN WORKED OUT ON ACTUARIAL VALUATION BASIS IN ST RICT COMPLIANCE WITH THE MANDATORY ACCOUNTING STANDARD 15 ISSUED B THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. THE AMOUNT OF LIABILITY TOWARDS GRATUITY AS PER ACT UARIAL VALUATION AS ON 31.3.2007 WORKS OUT TO BE ` 1 01 71 141/- AGAINST WHICH A PROVISION OF ` 1 09 26 297/- IS ALREADY EXISTED IN THE BOOKS. HOW EVER THE COMPANY HAS DECIDED NOT TO WRITE BACK THE EXCES S PROVISION OF ` 7 55 156/- IN THE BOOKS. DUE TO THIS CHANGE IN THE ACCOUNTING POLICY THE CH ARGE TO THE PROFIT AND LOSS ACCOUNT TOWARDS GRATUITY AND EARNED LEAVE IS LOWER BY ` 32 28 529/- AND CONSEQUENTLY THE RESULTANT LOSS IN THE BALANCE SHEET IS ALSO LOWER BY THE SAME AMOUNT. 30. UNDISPUTEDLY THEREFORE THE PROVISION OF ` 1 09 26 297/- WAS ALREADY EXISTING IN THE BOOKS. THE GRATUITY AS PER THE AC TUARIAL VALUATION AS ON 31.3.2007 WORKED OUT TO ` 1 01 71 141/-. THE EXCESS PROVISION WAS OF ` 7 55 156/-. AS PER MENTION IN SCHEDULE 14 (SUPRA) HOWEVER THE ASSESSEE COMPANY HAD DECIDED NOT TO WRITE BACK THIS EXCESS P ROVISION DUE TO CHANGE IN ITS ACCOUNTING POLICY IN RESPECT OF PROVISION OF LIABILITIES TOWARDS GRATUITY AND E.L. AS A RESULT OF THIS CHARGE TO THE PROFI T AND LOSS ACCOUNT TOWARDS GRATUITY AND EARNED LEAVE WAS LOWER BY ` 3 28 529/-. AS A RESULT THE LOSS IN THE BALANCE SHEET WAS ALSO LOWER BY THE SAID AMO UNT. SINCE THERE WAS THUS NO WRITE BACK NO ADDITION WAS WARRANTED AND THE ADDITION MADE ITA 651 3080 & 2592 12 INCORRECTLY HAS RIGHTLY BEEN DELETED BY THE LD. CIT (A). AS SUCH GROUND NO.5 IS ALSO REJECTED. 31. IN THE RESULT ITA NO. 3080(DEL)2010 IS DISMISS ED. ITA NO. 2592(DEL)2010: 32. THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2007-08 RAISING THE FOLLOWING GROUNDS:- 1. THAT THE CIT(APPEALS) ERRED BOTH ON FACTS AND I N LAW IN TREATING CERTAIN COMPUTER SOFTWARE EXPENSES AMOUNTING TO ` 4 40 086/- AS CAPITAL IN NATURE WHEREAS THE SAME ARE CLEARLY IN T HE REVENUE FILED AND IT CANNOT BE SAID THAT THE APPELLANT DERIVED AN ADVANTAGE OF ENDURING NATURE. 2. THAT EACH OF THE ITEM OF EXPENSES ON SOFTWARE I S COVERED AS REVENUE EXPENSES BY THE TEST LAID DOWN BY THE HONB LE SPECIAL BENCH OF ITAT DELHI IN THE CASE OF AMWAY INDIA ENTERPRI SES[301 ITR (AT)1] AND THE LD. CIT(A) SHOULD HAVE ALLOWED THESE EXPENSES AS REVENUE EXPENSES. 33. THIS ISSUE AS HAS BEEN EFFECTIVELY DEALT WITH W HILE CONSIDERING GROUND NO.2 IN ITA NO. 3080(DEL)2010. FOR THE REASONS RE CORDED THEREIN THE GRIEVANCE RAISED BY THE ASSESSEE BY WAY OF GROUND N OS. 1&2 IS ACCEPTED. 34. IN THE RESULT ITA NO. 2592(DEL)2010 FILED BY T HE ASSESSEE IS ALLOWED. 35. CONSEQUENTLY ITA NOS. 651 AND 3080(DEL)2010 F ILED BY THE DEPARTMENT FOR ASSESSMENT YEARS 2006-07 AND 2007-08 RESPECTIVELY ARE ITA 651 3080 & 2592 13 DISMISSED WHEREAS ITA NO. 2592(DEL)2010 FILED BY T HE ASSESSEE FOR ASSESSMENT YEAR 2007-08 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.01.2011. SD/- SD/- (A.K. GARODIA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21.01.2011. *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR