2017 (9) TMI 2013 - HC - Income Tax

TP Adjustment - comparable selection - omission by the ITAT of Celestial Labs Ltd. from the list of comparables - HELD THAT - This Court finds that the ITAT has itself undertaken a detailed analysis of the functional profile of the tested company vis-a-vis that of the comparable and has given cogent reasons for excluding the said comparable. The Court is not persuaded to hold that this factual finding is perverse. It accordingly declines to frame a question on this issue. Nature of expenses - Expenditure incurred on software licenses - capital or revenue expenditure - HELD THATR - The decision of this Court in CIT v. Asahi India Safety Glass Ltd 2011 (11) TMI 2 - DELHI HIGH COURT answers this very issue against the Revenue. The Supreme Court dismissed the Special Leave Petition filed by the Revenue against the said decision. 2012 (7) TMI 1075 - SC ORDER In view of that matter, the Court declines to frame a question on this issue as well.

Summary

Issues:
1. Delay in filing and re-filing the appeal.
2. Exclusion of Celestial Labs Ltd. from the list of comparables by ITAT.
3. Treatment of expenditure on software licenses as revenue expenditure.

Analysis:
1. The judgment addresses the delay in filing and re-filing the appeal, which was condoned by the court for reasons stated in the applications. The applications were disposed of accordingly.

2. The first issue raised by the Revenue pertains to the omission of Celestial Labs Ltd. from the list of comparables by the ITAT. The court noted that the ITAT conducted a detailed analysis of the functional profile of the tested company compared to the comparables and provided valid reasons for excluding Celestial Labs Ltd. The court found no basis to consider this factual finding as perverse and thus declined to frame a question on this issue.

3. The second issue concerns the treatment of expenditure on software licenses as revenue expenditure. The court referred to a previous decision in CIT v. Asahi India Safety Glass Ltd., where it was ruled against the Revenue. The Supreme Court also dismissed the Special Leave Petition filed by the Revenue on this matter. Considering the precedent, the court declined to frame a question on this issue as well.

In conclusion, the appeal under Section 260A of the Income Tax Act, 1961 was dismissed by the court based on the analysis of the issues raised by the Revenue.