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TMI Blog2009 (12) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... the royalty paid was towards acquiring technology which was in the nature of technical know-how fee. He, therefore, treated the expenditure of Rs.15,68,666/- in Assessment Year 2003-04 and Rs.20,73,720/- in y 2004-05. However, he allowed depreciation @25% in both the years. 3. On appeal, the ld. CIT(A) upheld the disallowance on the ground that I.T.A.T. in Assessment Year 2002-03 had upheld the stand taken by the Assessing Officer. 4. At the outset, it has been brought to the notice of the Bench that against the order of I.T.A.T. assessee preferred appeal before the Hon ble Delhi High Court. The Hon ble Delhi High Court on appreciation of facts has held that the expenditure incurred was in the nature of royalty and, therefore, the issue is now covered in favour of the assessee by the decision of the Hon ble jurisdictional High Court. On the other hand, ld. Sr.D.R. supported the order of ld. CIT(A). He submitted that it was to be seen whether the Hon ble Delhi High Court has appreciated the facts noted and relied upon by the Tribunal. 5. We have heard both the parties. We have gone through the decision of Hon ble Delhi High Court in ITA No.464 of 2009 dated 9/10/2009. The Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... US $ 1 billion. This payment is admittedly treated as capital expenditure by the assessee and has been shown as such. However, insofar as payment of royalty is concerned which is an issue before us, that depends on the domestic as well as export sales. Quantum of the said sales would determine the extent of royalty to be paid and it will decrease or increase every year depending upon the decrease or increase in the sales. Significantly, this payment is not because of transfer of technology, but for providing technical services . In such circumstances, we are of the opinion that this payment of royalty, which is a continuous process, should have been treated as revenue expenditure. In a recent judgment given by this court in the case of Commissioner of Income Tax Vs. Sharda Motor Industrial Ltd. in ITA No.837/20096 decided on 03.09.2009, identical issue arose. In the aforesaid case also, lump sum payment was made for providing technical know-how, which was considered as capital expenditure. In addition, royalty was also paid by the assessee at a particular percentage of the sales. Holding that, the said payment would be in the nature of revenue expenditure. This court dealt with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case for Assessment Year 2002-03, the issue is covered in favour of the assessee by the decision of Hon ble Delhi High Court. Respectfully, following the decision of Hon ble Delhi High Court, it is held that payments made by assessee are in the nature of revenue expenditure. The Assessing Officer is directed to allow the relief to the assessee in both the years. 6. The next issue for consideration relates to upholding the action of Assessing Officer in respect of disallowance of ISO certification charges of Rs.95,254/- in Assessment Year 2003-04. Facts of the case, stated in brief, are that the assessee debited an amount of Rs.95,254/- on account of ISO 14001 charges. The Assessing Officer was of the view that certificate of ISO 14001 was of enduring benefit and, therefore, he disallowed the amount as capital expenditure. 7. Before ld. CIT(A), it was submitted that ISO certification charges were incurred as an Environment Management System (EMS) standard which provides a highly effective globally accepted framework for establishing an continually improving the effectiveness of environmental management. Implementation of ISO 14001 may bring both reduction in environmental ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the amount of Rs.95,254/- is allowable as revenue expenditure. Accordingly, we set aside the order of ld.CIT(A) and direct the Assessing Officer to allow the claim of the assessee on account of ISO certification charges. 10. The next issue for consideration relates to confirming the addition on account of development charges. We have heard both the parties. We have also gone through the details of development charges. From the receipts issued by Bhiwadi Industrial Development Authority; the Rajasthan State Industrial Development; and Investment Corporation Ltd. it is seen that the assessee has made payment on account of SC, ground rent, FSC, DC and ER. From the receipts and details given, it is not clear whether the expenditure was incurred in the revenue field or in the capital field. We, therefore, set aside this issue to the file of Assessing Officer with the direction to examine the nature and character of the payments of development charges and decide the issue as per provisions of law after affording the assessee a reasonable opportunity of being heard. 11. In the result, appeal filed by the assessee for Assessment Year 2003- 04 is partly allowed for statistical purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled for depreciation @60% as is applicable to computers. Ld. CIT(A) relying on decision of I.T.A.T. in the case of ITO v. Simran Majumdar 98 ITD 199 and decision of I.T.A.T. Delhi Bench in the case of Expeditors International (India) P. Ltd. held that computer accessories and peripherals being integral part of computer was eligible for deduction of depreciation allowance @60%. 18. Before us, ld. Sr.D.R. submitted that all the computer peripherals are not eligible for depreciation as UPS can be used independently for any other purpose. Likewise camera can also be used for some other purposes, therefore, depreciation will not be allowable on all the items @60%. It was also submitted that the Assessing Officer had not examined the matter in the light of decisions of I.T.A.T. On the other hand, ld. A.R. of the assessee supported the order of ld.CIT(A). 19. We have heard both the parties and gone through the material available on record. From the order passed by the Assessing Officer, it is clear that he has not examined the nature and character of computer peripherals whether they could be used independently. We, therefore, set aside the matter to the file of the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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