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TMI Blog2012 (12) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... o AO - ITA No.656/Bang/2011 - - - Dated:- 31-10-2012 - N.V. Vasudevan and Jason P. Boaz, JJ. Appellant Rep by: Shri K.S. Prasad Respondent Rep by: Shri S.K. Ambustha ORDER Per: Jason P Boaz: This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-IV, Bangalore dt.8.3.2011 for Assessment Year 2005-06. 2. The facts of the case, in brief, are as under : 2.1 The assessee-company (hereinafter referred to as the assessee ), engaged in the business of engineering and research services, filed its return for Assessment Year 2005-06 on 29.10.2005 declaring loss of Rs.82,28,850. The assessee's case was taken up for scrutiny by issue of notice under section 143(2) of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the action of the Assessing Officer in adding back Rs.3,94,061 incurred under the head Legal Professional charges. 5. That the learned CIT (Appeals) erred in upholding interest under sections 234B and 234D of the Act. 6. That the appellant craves leave to add to and / or alter, amend, rescind or modify the grounds herein above before or at the time of hearing the appeal." 4. The grounds raised at S.Nos.1 and 6 are general in nature and therefore no adjudication is called for thereon. 5. At the outset, the learned counsel for the assessee submitted that the grounds of appeal at S.No.2 and 4 in respect of the disallowances of (i) donation amounting to Rs.5,61,578 and (ii) legal and professional charges amounting to Rs.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture as held by the Assessing Officer. In support of the assessee's proposition the learned counsel for the assessee relied on a number of judicial decisions of the Tribunal across India including the following decision of the co-ordinate bench of this Tribunal in the following cases : i) IBM India Ltd. Vs. CIT reported in 105 ITD 1 (2003) ii) Software Silicon Systems India P. Ltd. Vs. ITO in ITA No.44/Bang/2006 The learned counsel for the assessee also relied on the decision of the Special Bench of the Delhi Tribunal in the case of Amway India Enterprises Vs. DCIT reported in 111 ITD 112 (SB) (Del). 6.2 Per contra, the learned Departmental Representative supported the orders of the authorities below. 6.3 We have heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Special Bench of the ITAT, Delhi in the case of Amway India Enterprises Vs. DCIT reported in 111 ITD 112, the author of which order, is part of this Bench. In this order, the Tribunal has observed that there cannot be any specific or precise test which can be applied conclusively or universally for distinguishing between capital and revenue expenditure and that different minds come to different conclusions with equal propriety. The cardinal rule is that the question whether a certain expenditure is on capital or revenue account should be decided from the practical and business view point and in accordance with sound accountancy principles. The Tribunal further observed that while dealing with this complex issue, these tests generally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his business. In other words, the functional test becomes more important and relevant because of the peculiar nature of the computer software and its possible use indifferent areas of business touching either capital or Revenue held or its utility to a businessman which may touch either capital or Revenue field. 6.5 The fact situation in respect of the necessity for having the issue of software expenditure examined to ascertain whether it is capital or revenue in nature in the case of Amway India Enterprises (supra) is similar to that of the present case of the assessee. We, therefore, respectfully following the decision in the case of Amway India Enterprises (supra), hold that since the examination of whether software expenditure incu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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