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TMI Blog2013 (5) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... 10A in the peculiar facts and circumstances of the case has been considered. No contrary view of the Jurisdictional High Court or of the Hon’ble Apex Court has been brought to notice in order to canvass that the impugned order deserves to be upset. Against revenue. Computer peripherals and accessories - whether eligible for depreciation @ 60% - Held that:- The issue whether the computer peripherals i.e. printers, inverters, modems, routers for network connectivity, EPABX, tape drive etc. are integral parts of the computer is no longer in question as the issue has consistently been decided in favour of the assessee by various orders of the Tribunal following the judgments of the jurisdictional High Court of Delhi in CIT vs. BSES Yamuna Powers Ltd. [2010 (8) TMI 58 - DELHI HIGH COURT] & CIT vs. Orient Ceramics & Inds. Ltd. [ 2011 (1) TMI 26 - DELHI HIGH COURT] where depreciation @ 60% has been allowed on computer peripherals. In favour of assessee. Training expenses - revenue v/s capital - Held that:- Expenses have been incurred for training programmes on regular basis provided to the employees of the assessee in order to update them on a continuous basis of the changes in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice under sec. 143(2) sent along with questionnaire under sec. 143(1) on 29.04.2008/08.09.2009. The Assessing Officer observed that in the year under consideration the assessee had undertaken international transactions with its associated enterprises and as the value of international transaction was more than Rs.15 crores after following the procedure laid down in sec. 92CA of the Act the international transaction entered into by the assessee with the associated enterprises was referred to the Transfer Pricing Officer for determining the arm s length price. The TPO s report was received wherein no adverse inference was drawn in regard to the transactions with the associated enterprises. 3. The facts pertaining to the issue arising in ground No.1 in the departmental appeal in the above factual matrix is that considering the claim of the assessee that it is operating a STPI unit whose profit are eligible for deduction under sec. 10A of the Act, the Assessing Officer required the assessee to explain why the Telecommunication expenses amounting to Rs.13,78,384/- attributable to the delivery of goods may not be excluded from the total export turnover for deduction under sec. 10A. Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the enquiry should stop as soon as the effective source is discovered, as had been held by the Privy Council in the case of Kamakhaya Narayan Singh (1948) 16 ITR 325 .Strength was also drawn from CIT vs. Madras Motors Ltd./M.M. Forgings, 257 ITR 60 (Mad.) which position was also considered by the Apex Court in the case of Pandian Chemicals Ltd. Vs. CIT (2003) 129 Taxman 539 (SC). In view of this position the AO was of the view that it is clear that the telecommunication charges amounting to Rs.13,78,384/- is to be excluded from the export turnover. The computation of deduction under sec. 10A of the Income-tax Act, 1961, as such was made as per Annexure `A to the assessment order. 4. Aggrieved by this the assessee came in appeal before the first appellate authority. Before the CIT(A) as per the impugned order, the assessee made oral submissions and written submissions. 4.1 As per Para 4 of the impugned order the contention on behalf of the assessee was that if the telecommunication expenses are excluded from the export turnover, then the said expenses should also be correspondingly excluded from the total turnover of the undertaking while computing deduction under sec. 10A. Des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then consolidated value of the goods is only mentioned in the invoice. In a case where only value of goods is quoted, expenses are borne by the supplier. In cases where expenses have not been separately charged, the convertible foreign exchange received is consideration of the goods only. Where such expenses are separately charged in the invoices, the consideration received in convertible foreign exchange includes the value of the goods and such expenses. If the consideration received is only against the goods, then there is no need to deduct such expenses from the consideration received in convertible foreign exchange. In cases where such expenses are separately charged, the expenses are required to be reduced from the consideration' received for the purpose of arriving at the export turnover ..The appellant also submitted that in the event, telecommunication expenses are reduced from the export turnover, the same ought to be reduced from the total turnover also for computing the profits eligible for deduction under Section 10A of the Act. The underlying principle in this regard, is based on the fact that there should be parity in the items included in the export t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning given to the export turnover by the legislature is to be adopted while understanding the meaning of the total turnover . Further, it is also noted that the total turnover is sum total of domestic turnover in the appellant s case, the export turnover will be equal to total turnover . Hence, if an item of expenditure is excluded from export turnover" the same has to be excluded from total turnover as well. Hence, following the decision of Hon'ble Supreme Court in the case of Lakshmi Machine Works (Supra) and decision of Karnataka HC referred to above and in light of facts of the case, the ground of appeal is allowed. 5. Aggrieved by this the Revenue is in appeal before the Tribunal. 6. The learned Sr. DR Shri Satpal Singh invited our attention to Page 2 of the assessment order contended that the AO has given sufficient and cogent reasons in his order for recalculating the claim of deduction allowable to the assessee under sec. 10A as the words used by which we have to be guided are derived from export and the issue has been settled judicially by way of various legal pronouncements which are referred to in the assessment order and heavily relied upon by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case has been considered. No contrary view of the Jurisdictional High Court or of the Hon ble Apex Court has been brought to our notice in order to canvass that the impugned order deserves to be upset. Being satisfied with the reasoning and finding, ground no-1 of the department is dismissed. 8. The facts pertaining to the next issue addressed by the Revenue as found discussed in the assessment order are that the assessee company made addition of Rs. 15,06,815/- to the block of computers and claimed depreciation @ 60%. The depreciation @ 60% was claimed on computer peripherals, printers, UPS etc. On query by the Assessing Officer it was submitted on behalf of the assessee that HIIPL had received a corporate subsidy from its associated enterprise (Honeywell International Inc. US (HII) for purchase of capital items for the Call Centre Division. The corporate subsidiary was entirely utilized to purchase capital assets required for providing IT-enabled services by the assessee to its associate enterprises. Addition of Rs.87,88,043/- made to the Call Centre Division has been adjusted against the corporate subsidy. As such no depreciation has been claimed by the assessee in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that the impugned order cannot be faulted with on this ground. The issue whether the computer peripherals i.e. printers, inverters, modems, routers for network connectivity, EPABX, tape drive etc. are integral parts of the computer is no longer in question as the issue has consistently been decided in favour of the assessee by various orders of the Tribunal following the judgments of the jurisdictional High Court of Delhi. Accordingly, considering the facts, circumstances of the case and the legal position on the issue, ground No.2 of the Revenue is dismissed. 13. Next issue agitated by the Revenue is found discussed in Para 7 of the assessment order. A perusal of the same shows that the AO in the course of proceedings asked the assessee to submit the details of training expenses in view of the fact that the claim of expenditure amounting to Rs.4,58,775/- was made. In response thereto it was stated on behalf of the assessee that Honeywell (Singapore) PTE Ltd. (HSPL), one of the Honeywell Group Companies incurred certain expenses on behalf of the assessee amounting to Rs.4,58,775/- which was reimbursed to the said HSPL. It was also claimed that the expenditure incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following proposition:- The principle which has to be deduced from decided cases is that, where expenditure laid out for the acquisition or improvement of a fixed capital asset is attributable to capital, it is capital expenditure but if it is incurred to protect the trade or business of the assessee then it is revenue expenditure. In deciding whether, a particular expenditure is capital or revenue in nature, what the courts have to see is whether the expenditure in question was incurred to create any new asset or was incurred for maintaining the business of the company. If it is former it is capital expenditure; if it is the latter, it is the revenue expenditure. 15.1 Considering the same the CIT(A) came to the following conclusion:- 9. I have gone through the above submissions of the appellant and case laws relied upon by the appellant and have also considered the facts and evidences on record and have perused the AO's order. I am of the considered view that the trainings are held at regular intervals and are recurring in nature as the employees need to be updated on a continuous basis of the changes in any industry. Hence, in the facts of the case in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company and if at all there was such benefit accrued to it, the same was certainly not in the capital field and was held to be revenue expenditure. The facts it was submitted are identical as such the claim deserves to be allowed and has rightly been allowed by the CIT(A). 16.2 The learned Sr. DR on the other hand, submitted that it cannot be ignored that the training imparted to its employees benefits the assessee over the years and as such it is a permanent asset with the assessee. Accordingly, the training and experience which is gathered by the assessee is not a revenue expenditure and is a capital expenditure. 17. We have heard the rival submissions and perused material available on record. A careful consideration of the facts and circumstances which are not in dispute namely that expenses have been incurred for training programmes on regular basis provided to the employees of the assessee in order to update them on a continuous basis of the changes in the industry so as to better adapt them to the changing environment. In these afore-mentioned peculiar facts and circumstances, there can be no two opinions that training is an imperative exercise which when imparted to its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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