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TMI Blog2015 (10) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... f loss of transaction of foreign currency loan - Held that:- The Assessing Officer though stated in the assessment order that if borrowing is for capital asset, the exchange loss already suffered would require to be capitalised in the context of the present law after the substitution of section 43A with effect from the assessment year 2003-04, he has not dealt with the issue on those lines. The Assessing Officer also did not examine as to whether the assessee has repaid the loan, etc. or it is still outstanding. In the circumstances, we are of the view that this issue has to be examined afresh in accordance with law with reference to the provisions of section 43A of the Act after ascertaining the facts from the assessee as to whether the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order passed by the Commissioner of Income-tax (Appeals)-V, Chennai dated December 31, 2012 for the assessment year 2009-10. 2. The first issue in the appeal of the assessee is that the Commissioner of Income-tax (Appeals) erred in confirming the action of the Assessing Officer in treating application computer software of ₹ 23,41,614 as capital expenditure. The Assessing Officer while completing the assessment noticed that the assessee has purchased various softwares worth ₹ 23,41,614. The Assessing Officer was of the view that entire expenses were for the purchase of softwares Oracle, Autocad, PRO E, NI-DAQ, MX software, etc., therefore he was of the view that these softwares have enduring nature and provided benefits fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was incurred for improving the efficiency of the existing system with a view to keep pace with improvement of technology and no machinery was brought into existence. Such expenses incurred by the assessee for enhancement of efficiency, in our considered opinion, is nothing but an upgradation of computers for achieving the desired result and, therefore, the same has to be treated as revenue expenditure." 6. As could be seen from the above observation of the High Court that the expenditure incurred on upgradation of software is revenue expenditure. Respectfully following the said decision, we allow the ground of appeal of the assessee on this issue. 7. The next issue in the appeal of the assessee is that the Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eign currency term loan is business loss and in the alternative he submits that such foreign exchange fluctuation should be added to the cost of asset under section 43A of the Act which aspect was not considered by the authorities. Counsel referring to page 2 of the assessment order submits that the assessee has in fact filed letter dated November 29, 2011 stating that loan was acquired for the purchase of capital asset along with list of assets purchased. Referring to page 4 of the assessment order, counsel submits that the Assessing Officer had in fact observed that if borrowing is for capital asset, exchange loss actually suffered would require to be capitalised in the context of the present law after substitution of section 43A with eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 43A of the Act after ascertaining the facts from the assessee as to whether the entire loan was repaid or outstanding or partly repaid or outstanding, as the submission of the assessee was that loan was repaid and the losses incurred by the assessee on foreign exchange fluctuation of FCNR, the loan is not a contingent liability. Therefore, in the light of the submissions of the assessee and also since the lower authorities have not examined this issue, we remit this issue back to the Assessing Officer with a direction to apply provisions of section 43A of Act and decide this issue in accordance with law after providing adequate opportunity to the assessee. 12. The only ground in the appeal of the Revenue is that the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the Commissioner of Income- tax (Appeals) by following the said decision of the Special Bench of this Tribunal observing as under : "7.2 I have considered the submission of the appellant and have also gone through the assessment order. I find the issue to be squarely covered by the decision of the Special Bench of the juris dictional Tribunal in the case of ITO v. Sak Soft Ltd. [2009] 313 ITR (AT) 353 (Chennai) [SB]. Respectfully following the decision of the jurisdictional Income-tax Appellate Tribunal, Special Bench in the case of Sak Soft Ltd. I direct the Assessing Officer to exclude the foreign exchange fluctuation income both from export turnover and from total turnover for the purpose of computing under section 10AA. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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