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TMI Blog2016 (7) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER Per Jason P. Boaz, A.M. This appeal by the assessee is directed against the final order of assessment passed under section 144C(13) r.w.s. 143(3) of the Income Tax Act, 1961 (in short 'the Act') dated 12.10.2009 in pursuance of the directions of the Dispute Resolution Panel-II (DRP), Mumbai issued under section 144C(5) of the Act on 20.09.2010. 2. The facts of the case, briefly, are as under: - 2.1 The assessee-company, engaged in the manufacture and trading of pharmaceutical products, filed its return of income for A.Y. 2006-07 on 29.11.2006 declaring total income of ₹ 23,72,68,243/-. The impugned order was passed under section 144C(13) r.w.s. 143(3) of the Act on 12.10.2009 wherein the income of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08 and ITA No. 1218/Mum/2014 both dated 18.05.2016. It is submitted by the learned A.R. that the Coordinate Bench held that the assessee neither acquired any software by payment of e-connectivity charges nor was there any enduring benefit to the assessee and therefore the e-connectivity charges paid by the assessee are revenue in nature. 4.2 Per contra, the learned D.R. supported the finding in the impugned order. 4.3.1 We have heard both parties and perused and carefully considered the material on record, including the judicial pronouncement cited (supra). We find that the issue of whether e-connectivity charges paid by the assessee are capital in nature as held by Revenue or revenue in nature as claimed by the assessee, has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s paying activity charges for the facility of access/usage of various applications, intranet websites, emails, global resources etc for day today running of the business. We do not find any acquisition of software by the assessee by payment of this activity charges. We also do not find any enduring benefit for the assessee. Thus, we hold that the e-connectivity charges paid by the assessee are of Revenue in nature. 4.3.2 In its order in the assessee s own case for A.Y. 2009-10 in ITA No. 1442/Mum/2014 dated 18.05.2016, the Coordinate Bench at para 12 thereof decided the same issue, whether e-connectivity charges paid were revenue expenditure as claimed in favour of the assessee holding as under at para 12 thereof: - 12. We find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y would provide. We find that the allocation of expenses by the parent company has not been challenged by the AO, that the AO and the DRP had not been able to prove that the expenses were not in nature of periodic charges(annual charges) and were one-time costs. It is also a fact that in case of failure to pay the costs it would not be able to have the benefit of the services. cumulatively, all these facts prove that the assessee had neither acquired any enduring benefit nor did any capital asset came into existence. Here, we would like to refer to the case of Asahi Safety Glass Ltd (346 ITR 329) believed by the Honorable Delhi High Court and same reads as under: It is now somewhat trite to say that the test of enduring benefit is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h included licence fee, annual technical support fee, professional charges, data entry operator charges, training charges and travelling expenses. The final figure was a consolidation of expenses incurred under these sub-heads. The Tribunal rightly came to the conclusion that none of these resulted in either creation of a new asset or brought forth a new source of income for the assessee. The Tribunal classified the said expenses as being recurring in nature to upgrade and/or to run the system. In the background of the aforementioned findings, it cannot be said that the expenses brought about an enduring benefit to the assessee. The AO was perhaps swayed by the fact that in the succeeding financial year, i.e., 1997-98 (asst. yr. 1998- 99), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these very reasons . The contention raised by the counsel for the Revenue that in the books of accounts, the assessee had not written off the expense in issue, while in the succeeding assessment year only a part of the expense had been written off and, therefore, the assessee s own understanding of the nature of the expense involved was that it was expended on capital account is only to be stated to be rejected. The reason being that the treatment of a particular expense or, a provision in the books of accounts can never be conclusively determinative of the nature of the expense. An assessee cannot be denied a claim for deduction which is otherwise tenable in law on the ground that the assessee had treated it differently in its books ..... X X X X Extracts X X X X X X X X Extracts X X X X
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