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TMI Blog2020 (7) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... iven by the Dispute Resolution Panel (DRP) as well as of the Special Bench decision of the Tribunal in the case of Amway India Enterprises Vs. DCIT [ 2008 (2) TMI 454 - ITAT DELHI-C] . There is no error or infirmity in the conclusions reached by the Tribunal - No substantial question of law. Expenses pertains to legal expenses in connection with structuring of the transaction and related aspects - HELD THAT:- Tribunal has taken the view that merely because the transaction in question is a capital asset, the legal expenses incurred for the same will not ipso facto become capital expenditure. While taking the above view, Tribunal referred to a decision of the Madras High Court in the case of CIT Vs. Bush Boake Allen India Ltd. [ 1981 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for more than two years being enduring in nature and also that the license fees are not used up during the year but over a period of 1 to 3 years? (c) Whether on the facts and the circumstances of the case and in law, the Tribunal was justified in allowing expenses of ₹ 8,30,000/- incurred in connection with sale of capital assets without appreciating the fact that the said expenses are in the nature of advisory fees incurred during the course of business, for proposed sale of land, sold in subsequent year, which contributed to the increase in the capital? 4. In so far question Nos.(a) and (b) are concerned, the issue is as to whether the expenses of ₹ 5,82,62,091.00 incurred in the use of computer software is revenue ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. The assessee did raise an objection before the DRP but without any success. In a very brief order, and based on rather vague and sweeping generalizations, learned DRP confirmed the disallowance. While doing so, the DRP observed as follows: We find that on the facts of the case as stated in the assessment order, the AO has correctly held this amount to be capital in nature and has allowed depreciation thereon. We are of the view that the AO has correctly treated the software expenditure as capital in nature, as it gave enduring benefit. It may be noted that from assessment year 2003-04, 'computer software' has been specially included in the depreciation table, on which depreciation is to be allowed. Hence, this objection of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Tribunal has held that the only dispute before it was whether the aforesaid amount should be treated as a revenue expenditure or as a capital expenditure. It has been held that since the amount is paid on the basis of actual use of software and not for acquisition of software, there was no question of treating the said expenses as capital expenditure. Therefore, Tribunal held that the authorities below had wrongly held the software payment to be capital expenditure in nature and accordingly upheld the stand taken by the assessee directing the Assessing Officer to treat the software expenses as revenue expenditure. 6. While holding so, the Tribunal considered the views given by the Dispute Resolution Panel (DRP) as well as of the Sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from the transactions to which they relate, but as items which are entitled to be judged in their own character. This line of approach may be said to have been firmly established as part of the law relating to allowance of expenditure, by the decision which the Supreme Court rendered in India Cements Ltd. vs. CIT (1966) 60 ITR 52 (SC). In that case, a company went in for a substantial loan of ₹ 40 lakhs from a financial house for a major expansion of its undertaking. The loan was secured by a charge on the company's fixed assets. The amount was advanced by the financial house on certain terms as to interest. For putting through this transaction the company had to incur vakil's fees for drafting the mortgage bond, other legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciple, apart from any statutory provisions, we see no distinction between interest in respect of a loan and an expenditure incurred for obtaining the loan. 7. This decision of the Supreme Court has been followed in innumerable decisions of the Courts since then. As an example may be cited a decision of a Bench of this Court in CIT vs. Kisenchand Chellaram (India) (P) Ltd. (1980) 16 CTR (Mad) 248 : (1981) 130 ITR 385. That case too related to the claim of an assessee-company for the allowance of legal charges representing the fees paid to the Registrar of Companies for increasing the company's capital. The argument addressed before the Court on behalf of the IT Department. in that case was that the legal expenditure contributed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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