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TMI Blog2024 (10) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... nion that the right to use the visions plus software program does not have any effect of providing enduring benefit and the payment made to GECC(USA) is only the license fees and not the price for acquisition of capital asset. The assessee did not acquire any ownership on the software and after termination of license agreement, all the rights and title remained with GECC(USA). DR failed to dislodge the findings of the Id. CIT(A) given in the orders passed for subsequent years after considering the same license agreement and various decisions of Hon ble High courts and Supreme Court. license fee etc. paid by the assessee to M/s GECC(USA) is revenue expenditure deductible u/s 37. No substantial question of law. - HON'BLE MR. JUSTICE YASHWANT VARMA AND HON'BLE MR. JUSTICE RAVINDER DUDEJA For the Appellant Through: Mr. Puneet Rai, SSC with Mr. Ashvini Kumar, Mr. Rishabh Nangia and Mr. Nikhil Jain, Advocates. For the Respondent Through: Mr. Himanshu S. Sinha, Mr. Prashant Meharchandani and Mr. Jainender Singh Kataria, Advocates. ORDER CM APPL. 48498/2024 (815 days delay in refilling) Bearing in mind the disclosures made, the delay of 815 days in refilling the appeal is condone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port it is engaged in healthcare receivable cycle management services which is under IT Enabled Services? 3.6 Whether exclusion of the comparable entities can be sustained as done by the Hon ble ITAT without determining the specific characteristics of the transactions; FAR (functions performed, assets deployed and risk assumed) analysis; contractual terms and market conditions as prescribed in Rule 10B (2) of the I.T. Act, 1962? 3.7 Whether in the facts and circumstances of the case the Hon ble ITAT was right in law in deleting the disallowance made by the Assessing Officer amounting to Rs. 10,90,21,322/- on account of License fee? 2. Insofar as the activities undertaken by the respondent-assessee are concerned, the Tribunal has captured the same in paragraph 3 of its order and which is reproduced hereinbelow:- 3. SBI Business Process Management Services Pvt. Ltd. (earlier known as GE Capital Business Process Management Services Private Limited) which was a Joint Venture in which GE Consumer Mauritius Investment Ltd II held 60% and SBI held 40%) now merged with SBI Cards and Payment Services Limited (earlier known as SBI Cards and Payment Services Pvt. Limited) was engaged in provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order dated 17/11/2016 was passed and as per the DRP under Rule 13 of the Income Tax (Dispute Resolution Panel) Rules 2009 passed order dated 24/3/2017 thereby rectifying the earlier order. 3. As is manifest from the above, the assessee was only providing IT enabled services to banks and financial institutions and carrying on back-end activities pertaining to credit card operations. It is in the aforesaid backdrop that the Tribunal has ultimately come to exclude the comparables which were suggested and which were concerned with Knowledge Process Outsourcing [ KPO ] activities. 4. Insofar as the aspect pertaining to the license fee disallowances and whether they were liable to be treated as capital or revenue in character, the Tribunal has noticed the consistent view which had been taken in this respect as would be evident from a reading of paragraph 16 which is extracted hereunder:- 16. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that this issue is covered by the order of the Tribunal in assessee s own case and there is no appeal filed by the Revenue before the Hon ble High Court. The Tribunal in A.Y. 2007-08, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed program or any part thereof available to any period other than its employees on a need to know basis; (b) copy the Licensed Program or any part thereof, other than for archival backup purposes; (c) use the Licensed Program for any purpose other than as permitted by clause 2.2 of license, sell or otherwise alienate the Licensed Program in any manner whatsoever; or (d) Duplicate, market, license or develop software programs that compete with the Licensed Program and/or exploit commercially the Licensed Program in any manner whatsoever. Similarly, clause 5 and its sub-clauses give the right of termination of license agreement to either parties under various circumstances. It is worthwhile to note that in case of default, if any, committed by the assessee, the rights of assessee to use the software would stand terminated forthwith. Under clause 5.5, the assessee is required to deliver the licensed program back immediately to GECC(USA) after removing the same from its systems on termination of agreement. Clause 5.5 of the agreement reads as under: 5.5 Upon termination of this Agreement the right to use the Licensed Program shall end and GECBPMS shall, with immediate effect: (a) deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the considered opinion that the right to use the visions plus software program does not have any effect of providing enduring benefit and the payment made to GECC(USA) is only the license fees and not the price for acquisition of capital asset. The assessee did not acquire any ownership on the software and after termination of license agreement, all the rights and title remained with GECC(USA). The Id. DR failed to dislodge the findings of the Id. CIT(A) given in the orders passed for subsequent years after considering the same license agreement and various decisions of Hon ble High courts and Supreme Court. It is also a matter of record that the assessee has returned its income for the relevant previous year at Rs. 152.88 crores whereas the amount expended towards use of routine application software is Rs. 2.19 crores which is 1.43%. This shows that implies that this software only is not the soul of assessee s business as argued by the Id. DR. In the case of southern Switchgear Ltd. (supra), the technical knowledge and information remained with the assessee even after termination of agreement which constituted enduring benefit to the assessee whereas in the present case, the so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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