M/s Lifetree Cyberworks Pvt. Ltd., Gurgaon V. DCIT, New Delhi

CO 367/DEL/2010

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8515 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-04-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 10-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMANA SEN
• Assessee Lawyers: SAUBHAGHY AGARWAL
• Keywords: Capital asset; Commercial expediency; Revenue expenditure
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.4540/DEL/2012 ASSESSMENT YEAR : 2007-08 DCIT, LIFETREE CYBERWORKS PVT. LTD., CIRCLE-4 (1), DLF BLDG. NO.9, TOWER-A, I.P. ESTATE, NEW DELHI. V. 2 ND FLOOR, PHASE-III, DLF CITY, GURGAON. C.O. NO. 367/DEL/2012 IN I.T.A. NO.4540/DEL/2012 ASSESSMENT YEAR : 2007-08 LIFETREE CYBERWORKS PVT. DCIT, LTD., 2 ND FLOOR, DLF CITY, CIRCLE-4 (1), PHASE-III, GURGAON. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACL AAACL AAACL AAACL- -- -8480 8480 8480 8480- -- -A AA A APPELLANT BY : SHRI SAUBHAGHY AGARWAL, ADVOCATE. RESPONDENT BY : MS. SUMANA SEN, SR. DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A) DATED 27.8.201. THE ASSESSEE HAS ALSO FILED CROSS OB JECTION TO THE APPEAL FILED BY THE REVENUE. THE GROUNDS OF APPE ALS RAISED IN THE REVENUES APPEAL AND CROSS OBJECTION ARE AS UNDER:- I.T.A. NO.4540/DEL/2012: I.T.A. NO.4540/DEL/2012: I.T.A. NO.4540/DEL/2012: I.T.A. NO.4540/DEL/2012: 1. THAT THE ORDER OF LD CIT(A) IS ERRONEOUS AND CONT RARY TO FACTS AND LAW. ITA NO4540 & CO.367/DEL/2012 2 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` /.30,91,500/- MADE BY THE ASSESSING OFFICER BY DISALLOWING THE SERVICE S CHARGES PAID ON SOFTWARE DEVELOPMENT TO DERPOL. 2.1. THE LD CIT(A) IGNORED THE FACT THAT THE ASSESSEE D ID NOT GET ANY NEW BUSINESS FOR WHICH PAYMENT WAS MADE TO DERPOL, THE LD CIT(A) ALSO IGNORED THE FACT THAT THE EXPENSES HAVE BEEN CLAIMED ONLY TO REDUCE THE TAX LIABILITY OF THE YEA R. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR A MEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF HEA RING. C.O. NO.367/DEL/2012: C.O. NO.367/DEL/2012: C.O. NO.367/DEL/2012: C.O. NO.367/DEL/2012: 1. THAT THE DISALLOWANCE OF ` .16,39,833/- ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES MADE BY THE ASSESSING OFFICER IN PAR A 9 OF THE IMPUGNED ASSESSMENT ORDER AND CONFIRMED BY THE LD C IT(A) VIDE PARA 4 OF HIS APPELLATE ORDER IS ARBITRARY, UNJU ST AND ILLEGAL. 2. THAT WITHOUT PREJUDICE TO GROUND NO.1 ABOVE, THE DISALLOWANCE AS MADE BY THE ASSESSING OFFICER IS VERY EXCESSIVE. VARIOUS OBSERVATIONS MADE BY THE AUTHORITIES BELOW IN T HEIR RESPECTIVE ORDERS ARE EITHER INCORRECT OR ARE LEGALLY UNTENABLE. THE CASE LAWS RELIED UPON BY THE LD CIT(A) WERE DISTIN GUISHABLE ON FACTS AND HAD NO APPLICATION TO THE FACTS OF RESPON DENT ASSESSEES CASE. 3. THAT THE RESPONDENT ASSESSEE RESERVES ITS RIGHT TO AD, AMEND/MODIFY THE GROUNDS OF CROSS OBJECTION. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS SAI D TO BE ENGAGED IN THE BUSINESS OF DEVELOPING/DEPLOYMENT AND P ROVIDING SERVICES IN THE FIELD OF ELECTRONIC, WEB BASED TECHNOL OGY AND OTHER APPLICATIONS RELATED TO INTERNET ETC. THE RETURN OF INCOME WAS FILED ON 15.11.2007 DECLARING A LOSS OF ` .47,24,206/-. THE CASE WAS SELECTED FOR ITA NO4540 & CO.367/DEL/2012 3 SCRUTINY. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFIC ER OBSERVED THAT ASSESSEE HAD DEBITED AN AMOUNT OF ` .30,91,500/- ON ACCOUNT OF SOFTWARE DEVELOPMENT AND MAINTENANCE EXPE NSES. THE ASSESSEE HAD EXPLAINED THAT IT HAD ENTERED INTO A CONSUL TANCY AGREEMENT ON 3.1.2006 WITH M/S DERPOL INVESTMENT LTD OF CYPRUS TO PROVIDE CONSULTANCY, ADVISORY SERVICES AND TECHNICAL ASSI STANCE FOR THE EXISTING PROJECT OF THE COMPANY AND FOR PROJECTS TO B E EXECUTED IN FUTURE IN RELATION TO SOFTWARE DEVELOPMENT FOR A TOT AL CONSIDERATION OF ` .41,22,000/-. IT FURTHER SUBMITTED THAT SINCE THE AG REEMENT WAS FOR A PERIOD OF 12 MONTHS, A PROPORTIONATE EXPENSES AMOUNTIN G TO ` .10,30,500/- WAS ATTRIBUTABLE TO THE SERVICES RENDERED IN THE FINANCIAL YEAR 2005-06 AND WAS THEREFORE CLAIMED IN THE PRECED ING YEAR AND THE BALANCE AMOUNT OF ` .30,91,500/- IS CLAIMED IN THE PRESENT YEAR. IT WAS FURTHER EXPLAINED THAT SERVICES PROVIDED BY DERPOL WE RE IN THE NATURE OF CONSULTANCY SERVICES AND ITS UTILIZATION HAD GENERAT ED A REVENUE OF ` .65,50,500/- FROM SOFTWARE DEVELOPMENT AND DEVELOPM ENT SERVICES IN FINANCIAL YEAR 2005-06 AN AMOUNT OF ` .5,10,000/- IN FINANCIAL YEAR 2006-07. 3. THE ASSESSING OFFICER, HOWEVER, OBSERVED THAT THE EXP ENDITURE OF ` .10,30,500/- AS CLAIMED IN EARLIER YEAR WAS DISALLOWED IN ASSESSMENT YEAR 2006-07 AS THESE WERE HELD TO BE CAPITAL IN NATU RE ON THE BASIS OF DETAILED DISCUSSION IN THE ASSESSMENT ORDER DATED 10.12.20 08. HE FURTHER OBSERVED THAT THE ASSESSEE COMPANY HAD BEEN REND ERING ITS SERVICES THROUGH OUT THE YEAR WHEREAS IT HAD STARTED AV AILING SERVICES OF DERPOL FROM JANUARY, 2006 AND THE INCOME FROM IN VOICES IN THE FINANCIAL YEAR 2005-06 WERE AGAINST INVOICES DATED 10 .4.2005 AND 19.4.2005 AND THEREFORE HE HELD THAT AGREEMENT MADE WITH DERPOL IN JANUARY 2006 HAD NO BEARING WITH THE REVENUE GENERA TED DURING FINANCIAL YEAR 2005-06. THEREFORE, HOLDING THAT IT WAS A SHAM ITA NO4540 & CO.367/DEL/2012 4 TRANSACTION WHICH WAS ARRANGED BY THE ASSESSEE TO INFLATE EXPENSES, THE ASSESSING OFFICER DISALLOWED THE SAME. 4. THE ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSEE HAD ONLY THREE EMPLOYEES WHO WERE PERFORMING CLERICAL SERVICES AND COMPANY HAD CLAIMED AN AMOUNT OF ` .19,85,076/- AS ADMINISTRATIVE EXPENSES OUT OF WHICH ` .16,39,833/- PERTAINED TO LEGAL & PROFESSIONAL CHARGE S. ON EXPLANATION, THE ASSESSEE EXPLAINED THAT THE SAID EXP ENSES WERE PAID TO M/S APC SECURITIES (INDIA) PVT. LTD. FOR AND IN RELATION TO BUSINESS ACTIVITY OF THE COMPANY. THE ASSESSING OFFICER, H OWEVER, HELD THAT THE EXPENSES WERE NOTHING BUT AN ARRANGEMENT TO INFLATE THE EXPENSES AND THEREFORE HE MADE A FURTHER ADDITION OF THE SAID AMOUNT OF ` .16,39,833/-. 5. DISSATISFIED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) AND SUBMITTED THAT THE DISALLOWANCE OF ` .30,91,500/- WAS NOT JUSTIFIED AS THE SAME WAS ADDED BACK TO THE INCOME OF T HE ASSESSEE ON THE BASIS OF ADDITION MADE IN THE PRECEDING YEAR. IT WAS FURTHER SUBMITTED THAT IN AN APPEAL LD CIT(A) VIDE ITS ORDER DATED 12.5.2009 HAD DELETED SUCH DISALLOWANCE IN ASSESSMENT YEAR 2006-07 AND FURTHER DEPARTMENTS APPEAL BEFORE ITAT AGAINST THE DELETION MADE BY LD CIT(A) WAS DISMISSED VIDE ORDER DATED 31.5.2010. IN TH IS RESPECT A COPY OF ORDER OF HON'BLE ITAT WAS ALSO FILED. THE LD CIT(A) ON THE BASIS OF ITAT ORDER DELETED THE ADDITION MADE BY ASSESSING OF FICER. 6. AS REGARDS DISALLOWANCE OF ` .16,39,833/- ON ACCOUNT OF LEGAL & PROFESSIONAL CHARGES IT WAS SUBMITTED BEFORE LD CIT(A) THAT SERVICES OF ASP WERE ENGAGED BY THE APPELLANT WHOLLY AND EXCLUSI VELY FOR BUSINESS PURPOSES AND ASSESSING OFFICERS OBSERVATION THAT APPELLANT COMPANY WAS NOT HAVING IN HOUSE EXPERTISE OF ITS OWN JUSTIFIES TH E APPELLANTS DECISION TO ENGAGE A CONSULTANCY FIRM. IT WAS FURTHER SUBMITTED THAT ASSESSING OFFICER HAD NOT DOUBTED THE GENUINENESS OF SUCH EXPENSES WHICH WAS FULLY VOUCHED AND VERIFIABLE. IT WAS ALSO SUB MITTED THAT ITA NO4540 & CO.367/DEL/2012 5 VARIOUS COURTS INCLUDING APEX COURT HAD HELD THAT NO BUSINESSMAN CAN BE COMPELLED TO MAXIMIZE HIS PROFIT AND THE AUTHORI TIES MUST NOT LOOK AT THE MATTER FROM THEIR OWN VIEW POINT BUT FROM TH E POINT OF VIEW OF PRUDENT BUSINESSMAN. IT WAS ALSO SUBMITTED THAT EXPENDIT URE WAS INCURRED FOR THE PURPOSE OF BUSINESS AND IT WAS NOT ESSEN TIAL THAT IT SHOULD BE NECESSARILY AND IMMEDIATELY BENEFIT THE BUSIN ESS OF ASSESSEE AND EVEN EXPENDITURE INCURRED VOLUNTARILY ON T HE GROUND OF COMMERCIAL EXPEDIENCY TO FACILITATE THE CARRYING ON BUSINESS WOULD BE DEDUCTIBLE U/S 37 OF THE ACT. RELIANCE IN THIS RESPECT WAS PLACED ON A NUMBER OF DECISION. THE LD CIT(A), HOWEVER, DID NOT AGREE WITH THE CONTENTIONS OF ASSESSEE AND UPHELD THE ADDITION MADE BY THE ASSESSEE BY HOLDING AS UNDER:- 4.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT, THE FINDINGS OF THE ASSESSING OFFICER AND THE FACTS ON RECORD. IT IS NOT DISPUTED THAT THE ASSESSEE HAS C LAIMED AN AMOUNT OF RS.16,39,833/- ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES PAID TO M/S. APC SECURITIES (INDIA) PVT. LTD. IN SUPPORT OF THE ABOVE CLAIM THE COPY OF THE CONSULTANCY AGREEMEN T DATED 08.07.2006 MADE BETWEEN THE ASSESSEE AND M/S. APC SECURI TIES (INDIA) PVT. LTD. HAS ALSO BEEN FURNISHED. THE PERUSA L OF THE SAID AGREEMENT REVEALS THAT THE SCOPE OF WORK, FEES AND TER MS OF PAYMENT READ AS UNDER:- 1. SCOPE OF WORK ASP AGREES, TO PROVIDE CERTAIN CONSULTANCY AND PROFE SSIONAL SERVICES AND ACT AS A FINANCIAL ADVISOR ALL THE ASPECTS INCLUDING BUT NOT LIMITED TO OPTIMIZING RETURN ON INVESTMENT L OOKING FOR STRATEGIC' OR FINANCIAL BUYER/ACQUIRER FOR ITS EXISTIN G INVESTMENTS. 2. FEES AND TERMS OF PAYMENT LTCW SHALL PAY ASP A CONSULTANCY FEE OF INR 14,61,006 TO BE PAID IN ADVANCE. THE ABOVE FEE WILL BE PAID BY LTCW THROUGH ITA NO4540 & CO.367/DEL/2012 6 CHEQUES FAVOURING APC SECURITIES (1NDIA) (P) LTD. THE PAYMENT IS EXCLUSIVELY OF ANY TAX. DUTIES, OR LEVIES, IF ANY APP LICABLE UNDER ANY LAW IN FORCE. 4.2 IN THE INSTANT CASE, THERE ARE ABSOLUTELY NO DETAI LS OF ANY SERVICES RENDERED BY M/S. APC SECURITIES (INDIA) PVT. L TD. THERE WAS NO CONFIRMATION OF ANY ARRANGEMENT BETWEEN THE P ARTIES AND THAT THERE WAS CONSIDERABLE DOUBT. THAT IN THE NO RMAL COURSE OF BUSINESS DEALINGS, SUCH A TRANSACTION COULD BE ENTER ED INTO ON THE BASIS OF AN AGREEMENT PARTICULARLY WHEN THE SCOPE OF WORK IS VAGUE AND THE TERMS OF PAYMENT ARE ALSO NOT WELL DEFI NED. THE ASSESSEE HAS NOT FILED ANY DOCUMENTARY EVIDENCE TO PROVE THE NATURE OF SERVICES REQUIRED TO BE RENDERED BY M/S. APC SECURITIES (INDIA) PVT. LTD. NOR REGARDING THE RATE OF CONSULTA NCY FEE REQUIRED TO BE PAID FOR THE SERVICES BY THE ASSESSEE-COMP ANY TO M/S. APC SECURITIES (INDIA) PVT. LTD. SECONDLY, THE P ERUSAL OF THE BALANCE SHEET (SCHDULE-4) REVEALS THAT THE ASSESSEE HAS MA DE INVESTMENTS TO THE EXTENT OF RS.L CRORE IN UNITS OF R S.IO EACH OF OPTIMIX ACTIVE DEBT MULTI-MANAGER FOF SCHEME-DIVIDE ND DURING THE YEAR UNDER CONSIDERATION WHICH HAS BEEN SHOWN UNDE R THE HEAD 'CURRENT INVESTMENTS'. APART FROM THAT THERE ARE OLD INVESTMENTS CARRIED FORWARD FROM THE PRECEDING YEAR T O THE EXTENT OF RS,4,82,77,672/ - IN EQUITY SHARES OF SUBSID IARY COMPANY WHICH IS SHOWN UNDER THE HEAD 'LONG TERM INVESTMENTS'. IT IS DIFFICULT TO COMPREHEND THAT FOR A N INVESTMENTS OF RS.I CRORE IN MUTUAL FUNDS, CONSULTANCY CHARGES OF RS.16,39,833/- WOULD BE PAID BY A PRUDENT INVESTO R. THEREFORE, IT IS NOT UNFAIR TO HOLD THAT THE GENUINE NESS OF THE TRANSACTIONS OF PAYMENT OF CONSULTANCY FEE BY THE ASSESSE E, MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BU SINESS OF THE ASSESSEE DOES NOT STAND PROVED. ITA NO4540 & CO.367/DEL/2012 7 7. AGGRIEVED WITH THE ABOVE ORDER, THE REVENUE FILE D APPEAL BEFORE THIS TRIBUNAL FOR DELETION OF ADDITION WHEREAS THE ASSE SSEE FILED CROSS OBJECTION IN RESPECT OF UPHOLDING OF ADDITION MADE BY THE ASSESSING OFFICER. 8. AT THE OUTSET, THE LD DR SUBMITTED THAT LD CIT(A) HAS RELIED UPON ITAT ORDER FOR ASSESSMENT YEAR 2006-07 AND HAS NOT GONE INTO THE MERIT OF ADDITION. IN THIS RESPECT PARA OF ASSESSMENT ORD ER WAS READ AND IT WAS BROUGHT TO THE NOTICE THAT BEFORE INCURRI NG OF EXPENDITURE IN JANUARY, 2006 THE ASSESSEE HAD GENERATED PART INCOME VI DE INVOICES RAISED IN THE MONTH OF APRIL, 2005. THEREFORE, THE E XPENDITURE HAD NO NEXUS WITH THE INCOME GENERATED. 9. THE LD AR, ON THE OTHER, ARGUED THAT AGREEMENT W AS MADE IN JANUARY, 2006 AND IT WAS THE SAME AGREEMENT ON WHICH LD CIT(A) HAS RELIED ON THE BASIS OF ITAT ORDER IN THE PRECEDING YE AR. IN VIEW OF THIS LD AR ARGUED THAT LD CIT(A) HAD RIGHTLY DELETED THE ADDITION. 10. IN RESPECT OF CROSS OBJECTION FILED BY THE ASSESSEE, THE LD AR SUBMITTED THAT THERE WAS NO EVIDENCE BEFORE THE ASSESSING OFFICER TO CLAIM THAT EXPENDITURE WAS A BOGUS EXPENDITURE. HE FU RTHER ARGUED THAT SERVICES OF M/S ASP WAS HIRED AS THE ASSESSEE HAD NOT REQUISITE TRAINED EMPLOYEES IN THIS RESPECT. MOREOVER, HE ARGUE D THAT ASSESSING OFFICER HIMSELF HAS STATED IN THE ASSESSMENT ORDER THAT EM PLOYEES OF THE ASSESSEE WERE DOING JOB OF CLERICAL NATURE AND HAD NO EXPERT PEOPLE. THEREFORE, IN VIEW OF THIS HE ARGUED THAT HI RING BY THE ASSESSEE WAS JUSTIFIED. HE FURTHER ARGUED THAT LD CIT(A) HAD I GNORED THE DOCUMENTS WHICH WERE FILED AS ADDITIONAL DOCUMENTS. 11. THE LD DR, ON THE OTHER HAND, ARGUED THAT GENUI NENESS OF EXPENSES WAS NOT PROVED AND IN THIS RESPECT PARA 4.1. T O 4.3. OF LD CIT(A)S ORDER WAS READ. IN VIEW OF THIS, THE LD DR ARGUED THAT DISALLOWANCE OF EXPENSES WAS RIGHTLY CONFIRMED. ITA NO4540 & CO.367/DEL/2012 8 12. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PA RTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FIRST ISSUE OF ` .30,91,500/- IS SQUARELY COVERED IN FAVOUR OF ASSESSEE. THE HON'BLE ITAT IN THE PRECEDING YEAR ON THE BASIS O F SAME AGREEMENT HAD ALLOWED THE EXPENDITURE OF ` .10,30,500/- WHICH WAS FOR THE PERIOD FROM JANUARY, 2006 TO MARCH, 2006. THE R ELEVANT PARA OF TRIBUNAL FROM LD CIT(A)S ORDER IS EXTRACTED AS BELOW: - IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT ON 3 RD DAY OF JANUARY, 2006 WITH M/S DERPOL INVESTMENT LTD. UNDER WHICH M/S DERPOL HAD TO PROVIDE TECHNICAL ADVISORY SERVICES AND ASSISTANCE FOR THE DESIGN ING AND DEVELOPMENT OF THE SOFTWARE PRODUCT OF THE ASSESSEE COMP ANY. THE LUMP SUM CONSIDERATION FOR A PERIOD OF ONE YEAR W AS FIXED AT ` .41,22,000/-. THE AGREEMENT WAS TO BE ENFORCED FOR A PERIOD OF 12 MONTHS UNLESS TERMINATED EARLIER IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN THE AGREEMENT. IT IS NOBODYS CASE THAT THE AGREEMENT WAS TERMINATED AT A TIME EARLIER THAN THE EXPIRY OF 12 MONTHS FROM THE DATE OF THE AGREEMENT. IT IS AL SO NOT IN DISPUTE THAT THE ASSESSEE AVAILED THE TECHNICAL ADVISOR Y SERVICES AND ASSISTANCE FROM M/S DERPOL SINCE THE MONTH OF JANUAR Y 2006. THE ASSESSEE HAS CLAIMED PROPORTIONATE CHARGES PERTAINING TO THE PERIOD FORM JANUARY, 2006 TO MARC H, 2006 AMOUNTING TO ` .10,30,500/- IN THE YEAR UNDER CONSIDERATION. FROM THE AGREEMENT AND THE NATURE OF THE SERVICES PROVIDED BY M/S DERPOL INVESTMENT LTD. IT IS NOT AT ALL ESTABLISHED THA T THE ASSESSEE HAD ACQUIRED ANY ASSET OF CAPITAL IN NATURE. THE ASSESSING OFFICER HAS ALLEGED THAT THE EXPENSES INCURRED B Y THE ASSESSEE COMPANY ARE OF ENDURING NATURE BUT HE HAS FAIL ED TO POINT OUT AS TO HOW AND IN WHAT MANNER, THE EXPENSES I NCURRED ITA NO4540 & CO.367/DEL/2012 9 BY THE ASSESSEE FOR AVAILING THE SERVICES OF M/S DERPOL CA N SAID TO BE OF ENDURING IN NATURE. IT IS AN ADMITTED POSITI ON THAT THE ASSESSEE COMPANY IS THROUGH OUT THE YEAR ENGAGED IN THE BUSINESS OF RENDERING SOFTWARE SERVICES TO ITS CLIENTS. SIN CE NO CAPITAL ASSETS WAS ACQUIRED NOR ANY BENEFIT OF ENDURING NATURE SO AS TO TREAT THE EXPENDITURE AS OF CAPITAL IN NATURE H AS BEEN ACQUIRED BY THE ASSESSEE AND SINCE ASSESSEE HAS AVAILED THE SERVICES OF M/S DERPOL IN THE COURSE OF CARRYING ON ITS BUSINESS OF SOFTWARE DEVELOPMENT AND DEPLOYMENT AND THE PAYME NT IS RELATED TO THE SERVICES RENDERED DURING THE PERIOD FR OM JANUARY, 2006 TO MARCH, 2006. WE ARE OF THE CONSIDERED VIEW T HAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS TO BE ALLOWED AS REVENUE EXPENDITURE IRRESPECTIVE OF THE FACT WHETHER ANY REV ENUE HAS BEEN GENERATED FROM THOSE SERVICES OR NOT WHEN PARTICU LARLY, THE EXPENDITURE HAS INCURRED WHOLLY AND EXCLUSIVELY FOR T HE PURPOSE OF ASSESSEES BUSINESS OF SOFTWARE DEVELOPMENT AND DEPLOYMENT. WE ARE, THEREFORE, IN FULL AGREEMENT WI TH LD CIT(A) IN HOLDING THAT THE EXPENSES CLAIMED BY THE ASSESSEE ARE OF REVENUE IN NATURE AND ARE, THUS TO BE ALLOWED AS REVE NUE DEDUCTION. THE ORDER OF LD CIT(A) IS THUS UPHELD. THE LD CIT(A) HAS JUST FOLLOWED THE ITAT ORDER IN EAR LIER YEAR RELATING TO THE SAME ISSUE. 13. IN VIEW OF THE ABOVE, WE DO NOT SEE ANY INFIRMIT Y IN THE ORDER OF LD CIT(A) AS REGARDS THE ADDITION OF ` .30,91,500/-. 14. WITH REGARDS TO CONFIRMATION OF DISALLOWANCE OF ` .16,39,833/- ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES,. WE HOLD TH AT LD CIT(A) HAS ELABORATELY DEALT WITH THE ISSUE AND FINDINGS OF LD CI T(A) ARE PART OF THIS ORDER. THE LD AR DID NOT BRING ANY FRESH MATERIA L IN SUPPORT OF THE ITA NO4540 & CO.367/DEL/2012 10 EXPENSES CLAIMED. THEREFORE, WE DO NOT SEE ANY INFIRMI TY IN THE ORDER OF LD CIT(A). 15. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE R EVENUE AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. 16. ORDER PRONOUNCED IN THE OPEN COURT ON 5TH DAY O F APRIL, 2013. SD/- SD/- (U.B.S. BEDI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.05.4.2013. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING DATE OF DICTATION 2.4.2013 DATE OF TYPING 2.4.2013 DATE OF ORDER SIGNED BY 5.4.2013 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET NET NOT WORKING. & SENT TO THE BENCH CONCERNED.