DCIT, Bangalore V. M/s Toyota Kirloskar Auto Parts Limited, Bangalore

ITA 1029/BANG/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7038 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-08-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 04-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEERA MALHOTRA II BENGALURU
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Depreciation; Transfer pricing; International transaction; Competent authority; Revenue expenditure; Capital expenditure
• Section: 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER IT (TP) A NO. 1024/BANG/2014 ASSESSMENT YEAR : 2005 - 06 TOYOTA KIRLOSKAR AUTO PARTS PRIVATE LTD., PLOT NO.21, BIDADI INDUSTRIAL AREA, RAMANAGAR DISTRICT, BANGALORE 562 109. PAN: AABCT 5590Q VS. THE DEPUTY COMMISSIONER OF INCOME TAX, LTU, BANGALORE. APP ELLANT RESPONDENT IT(TP)A NO. 1029/BANG/2014 ASSESSMENT YEAR : 2005 - 06 THE DEPUTY COMMISSIONER OF INCOME TAX, LTU, BANGALORE. VS. TOYOTA KIRLOSKAR AUTO PARTS PRIVATE LTD., PLOT NO.21, BIDADI INDUSTRIAL AREA, RAMANAGAR DISTRICT, BANGALORE 562 109. PAN: AABCT 5590Q APPELLANT RESPONDENT ASSESSEE BY : SHRI K. R. VASUDEVAN, ADVOCATE REVENUE BY : MS. NEERA MALHOTRA, CIT(DR)(ITAT) - II, BENGALURU DATE OF HEARING : 12.12.2017 DATE OF PRONOUNCEMENT : 2 2 .12.2017 IT(TP)A NOS.1024 & 1029/BANG/2014 PAGE 2 OF 10 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THESE ARE CROSS APPEALS BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF THE CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- IT(TP)A NO.1024/BANG/2014 (ASSESSEES APPEAL) I. TRANSFER PRICING ADJUSTMENT THE GROUNDS HEREINAFTER TAKEN BY THE APPELLANT ARE WITHOUT PREJUDICE TO ONE ANOTHER. GENERAL GROUNDS 1. THE LEARNED ASSESSING OFFICER ('AO'), THE LEARNE D ADDITIONAL COMMISSIONER OF INCOME TAX (LTU), BANGAL ORE ('TRANSFER PRICING OFFICER' OR 'TPO') AND THE HONOR ABLE COMMISSIONER OF INCOME TAX (APPEALS) ('HON'BLE CIT (A)') HAVE ERRED IN LAW AND FACTS OF THE CASE IN PROPOSIN G A TRANSFER PRICING ADJUSTMENT UNDER SECTION 92CA OF THE INCOME -TAX ACT, 1961 ('THE ACT') IN RELATION TO THE APPELLANT'S INT ERNATIONAL TRANSACTIONS WITH ASSOCIATED ENTERPRISES ('AES'). 2. THE LEARNED AO, TPO AND THE HON'BLE CIT (A) ERRE D IN REJECTING THE TRANSFER PRICING (`TP') DOCUMENTATION MAINTAINED BY THE APPELLANT IN ACCORDANCE WITH PROVISIONS OF T HE INCOME-TAX ACT, 1961 ('THE ACT') READ WITH INCOME-TAX RULES, 1 962 ('THE RULES'). 3. THE LEARNED AO, TPO AND THE HON'BLE CIT (A) ERRE D IN REJECTING THE USE OF MULTIPLE YEAR DATA BY THE APPE LLANT IN THE TRANSFER PRICING DOCUMENTATION AND INSISTING THAT O NLY CURRENT YEAR FINANCIAL DATA (I.E. FINANCIAL YEAR ENDING 31S T MARCH 2005) SHOULD BE USED FOR CONDUCTING COMPARABILITY ANALYSI S. IT(TP)A NOS.1024 & 1029/BANG/2014 PAGE 3 OF 10 OTHER SPECIFIC GROUNDS 4. THE LEARNED AO, TPO AND THE HON'BLE CIT (A) ERRE D IN NOT APPRECIATING THAT THE LOSSES INCURRED BY THE AP PELLANT WERE DUE TO THE INITIAL STAGE OF OPERATIONS OF THE APPEL LANT AND THAT FUTURE PROJECTIONS CAN BE CONSIDERED TO ESTABLISH T HE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS OF THE APPE LLANT. 5. THE LEARNED AO, TPO AND THE HON'BLE CIT (A) HAVE ERRED IN NOT APPRECIATING THE INTERNAL COMPARABLE UNCONTR OLLED TRANSACTION ANALYSIS PROVIDED BY THE APPELLANT AS A SUPPLEMENTARY ANALYSIS TO DEMONSTRATE THE ARM'S LEN GTH NATURE OF THE INTERNATIONAL TRANSACTION PERTAINING TO PAYMENT OF TECHNICAL ASSISTANCE FEES AND WHILE DOING SO ERRED IN: I. DISREGARDING THE SIMILAR AGREEMENT FOR TRANSACTI ONS BETWEEN TOYOTA MOTOR CORPORATION AND KIRLOSKAR SYSTEMS LIMI TED, WHEN THE AFORESAID PARTIES WERE UNRELATED PARTIES; II. STATING THAT THE APPELLANT HAS NOT DERIVED ANY ECONOMIC BENEFITS FROM OBTAINING THE TECHNICAL ASSISTANCE SE RVICES; AND III. NOT APPRECIATING THAT THE PAYMENT OF TECHNICA L ASSISTANCE FEE HAS BEEN CONCLUDED TO BE AT ARM'S LENGTH BASED ON T HE SIMILAR FACTS AND EVIDENCES IN THE. APPELLANT'S OWN CASE FOR OTHER ASSESSMENT YEARS. 6. THE LEARNED AO, TPO AND THE HON'BLE CIT (A) ERR ED IN REJECTING M/S HANG CRANSKSHAFTS LTD. AS A COMPARABL E COMPANY. 7. THE LEARNED AO, TPO AND THE HON'BLE CIT (A) OUGH T TO HAVE COMPUTED THE OPERATING MARGIN OF THE COMPARABL E COMPANIES BASED ON THE ANNUAL REPORTS WHICH ARE AVA ILABLE IN THE PUBLIC DOMAIN. 8. THE LEARNED AO, TPO AND THE HON'BLE CIT (A) ERRE D IN NOT APPRECIATING THAT THE TECHNICAL KNOWLEDGE IS VE RY ESSENTIAL TO THE PRODUCTS MANUFACTURED WHICH IS ONLY AVAILABLE W ITH THE AE OF THE APPELLANT AND THEREFORE, THE ROYALTY PAYMENT PR OVIDE ACCESS TO THE TECHNICAL KNOW-HOW AND PATENTS OWNED BY THE AE, AND THEREBY ERRED IN CONCLUDING THAT THE APPELLANT HAS NOT DERIVED ANY ECONOMIC BENEFITS. IT(TP)A NOS.1024 & 1029/BANG/2014 PAGE 4 OF 10 II. CORPORATE TAX DISALLOWANCE OF PROVISION FOR WARRANTY: 9. THE LEARNED AO AND THE HON'BLE CIT (A) ERRED IN DISALLOWING THE PROVISION MADE FOR WARRANTY AMOUNTI NG TO RS 37,17,556/- ON THE GROUND THAT THE SAME IS IN THE N ATURE OF A CONTINGENT LIABILITY. 10. THE LEARNED AO AND THE HON'BLE CIT (A) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAS WORKED OUT THE L IABILITY AS PER PROPER METHODOLOGY, ON ACCOUNT OF FREE MAINTENANCE AND REPLACEMENT OF PARTS DURING THE WARRANTY PERIOD AND CLAIMED THE SAME AS A REVENUE EXPENDITURE ALLOWABLE UNDER SECTI ON 37 (1) OF THE INCOME TAX ACT, 1961 (THE ACT). 11. THE LEARNED AO AND THE HON'BLE CIT (A) ERRED IN CONCLUDING THAT THE APPELLANT IS PROVIDING FOR WARR ANTY ON AN ADHOC BASIS AND NOT ON SCIENTIFIC METHOD. 12. THE LEARNED AO AND THE HON'BLE CIT (A) ERRED IN DISALLOWING THE WARRANTY EXPENSES WITHOUT CONSIDERI NG THE DETAILS SUBMISSION MADE BY THE APPELLANT WITH REGARD TO COM PUTATION OF WARRANTY PROVISION, UTILIZATION OF THE PROVISION AN D REVERSAL OF EXCESS PROVISION. 13. THE LEARNED AO AND THE HON'BLE CIT (A) HAS ERRE D IN NOT PLACING RELIANCE ON THE DECISION OF THE HON'BLE SUP REME COURT IN THE CASE OF ROTORK CONTROLS INDIA (P) LTD VS COMMIS SIONER OF INCOME TAX (SC) [2009] (180 TAXMANN 422.) DISALLOWANCE OF ALLOCATION OF OVERHEAD FOR WORK-IN- PROGRESS VALUATION: 14. THE LEARNED AO AND THE HON'BLE CIT (A) ERRED IN DISALLOWING OVERHEAD EXPENSES OF RS. 72,84,000/- 15. THE LEARNED AO AND THE HON'BLE CIT (A) OUGHT TO HAVE APPRECIATED THAT THE TREATMENT ADOPTED BY THE APPEL LANT IS CONSISTENT AND THE IMPACT OF THE OVERHEAD ALLOCATIO N TO THE CLOSING WORK-IN-PROGRESS VIS-A-VIS THE OPENING WORK -IN-PROGRESS WOULD STAND NULLIFIED OVER A PERIOD OF TUNE RESULTI NG ONLY IN A TIMING DIFFERENCE. IT(TP)A NOS.1024 & 1029/BANG/2014 PAGE 5 OF 10 16. THE LEARNED AO AND THE HON'BLE CIT (A) OUGHT TO HAVE CONSIDERED THE CONSEQUENTIAL IMPACT OF THE SAID DIS ALLOWANCE IN THE SUBSEQUENT YEARS. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AND MODIFY THE ABOVE GROUNDS DURING THE COURSE OF THE APPEAL. FOR THE ABOVE AND ANY OTHER GROUNDS WHICH MAY BE RA ISED AT THE TIME OF HEARING, IT IS PRAYED THAT NECESSARY RE LIEF MAY BE PROVIDED. IT(TP)A NO.1029/BANG/2014 (REVENUES APPEAL) 1. THE ORDER OF LD CIT(A) IS OPPOSED TO LAW AND F ACTS OF THE CASE. 2. THE LD. CIT(A) HAS ERRED IN ALLOWING THE ASSESSE E APPEAL TREATING EXPENDITURE ON LICENSE FEE PAID FOR PURCHA SE OF MS WINDOWS AND ORACLE INTERNET DEVELOPER SUITE AS REVE NUE IN NATURE. 3. THE LD. CIT(A) HAS ERRED IN DIRECTING THE TPO TO RESTRICT THE TP ADJUSTMENTS TO ONLY INTERNATIONAL TRANSACTIO NS. THE ENTIRE SALES MADE BY THE TAX PAYER IS TO UNRELA TED PARTIES AND THE INTERNATIONAL TRANSACTIONS TO BE BENCH MARKED F OR SITTING IN THE COST. THE TPO THEREFORE CALCULATED THE ADJUSTED COS T TO UNRELATED PARTIES AND ARRIVED AT THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS. TO ARRIVE AT THE TP ADJUSTMENTS THE T PO HAS AGGREGATED ALIT HE TRANSACTIONS FOR THE PURPOSE OF DETERMINING 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE HAS CONTENDED THAT WITH REGARD TO THE GROUNDS RAISED ON TRANSFER PRICING INCOME ADJUSTMENT OF RS.12,48,82,887, THE ASSESSEE HAS REC EIVED A MAP RESOLUTION FOR THE AY 2005-06 BETWEEN THE INDIAN CO MPETENT AUTHORITY AND THE JAPANESE COMPETENT AUTHORITY UNDER ARTICLE 25 O F THE INDO-JAPAN DOUBLE TAXATION AVOIDANCE CONVENTION R.W.S. 90 OF T HE INDIAN INCOME TAX IT(TP)A NOS.1024 & 1029/BANG/2014 PAGE 6 OF 10 ACT, 1961. IN THE LIGHT OF THE ACCEPTANCE OF MAP R ESOLUTION VIDE LETTER 30.09.2015, THE ASSESSEE INTENDS TO WITHDRAW THE AP PEAL IN RELATION TO TRANSFER PRICING GROUNDS. THIS FACTUAL ASPECT WAS NOT DISPUTED BY THE REVENUE. ACCORDINGLY, GROUND NOS. 1 TO 8 RELATING TO THE TRANSFER PRICING ISSUES IN THE ASSESSEES APPEAL ARE DISMISSED BEING INFRUCTUOUS. 3. SIMILAR IS THE POSITION IN THE REVENUES APPEAL WITH REGARD TO GROUND NO.3 RELATING TO THE TP ISSUES. ACCORDINGLY, GROUN D NO.3 OF THE REVENUES APPEAL IS ALSO DISMISSED BEING NOT PRESSED. 4. ON THE CORPORATE ISSUES, TWO GROUNDS WERE RAISED BY THE ASSESSEE IN ITS APPEAL. ONE IS WITH REGARD TO DISALLOWANCE OF PROVISION FOR WARRANTY AND THE OTHER IS WITH REGARD TO DISALLOWANCE OF ALL OCATION OF OVERHEAD FOR WORK-IN-PROGRESS (WIP) VALUATION. WITH REGARD TO GROUND NOS. 9 TO 13 RELATING TO DISALLOWANCE OF PROVISION FOR WARRANTY, IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THIS GROUND IS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AYS 2003-04 TO 2006-07. COPY OF THE ORDER IS PLACED ON RECORD. ON A CAREFUL PERUSA L OF THE ORDER OF THE TRIBUNAL, WE FIND THAT THIS ISSUE WAS EXAMINED BY T HE TRIBUNAL AND WAS DECIDED AGAINST THE ASSESSEE. THE RELEVANT OBSERVAT IONS OF THE TRIBUNAL ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 9. REGARDING GROUND NO.2B IN RESPECT OF DISALLOWA NCE OF PROVISION FOR WARRANTY, WE FIND THAT IT IS NOTED BY THE AO ON PAGE-4 OF THE ASSESSMENT ORDER THAT THE ASSESSEE IS MAKING PROVISIONS FOR WARRANTY ON AD HOC BASIS. AS PER T HE DETAILS REGARDING PROVISION FOR WARRANTY AVAILABLE ON PAGE- 77 OF THE PAPER BOOK, IT IS SEEN THAT DURING THE PRESENT YEAR I.E. ASSESSMENT YEAR 2003-04, THE ASSESSEE HAS MADE PROVISION FOR R S.30,65,924 AND OPENING BALANCE WAS RS.69,15,441/- AND THE AMOU NT UTILIZED IN PRESENT YEAR WAS ONLY RS.30,65,924/- AND IN THE NEXT YEAR, THE ASSESSEE HAS REVERSED PROVISION OF RS.69,15,440/- A LTHOUGH, THE ASSESSEE MADE FURTHER PROVISION IN THAT YEAR OF RS .69,15,440/- AND THEREAFTER IN ASSESSMENT YEAR 2005-06, THE ASSE SSEE AGAIN IT(TP)A NOS.1024 & 1029/BANG/2014 PAGE 7 OF 10 REVERSED THE PROVISION OF RS.47,75,036/- ALTHOUGH M ADE FURTHER PROVISION OF RS.84,92,591/- IN THAT YEAR. IN ASSESS MENT YEAR 2006- 07, THERE IS OPENING BALANCE OF RS.1,09,40,410/- AN D THE ASSESSEE MADE FURTHER PROVISION OF RS.1,80,26,928/- BUT UTIL IZATION IN THAT YEAR WAS ALSO VERY SMALL AMOUNT OF RS.15,83,971/- L EADING TO CLOSING BALANCE OF 2,73,83,367/-. THE ASSESSEE HAD NOT INDICATED ANY SCIENTIFIC BASIS FOR MAKING THE PROVISION FOR W ARRANTY EXPENSES. IN THE NOTES ON ARGUMENTS, THE ASSESSEE SAYS THAT THE ASSESSEE CREATING PROVISION OF 0.5% OF THE SALES MA DE DURING THE YEAR WHICH IS BASED ON PAST EXPERIENCE BUT IN VIEW OF THE FACTS NOTED ABOVE FROM PAGE-77 OF THE PAPER BOOK, WE FIND THAT THE TRACK REPORT OF ACTUAL WARRANTY EXPENSES IS VERY SM ALL AS AGAINST THE PROVISION MADE BY THE ASSESSEE. DURING THE ASS ESSMENT YEAR 2001-02 TO 2006-07, THE ACTUAL EXPENSES WAS OF RS.3 6,49,795/- IN AY: 2002-03, RS.32,99,225/- IN AY: 2003-04, RS. 30, 65,924/- IN AY: 2006-07 AND EVEN AFTER REVERSAL OF RS.7,96,311/ - IN AY: 2003-04, RS. 69,15,440/- IN AY: 2004-05, IN AY: 200 5-06, THERE IS CLOSING BALANCE ON RS.2,73,83,367/- ON 31-03-20 06. IN VIEW OF THESE FACTS, THIS IS APPARENT THAT THE PROVISION FOR WARRANTY MADE BY THE ASSESSEE IS ARBITRARY AND THE SAME IS A KIN TO CREATING OF CONTINGENT LIABILITY ONLY AND THEREFORE, THIS CL AIM IS NOT ALLOWABLE IN VIEW OF THE FACTS OF THE PRESENT CASE. REGARDING VARIOUS JUDGMENTS ON WHICH RELIANCE HAS BEEN PLACED BY THE LD. AR OF THE ASSESSEE, THE ASSESSEE DOES NOT GET ANY H ELP FROM THESE JUDGMENTS. IN THE CASE OF M/S LENOVO (IND.)PVT. LT D. VS ACIT 140 ITD 127(BLORE), IT WAS HELD BY THE TRIBUNAL TH AT IF THE ASSESSEE HAS MADE PROVISION ON SCIENTIFIC BASIS, IT HAS TO BE ALLOWED AS DEDUCTION BUT SINCE IN THE PRESENT CASE, THE PROVISION IS NOT MADE ON SCIENTIFIC BASIS, THE SAME IS NOT AL LOWABLE. 10. THE SECOND JUDGMENT CITED IN THE JUDGMENTS IS OF THE HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CIT VS DENSO KIRLOSKAR (2013) 34 TAXMAN.COM 238 (KAR.HC). IN THIS CASE, THE HONBLE KARNATAKA HIGH COURT HAS RESTORE D BACK THE MATTER TO THE FILE OF THE AO FOR FRESH DECISION IN THE LIGHT OF THE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF M/S ROTORK CONTROLS INDIA (P)LTD. VS CIT AS REPORTED I N 314 ITR 62(SC)(2009). IN THIS CASE, IT WAS HELD THAT IF LA RGE NUMBER OF SOPHISTICATED GOODS WERE BEING MANUFACTURED AND DEF ECTS EXISTED IN SOME OF THE ITEMS MANUFACTURED AND SOLD, THEN PR OVISION MADE BY THE ASSESSEE FOR WARRANTY CLAIM ON THE BASIS OF PAST IT(TP)A NOS.1024 & 1029/BANG/2014 PAGE 8 OF 10 EXPERIENCE IS ALLOWABLE AS DEDUCTION U/S 37(1) OF T HE ACT, 1961. HENCE, AS PER RATIO OF THIS JUDGMENT, IF THE PROVIS ION FOR WARRANTY IS ON THE BASIS OF PAST EXPERIENCE THEN IT IS ALLOW ABLE. IN THE PRESENT CASE, THE FACTS DO NOT SUGGEST SO. IN AY: 2001-02, PROVISION WAS MADE OF RS.36,49,795/- AND AS AGAINST THIS, IN AY: 2002-03 THE AMOUNT OF RS.33,579/- ONLY WAS USED AND FURTHER PROVISION WAS MADE IN AY: 2002-03 OF RS.32,99,225/- . IN THE PRESENT YEAR, AMOUNT UTILIZED IS RS.34,910/- AND FU RTHER PROVISION IS MADE OF RS.30,65,924/- AND AMOUNT REVERSED IS RS .7,96,311/-. IN AY: 200-405, THERE IS NO UTILIZATION. HENCE, I T IS SEEN THAT IN THE PRESENT YEAR, THE PAST AND FUTURE EXPERIENCE DO ES NOT SUPPORT THE CLAIM OF ASSESSEE REGARDING CREATING OF PROVISI ON OF RS.30,65,924/- OUT OF WHICH THE ASSESSEE REVERSED A N AMOUNT OF RS.7,96,311/- AND CLAIMED DEDUCTION OF THE DIFFERE NCE IN THESE TWO AMOUNTS OF RS.23.23 LAKHS. HENCE, NONE OF THE J UDGMENTS CITED BY THE LD. AR OF THE ASSESSEE IS OF ANY HELP TO THE ASSESSEE IN THIS CASE AND THEREFORE, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. HENCE, GROUN D NO.2B IS REJECTED. 5. SINCE THE TRIBUNAL HAS TAKEN A PARTICULAR VIEW IN A SIMILAR SET OF FACTS, WE FIND NO JUSTIFICATION TO TAKE A CONTRARY VIEW IN THIS APPEAL. ACCORDINGLY, FOLLOWING THE SAME, WE DECIDE THE ISSU E AGAINST THE ASSESSEE. 6. SO FAR AS GROUND NOS.14 TO 16 RELATING TO DISALL OWANCE OF ALLOCATION OF OVERHEAD FOR WIP VALUATION IS CONCERNED, THIS GR OUND WAS ALSO ADJUDICATED BY THE TRIBUNAL IN SAME ORDER. THIS GR OUND WAS NOT PRESSED BY THE ASSESSEE IN THOSE ASSESSMENT YEARS IN VIEW OF T HE MAP RESOLUTION AND ACCORDINGLY THE TRIBUNAL HAS REJECTED THIS GROUND. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE EXTRACTED HEREUNDE R FOR THE SAKE OF REFERENCE:- 14. REGARDING GROUND NO.1 TO 6 IN RESPECT OF DISA LLOWANCE OF ALLOCATION OF WORK IN PROGRESS, HE SUBMITTED THA T THERE IS NO MERIT IN THIS ISSUE BUT THE AO SHOULD FOLLOW THE SA ME PRACTICE IN SUCCEEDING YEARS ALSO. IT(TP)A NOS.1024 & 1029/BANG/2014 PAGE 9 OF 10 15. THE LD. DR OF THE REVENUE SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. GROU ND NO.1 AND ADDITIONAL GROUNDS ARE REJECTED AS NOT PRE SSED, IN VIEW OF MAP RESOLUTION AND SUBMISSIONS OF THE LD. AR OF THE ASSESSEE. 17. GROUND NO.7 IS REJECTED AS NOT PRESSED. 7. SINCE THE ASSESSEE HAS NOT PRESSED THIS GROUND I N THE EARLIER YEARS, IT WAS DECIDED AGAINST THE ASSESSEE. WE FIND NO ME RIT IN THIS GROUND. ACCORDINGLY, WE DISMISS THIS GROUND OF THE ASSESSEE . 8. SO FAR AS GROUND NO.2 IN THE REVENUES APPEAL IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE HAS CANDIDLY ADMITTED THAT HE HAS NO OBJECTION IF THE SOFTWARE EXPENSES ARE TO BE TREATED AS CAPITAL EXPENDITURE AND DEPRECIATION IS ALLOWED THEREON. IN THE LIGHT OF T HIS ARGUMENT OF THE ASSESSEE, WE SET ASIDE THE ORDER OF THE CIT(APPEALS ) AND RESTORE THE ORDER OF THE AO IN THIS REGARD. 9. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D, WHILE THE REVENUES APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF DECEMBER, 2017. SD/- SD/- ( INTURI RAMA RAO ) ( SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 22 ND DECEMBER, 2017. / D ESAI S MURTHY / IT(TP)A NOS.1024 & 1029/BANG/2014 PAGE 10 OF 10 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.