AI Insights
The case involves the Department of Income Tax (Appellant) contesting the decision of the CIT(A) which allowed M/s Experian Credit Information Company of India Pvt. Ltd. (Respondent) to treat a significant technology cost as revenue expenditure rather than capital expenditure. The Assessing Officer had initially treated this expenditure as capital, allowing depreciation but disallowing the full deduction claimed. The CIT(A) reversed this decision based on previous Tribunal decisions favoring the respondent for similar expenditures in earlier assessment years. The Tribunal's decision in this case reaffirmed the CIT(A)'s decision, emphasizing the nature of the expenditure as recurring and not resulting in the creation of a new asset or enduring benefit.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 123447 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-06-2023
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
E
Next Hearing Date
20-06-2023
Assessment Year
2018-2019
Appeal Filed On
09-04-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI NARENDER KUMAR CHOUDHRY (JUDICIAL MEMBER) ITA No. 1146/MUM/2023 Assessment Year: 2018-19 DCIT, Circle-14(1)(2), Room No. 455, 4 th floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. M/s Experian Credit Information Company of India Pvt. Ltd., 5 th floor, East Wing, Tower 3 Equinox business Park, LBS Marg Kurla West Mumbai-400070. PAN No. AABCE 6822 A Appellant Respondent Assessee by : None Revenue by : Mr. B.K. Bagchi, DR Date of Hearing : 21/06/2023 Date of pronouncement : 22/06/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 07.02.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018-19 raising following grounds: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in allowing technology cost to the extent of Rs.6,45,73,278/- as revenue expenditure ignoring the fact that the assessee had incurred to set up technology and platform which would help him in conducting the business in the future. 2. The appellant prays that above ground be set aside and that of the Assessing Officer be restored. 2. At the outset, regarding the delay of two days in filing the appeal, the Ld. Departmental Representative (DR) submitted that due to holiday on 08 subsequent date i.e. 10 admitted in view of G Section 10 in The General Clauses Act, 1897 10 Computation of time. (1) Where, by any commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a period, then, if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court or office is open: Provided that nothing in this section shall apply to any act or proceeding to which the Indian Limitation Act, 1877 (15 of 1877) (2) This section applies also to all or after the fourteenth day of January, 1887. 2.1 In the view of the submission of the Ld. in filing the appeal and accordingly the 2.2 We further note that despite notifying for the anyone attended on behalf of the assessee nor any adjournment was sought, therefore after hearing the arguments of the Ld. DR. M/s Experian Credit Information Company of India platform which would help him in conducting the business in the future. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. At the outset, regarding the delay of two days in filing the appeal, the Ld. Departmental Representative (DR) submitted that due to holiday on 08 th and 9 th April, the appeal has been filed on subsequent date i.e. 10 th April and therefore, appeal might be General clauses Act, which prescribe as under: Section 10 in The General Clauses Act, 1897 10 Computation of time. Where, by any 19 [Central Act] or Regulation made after the commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a period, then, if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court ffice is open: Provided that nothing in this section shall apply to any act or proceeding to which the Indian Limitation Act, 1877 (15 of 1877) This section applies also to all 19 [Central Acts] and Regulations made on or after the fourteenth day of January, 1887. In the view of the submission of the Ld. DR, there is no delay in filing the appeal and accordingly the appeal is admitted. further note that despite notifying for the anyone attended on behalf of the assessee nor any adjournment therefore the appeal is heard ex-parte qua the assessee after hearing the arguments of the Ld. DR. M/s Experian Credit Information Company of India Pvt. Ltd. 2 ITA No. 1146/Mum/2023 platform which would help him in conducting the the order of CIT(A) on the above ground be set aside and that of the Assessing At the outset, regarding the delay of two days in filing the appeal, the Ld. Departmental Representative (DR) submitted that April, the appeal has been filed on April and therefore, appeal might be , which prescribe as under: [Central Act] or Regulation made after the commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, then, if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court ffice is open: Provided that nothing in this section shall apply to any act or proceeding to which the Indian Limitation Act, 1877 (15 of 1877) 20 , applies. l Acts] and Regulations made on DR, there is no delay appeal is admitted. hearing neither anyone attended on behalf of the assessee nor any adjournment parte qua the assessee 3. Briefly stated, facts of the case are that in the assessment completed u/s 143(3) r.w.s. 143(3 Assessing Officer made various disallowance including disallowance of technology cost of Rs.6,45,73,278/ 3.1 However, the Ld. CIT(A) deleted the addition following the finding of the Tribuna The relevant finding of the “9. Ground of Appeal No. 2 Rs.16,44,33,196/ of Rs.6,45,73,278/ Appellant debited Rs. 16,44,33, 196/ as'Technology Cost' whose details are assessment order. AO held this as capital expenditure and disallowed the same after allowing depreciation @ 60% due to following reasons. Benefit of this cost benefits for long period of time. Hence, after allowing depreciation of Rs AO made disallowance of Rs. 6,45,73,2781 in Nature". b)Appellant contended that identical issue of holding TechnologyCost as Capital Expenditure was decided in favour of Appellant by CIT(A)'s in cases of Appellant fr AY 2017-18. The details of orders of CIT(A) 's in cases of Appellant is as under: AY Date of Order 2011-12 14 October 2016 2012-13 4 May 2018 2013-14 4 May 2018 2014-15 4 May 2018 2017-18 29 April 2022 M/s Experian Credit Information Company of India Briefly stated, facts of the case are that in the assessment ompleted u/s 143(3) r.w.s. 143(3A) and 143(3B) of the Act, the Assessing Officer made various disallowance including disallowance of technology cost of Rs.6,45,73,278/-. However, the Ld. CIT(A) deleted the addition following the finding of the Tribunal in earlier years in the case of the assessee. The relevant finding of the ld CIT(A) is reproduced as under: Ground of Appeal No. 2 – Holding Technology cost of Rs.16,44,33,196/- as capital expenditure and making addition of Rs.6,45,73,278/- after allowing depreciation. Appellant debited Rs. 16,44,33, 196/- in P & L Account as'Technology Cost' whose details are tabulated in para 4 of assessment order. AO held this as capital expenditure and disallowed the same after allowing depreciation @ 60% due to following reasons. Benefit of this cost benefits for long period of time. Hence, after allowing depreciation of Rs. 9,68,59,918 the AO made disallowance of Rs. 6,45,73,2781-holding it a "Capital b)Appellant contended that identical issue of holding TechnologyCost as Capital Expenditure was decided in favour of Appellant by CIT(A)'s in cases of Appellant from AY 2011 18. The details of orders of CIT(A) 's in cases of Appellant is as under:- Date of Order Appeal No. Reference to relevant para 14 October 2016 CIT(A)-8/IT-594/14-15 Para 5.3.1 to 5.3.2 on page 54-55 4 May 2018 CIT(A) 22, Mumbai/10268/2016-17 Para 5.4 on page 16 4 May 2018 CIT(A) 22, Mumbai/210281/2016-17 Para 5.4 on page 17 4 May 2018 CIT(A) 22, Mumbai/10861/2016-17 Para 5.4 on page 17 29 April 2022 National Faceless Appeal Centre Para 7.3 on page 12 M/s Experian Credit Information Company of India Pvt. Ltd. 3 ITA No. 1146/Mum/2023 Briefly stated, facts of the case are that in the assessment ) of the Act, the Assessing Officer made various disallowance including disallowance However, the Ld. CIT(A) deleted the addition following the l in earlier years in the case of the assessee. is reproduced as under: Holding Technology cost of as capital expenditure and making addition in P & L Account tabulated in para 4 of assessment order. AO held this as capital expenditure and disallowed the same after allowing depreciation @ 60% due to following reasons. Benefit of this cost benefits for long period of . 9,68,59,918 the holding it a "Capital b)Appellant contended that identical issue of holding TechnologyCost as Capital Expenditure was decided in favour of om AY 2011-12 to 18. The details of orders of CIT(A) 's in cases of Reference to relevant para Para 5.3.1 to 5.3.2 on page Para 5.4 on page 16 Para 5.4 on page 17 Para 5.4 on page 17 Para 7.3 on page 12 c)Further, the Appellant stated that Hon'ble ITAT Mumbai upheld the orders of CIT(A) and allowed deduction of "Technology Cost" as recurring in nature and does not result in generation of any new asset or any right of permanent nature for AY 2011 4713/Mum/2017 and 2018 vide order dated 02.08.2021. The relevant part of judgement of Hon'ble ITAT is asunder: "14. We have heard both the parties and perused the records. We find assessee's claim of technology recharge cost is revenue expenditure or capital expenditure. The order of the Assessing Officer is again thoroughly based upon surmises and conjecture with no cogent material whatsoever. Th and expenses are incurred not to earn income during the year but continue to provide benefit over a period of years is totally a surmises and conjecture. Moreover, in tax laws there is no concept of deferred rev expenditure.Moreover, we are of the opinion that the Assessing Officer has not brought on record any cogent material how these items are in capital in nature. On the other hand learned CIT(A) has analysed expenditure in detail and has found that these revenue in nature and they should not be treated as capital expenditure. Here we note that learned CIT(A) was rightly referred to the decision of Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. (124 ITR 1). It may be gainful to refer to the exposition in the case of Empire Jute Co. Ltd. (supra) wherein it was observed that "there may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the less, be on revenue account and the break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principles laid down in this test. What is material to consider is the nature of the advantage in a commercial senseand it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and condu to be carried on more effectively or more profitably while M/s Experian Credit Information Company of India )Further, the Appellant stated that Hon'ble ITAT Mumbai upheld the orders of CIT(A) and allowed deduction of "Technology Cost" as recurring in nature and does not result in generation of any new asset or any right of permanent nature in cases of Appellant for AY 2011-12 to AY2014-15 in ITA's No. 805, 4711 to 4713/Mum/2017 and 2018 vide order dated 02.08.2021. The relevant part of judgement of Hon'ble ITAT is asunder: "14. We have heard both the parties and perused the records. We find that the issue here is whether the assessee's claim of technology recharge cost is revenue expenditure or capital expenditure. The order of the Assessing Officer is again thoroughly based upon surmises and conjecture with no cogent material whatsoever. The opinion of the Assessing Officer that cost and expenses are incurred not to earn income during the year but continue to provide benefit over a period of years is totally a surmises and conjecture. Moreover, in tax laws there is no concept of deferred rev expenditure.Moreover, we are of the opinion that the Assessing Officer has not brought on record any cogent material how these items are in capital in nature. On the other hand learned CIT(A) has analysed expenditure in detail and has found that these expenses are basically revenue in nature and they should not be treated as capital expenditure. Here we note that learned CIT(A) was rightly referred to the decision of Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. (124 ITR 1). It may be ul to refer to the exposition in the case of Empire Jute Co. Ltd. (supra) wherein it was observed that "there may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principles laid down in this test. What is material to consider is the nature of the advantage in a commercial and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more effectively or more profitably while M/s Experian Credit Information Company of India Pvt. Ltd. 4 ITA No. 1146/Mum/2023 )Further, the Appellant stated that Hon'ble ITAT Mumbai upheld the orders of CIT(A) and allowed deduction of "Technology Cost" as recurring in nature and does not result in generation of any in cases of Appellant 15 in ITA's No. 805, 4711 to 4713/Mum/2017 and 2018 vide order dated 02.08.2021. The relevant part of judgement of Hon'ble ITAT is asunder:- "14. We have heard both the parties and perused the that the issue here is whether the assessee's claim of technology recharge cost is revenue expenditure or capital expenditure. The order of the Assessing Officer is again thoroughly based upon surmises and conjecture with no cogent material e opinion of the Assessing Officer that cost and expenses are incurred not to earn income during the year but continue to provide benefit over a period of years is totally a surmises and conjecture. Moreover, in tax laws there is no concept of deferred revenue expenditure.Moreover, we are of the opinion that the Assessing Officer has not brought on record any cogent material how these items are in capital in nature. On the other hand learned CIT(A) has analysed expenditure in expenses are basically revenue in nature and they should not be treated as capital expenditure. Here we note that learned CIT(A) was rightly referred to the decision of Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. (124 ITR 1). It may be ul to refer to the exposition in the case of Empire Jute Co. Ltd. (supra) wherein it was observed that "there may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none the less, be test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principles laid down in this test. What is material to consider is the nature of the advantage in a commercial and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling ct of the assessee's business to be carried on more effectively or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. " On the touchstone of above said Hon'ble Supreme Court decision and on the facts and circumstances of the case in our considered opinion learnedCIT(A) has taken correct view of the matter and it does not need any interference in our part. d)Respectfully following the above and Hon'ble Jurisdictional ITAT in Appellants case on an identical issue the Technology Cost is treated as Revenue Expenditure and is allowed deduction us 37 of Act. Addition/Disallowance made by the AO of Rs.6,45,73,278/ hereby deleted. Grounds of Appeal No. 2 is allowed. 4. Since, the Ld. CIT(A) has follow issue in dispute in the case find any error in the order the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. The ground of appeal of the Revenue is accordingly 5. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on Sd/- (NARENDER KUMAR CHOUDHRY JUDICIAL MEMBER Mumbai; Dated: 22/06/2023 Rahul Sharma, Sr. P.S. M/s Experian Credit Information Company of India leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. " On the touchstone of above said Hon'ble Supreme Court decision and on the facts and circumstances of the case in our considered opinion learnedCIT(A) has taken correct view of the matter and it does not need any interference in our part. Respectfully following the above mentioned orders of CIT(A)'s and Hon'ble Jurisdictional ITAT in Appellants case on an identical issue the Technology Cost is treated as Revenue Expenditure and is allowed deduction us 37 of Act. Addition/Disallowance made by the AO of Rs.6,45,73,278/ hereby deleted. Grounds of Appeal No. 2 is allowed. Since, the Ld. CIT(A) has followeda binding precedent on the issue in dispute in the case of assessee itself, therefore find any error in the order the Ld. CIT(A) on the issue in dispute we uphold the same. The ground of appeal of the Revenue is accordingly dismissed. In the result, the appeal filed by the Revenue is dismissed. nounced in the open Court on 22/06/2023. NARENDER KUMAR CHOUDHRY) (OM PRAKASH JUDICIAL MEMBER ACCOUNTANT MEMBER M/s Experian Credit Information Company of India Pvt. Ltd. 5 ITA No. 1146/Mum/2023 leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. " On the touchstone of the above said Hon'ble Supreme Court decision and on the facts and circumstances of the case in our considered opinion learnedCIT(A) has taken correct view of the matter and it does not need any interference in our part. mentioned orders of CIT(A)'s and Hon'ble Jurisdictional ITAT in Appellants case on an identical issue the Technology Cost is treated as Revenue Expenditure and is allowed deduction us 37 of Act. Addition/Disallowance made by the AO of Rs.6,45,73,278/- is hereby deleted. Grounds of Appeal No. 2 is allowed.” binding precedent on the of assessee itself, therefore, we do not find any error in the order the Ld. CIT(A) on the issue in dispute we uphold the same. The ground of appeal of the In the result, the appeal filed by the Revenue is dismissed. /06/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// M/s Experian Credit Information Company of India Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai M/s Experian Credit Information Company of India Pvt. Ltd. 6 ITA No. 1146/Mum/2023 BY ORDER, (Assistant Registrar) ITAT, Mumbai
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