Oracle India Private Ltd., New Delhi V. DCIT, New Delhi

ITA 1260/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4024 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 11-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 11-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SRUJANI MOHANTY
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: E NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO: 1260/DEL/2011 ASSESSMENT YEAR : 2004-05 ORACLE INDIA P.LTD. VS. DCIT, CIRCLE 13(1) 3 RD FLOOR, A WING, IFCI TOWER NEW DELHI 61, NEHRU PLACE NEW DELHI 19 (APPELLANT) (RESPONDENT) APPELLANT BY :SH.TARANDEEP SINGH, C.A. RESPONDENT BY : SMT. SRUJANI MOHANTY, SR.D.R. O R D E R PER SHAMIM YAHYA, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF LD.CIT(A)-XX, NEW DELHI DATED 30.12.2010 AND PERT AINS TO A.Y. 2004- 05. 2. THE ISSUE RAISED IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE A.O. ON THE GROUND THAT TH E COST OF MASTER COPIES OF SOFTWARE OF RS. 1,920,456/- IMPORTED BY T HE APPELLANT, IS CAPITAL EXPENDITURE AND NOT REVENUE EXPENDITURE THE REBY DISALLOWING A ITA 1260/DEL/2011 PAGE 2 OF 4 A.Y. 2004-05 M/S ORACLE INDIA P.LTD., NEW DELHI SUM OF RS. 14,40,342/- (AFTER ALLOWING DEPRECIATION OF RS. 480,114 BEING 25% OF RS. 1,920,456/-). 3. THE A.O. ON THIS ISSUE MENTIONED THAT DURING TH E YEAR THE ASSESSEE HAS PURCHASED MASTER COPIES OF SOFTWARE FO R RS. 19,20,456/-. SINCE THE ASSESSEE WAS ENGAGED IN DUPLICATION OF S OFTWARE FROM MASTER COPY, COST INCURRED FOR MASTER COPY ARE IN THE NATU RE OF CAPITAL EXPENDITURE AND NOT A REVENUE EXPENDITURE BECAUSE T HE BENEFIT DERIVED FROM MASTER COPY ARE OF ENDURING NATURE AND NOT RES TRICTED TO CURRENT A.Y. THE A.O. ALLOWED DEPRECIATION @ 25%, HE ALLOWE D BALANCE RS.14,40,342/-. 4. UPON ASSESSEES APPEAL THE LD.CIT(A) NOTED THAT THE TRIBUNAL IN THE PRECEDING YEARS SINCE 1994-95 HAS DECIDED THE I SSUE IN FAVOUR OF REVENUE. ACCORDINGLY THE CIT(A) CONFIRMED THE ACTI ON OF THE A.O. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. AT THE OUTSET BOTH THE COUNSELS FAIRLY AGREED THAT THE ISSUE IS C OVERED IN FAVOUR OF THE REVENUE VIDE THE DECISION OF ITAT IN EARLIER A.YS. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND WE NOTE THAT THE ITAT VIDE ITS ORDER IN ITA 328/D/98, 1783/ DD/99 AND 916/D/2000 FOR A.Y. 1994-95, 1995-96 AND 1996-97 I N ASSESSEES OWN ITA 1260/DEL/2011 PAGE 3 OF 4 A.Y. 2004-05 M/S ORACLE INDIA P.LTD., NEW DELHI CASE HAD CONSIDERED THE ISSUE IN DETAIL AND CONCLUD ED AS UNDER. IN VIEW OF DECISION IN THE PRECEDING PARAS AND APPLYING THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF M/ S EMPIRE JUTE COMPANY AND M/S ALEMBIC CHEMICAL WORKS CO.LTD. (SUP RA), WE ARE OF THE OPINION, THAT EXPENDITURE ON ACQUISITION OF MAS TER COPY IS A CAPITAL EXPENDITURE AND ACCORDINGLY, WE REVERSE THE ORDER O F THE CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. IN THIS REGARD THE LD .COUNSEL FOR THE ASSESSEE SUBMITTED THAT ITAT ORDER IS IN APPEAL BEFORE THE H ONBLE HIGH COURT. 7. FOLLOWING THE PRECEDENT AS ABOVE, WE UPHOLD THE RODER OF LD.CIT(A) AND DECIDE THE ISSUE IN FAVOUR OF THE RE VENUE. 8. IN THE RESULT ASSESSEES APPEAL STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 11. 5.2011 IMMEDIATELY AFTER CONCLUSION OF THE HEARING. SD/- SD/- (RAJPAL YADAV ) (SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH MAY, 2011 *MANGA ITA 1260/DEL/2011 PAGE 4 OF 4 A.Y. 2004-05 M/S ORACLE INDIA P.LTD., NEW DELHI COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2. RESPONDENT; 3. CIT; 4. CIT(A); 5. DR; 6. GUARD FILE BY ORDER DY. REGISTRAR // C O P Y //