Deputy Commissioner of Income tax, Bangalore V. M/s.McML Systems Pvt. Ltd., Bangalore

ITA 2122/BANG/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8613 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 05-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K N DHANDAPANI
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Capital asset; Depreciation; Commercial expediency; Condonation of delay; Revised return; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER I.T.A. NO.2122/BANG/2016 (ASSESSMENT YEAR : 2008-09) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(2), ROOM NO. 230, 2 ND FLOOR, BMTC BUILDING, 80 FEET ROAD, 6 TH BLOCK, KORAMANGALA, BANGALORE-560 095. . APPELLANT. VS. M/S. MCML SYSTEMS PVT. LTD., NO.C-9, KSSIDC INDUSTRIAL ESTATE, YELAHANKA, BANGALORE-560 064. .. RESPONDENT. PAN : AACCM 1613 N C.O. NO.47/BANG/2017 (IN ITA NO.2122/BANG/2016) (ASSESSMENT YEAR : 2008-09) M/S. MCML SYSTEMS PVT. LTD., BANGALORE-560 064. PAN : AACCM 1613 N . APPELLANT. VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE -12(1), BANGALORE. .. RESPONDENT. REVENUE BY : SHRI. K. N. DHANDAPANI, JCIT ASSESSEE BY : SHRI K. R. VASUDEVAN, ADVOCATE. DATE OF HEARING : 07.02.2019. DATE OF PRONOUNCEMENT : 10.04.2019. 2 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 O R D E R PER SHRI JASON P BOAZ, A.M. : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-4, BANGALORE, DATED 27.07.2016 FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS FIELD CROSS OBJECTIONS (C.O.) IN RESPECT OF THE IMPUGNED ORDER. ORDER ON REVENUES APPLICATION FOR CONDONATION OF DELAY IN FILING THE APPEAL FOR ASSESSMENT YEAR 2008-09 2.1 ADMITTEDLY REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 HAS BEEN FILED BELATEDLY BY 51 DAYS BEFORE THE TRIBUNAL. A PETITION HAS BEEN FILED BY THE ASSESSING OFFICER (AO) SEEKING CONDONATION OF THE DELAY IN FILING THE APPEAL ACCOMPANIED BY AN AFFIDAVIT SWORN TO DATED 08.05.2017. IN ITS PETITION / AFFIDAVIT, REVENUE HAS PUT FORTH THE FOLLOWING REASONS FOR THE DELAY IN FILING THE APPEAL:- 3. I PRAY FOR CONDONATION OF DELAY IN FILING OF APPEAL TO THE HONBLE INCOME TAX APPELLATE TRIBUNAL. THE DELAY IS DUE TO THE FACT THAT THE TIME BARRING DATE FOR COMPLETION OF ASSESSMENTS DURING THE LAST FINANCIAL YEAR WAS 31 ST DECEMBER 2016 AND ALSO SINCE THERE WERE CONTINUOUS HOLIDAYS DURING THE MONTHS OF OCTOBER AND NOVEMBER 2016 DUE TO FESTIVALS, THE AVAILABLE STAFF WERE ON LONG LEAVE. SINCE THERE IS SUFFICIENT CAUSE FOR DELAY IN FILING THE APPEAL, IT IS REQUESTED THAT THE DELAY IN FILING THE APPEAL MAY BE CONDONED. 3 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 2.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS IN THE MATTER OF CONDONATION OF THE DELAY OF 51 DAYS ON THE PART OF REVENUE IN FILING THE INSTANT APPEAL FOR ASSESSMENT YEAR 2008-09 BEFORE THE TRIBUNAL. TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES INVOLVED, THE REASONS/EXPLANATIONS PUT FORTH BY REVENUE AND THE PRINCIPLES LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF MST KATIJI AND OTHERS (167 ITR 471) (SC) FOR DEALING WITH MATTERS RELATING TO CONDONATION OF DELAY, WE ARE OF THE VIEW THAT REVENUE HAD REASONABLE AND SUFFICIENT CAUSE FOR FILING THE APPEAL FOR ASSESSMENT YEAR 2008-09 BELATEDLY. IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN BY THE HONBLE APEX COURT IN ITS DECISION IN THE CASE OF MST KATIJI AND OTHERS (SUPRA), WE CONDONE THE DELAY OF 51 DAYS ON THE PART OF REVENUE IN FILING THIS APPEAL BEFORE THE TRIBUNAL AND ADMIT ITS APPEAL FOR ASSESSMENT YEAR 2008-09 FOR CONSIDERATION / ADJUDICATION. O R D E R 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER:- 3.1 THE ASSESSEE, A COMPANY, ENGAGED IN THE BUSINESS OF PROVIDING SIGNALING SYSTEMS SOLUTIONS TO THE RAILWAYS, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 01.10.2008 DECLARING LOSS OF (-)RS.2,02,01,133/- UNDER NORMAL PROVISIONS AND BOOK PROFITS UNDER MAT PROVISIONS AT RS.4,98,44,075/-. THE ASSESSEE FILED A REVISED RETURN 4 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 OF INCOME ON 19.01.2009. THE CASE WAS SELECTED FOR SCRUTINY FOR THIS ASSESSMENT YEAR. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE HAD CLAIMED CERTAIN ITEMS OF EXPENDITURE AS DEDUCTION IN THE COMPUTATION OF INCOME EVEN THOUGH IT HAD CAPITALIZED THE SAME AS INTANGIBLE ASSETS IN ITS BOOKS OF ACCOUNT. ON BEING QUERIED IN THIS REGARD, THE ASSESSEE SUBMITTED THAT IT HAD INCURRED HUGE EXPENSES ON TRAINING AND SALARIES OF EMPLOYEES AND RELATED CERTIFICATIONS TO MEET WITH INTERNATIONAL STANDARDS. SINCE THE BENEFIT FROM THESE EXPENDITURES HAS AN ENDURING EFFECT AND WAS DEFERRED OVER A NUMBER OF YEARS, THESE COSTS / EXPENDITURES WERE CAPITALIZED IN THE ASSESSEES BOOKS OF ACCOUNTS. HOWEVER, THESE EXPENSES WERE ACTUALLY REVENUE IN NATURE AND WERE THEREFORE CLAIMED AS DEDUCTIONS IN THE COMPUTATION OF INCOME. THE EXPLANATIONS PUT FORTH BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO WHO HELD THAT THESE EXPENDITURES WERE CAPITAL IN NATURE AND WHILE DISALLOWING THE SAME, ALLOWED DEPRECIATION THEREON @ 25%. THE ASSESSMENT WAS ACCORDINGLY CONCLUDED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) VIDE ORDER DATED 25.03.2010, WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT RS.34,13,815/-. 3.2.1 AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 25.03.2010 FOR ASSESSMENT YEAR 2008-09, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A)- 4, BANGALORE. THE CIT(A) DISPOSED OFF THE APPEAL VIDE THE IMPUGNED 5 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 ORDER DATED 27.07.2016, ALLOWING THE ASSESSEE PARTIAL RELIEF. THE RELEVANT ISSUE ON WHICH CIT(A) ALLOWED RELIEF TO THE ASSESSEE WAS IN RESPECT OF EXPENDITURE OF RS.98,88,226/- CLAIMED BY THE ASSESSEE IN RESPECT OF SALARIES AND TRAINING COST OF EMPLOYEES. WHILE DOING SO, THE CIT(A) RENDERED THE FOLLOWING OBSERVATIONS / FINDINGS:- (I) AN EXAMINATION OF THE SAID EXPENDITURE SHOWS THAT IT PERTAINS TO IRSE ASSESSMENT COST AND SALARIES / TRAINING COST OF EMPLOYEES AND THAT SUCH EXPENSES ARE IN LINE WITH THE NORMAL BUSINESS ACTIVITY OF THE ASSESSEE. (II) MERELY BECAUSE THESE EXPENSES INCULCATE BETTER SKILLS TO EMPLOYEES AND LONG TERM INDIRECT BENEFIT TO THE ASSESSEE; THAT IN ITSELF DOES NOT RENDER THE EXPENSES TO BE DISALLOWABLE AS CAPITAL INVESTMENT. (III) THE TRAINED MANPOWER IS NOT A CAPITAL ASSET OF THE ASSESSEE AND THE ASSESSEE DOES NOT GET TO OWN ANY EXCLUSIVE OR ABSOLUTE RIGHTS ON THE TRAINED STAFF. (IV) THE EXPENDITURE HAS TO BE TESTED BY THE YARDSTICK OF COMMERCIAL EXPEDIENCY AND BUSINESS PURPOSE, AS WAS HELD BY THE HONBLE APEX COURT IN THE CASE OF TRAVANCORE TITANIUM PRODUCTS LTD., VS. CIT (60 ITR 277) (SC). (V) IN THE BACKGROUND OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE EXPENDITURE MADE TOWARDS SALARY, TRAINING AND SKILL ENHANCEMENT OF EMPLOYEES IS REVENUE IN NATURE. 6 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 3.2.2 THE CIT(A) ALSO OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT EVEN THOUGH THESE EXPENSES WERE REVENUE IN NATURE, IT HAD TO CAPITALIZE THESE EXPENSES AND SHOW THEM AS INTANGIBLE ASSETS, IN VIEW OF THE REQUIREMENTS OF ACCOUNTING STANDARDS 26 AND PLACED RELIANCE ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF KEDARNATH JUTE MANUFACTURING LTD., VS. CIT (81 ITR 363) (SC). THE CIT(A) WAS OF THE VIEW THAT THE AOS CATEGORIZATION OF THESE ASSETS AS INTANGIBLE DEPRECIABLE ASSETS IS NOT IN TUNE WITH THE DEFINITION OF INTANGIBLE ASSETS AS CONTAINED IN SECTION 32(1) OF THE ACT. THE CIT(A) ALSO NOTED THAT THE SIMILAR ISSUE WAS DECIDED IN THE ASSESSEES FAVOUR BY HIS PREDECESSOR CIT(A) IN THE CASE ON HAND FOR THE EARLIER ASSESSMENT YEAR 2007-08. REVENUES APPEAL IN ITA NO.2122/BANG/2016 ASSESSMENT YEAR 2008-09 4.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF CIT(A)-4,BANGALORE DATED 27.07.2016 FOR ASSESSMENT YEAR 2008-09, HAS FILED THIS APPEAL BEFORE THE TRIBUNAL WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LD.CIT (A) IS OPPOSED TO THE LAW AND FACTS OF THE CASE. 7 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT (A) WAS RIGHT IN TREATING THE EXPENDITURE INCURRED ON INTANGIBLE ASSETS AS REVENUE IN NATURE WITHOUT APPRECIATING THE FACT THAT ANY EXPENDITURE INCURRED FOR BRINGING INTO EXISTENCE ANY ASSET OF ENDURING VALUE IS A CAPITAL EXPENDITURE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS NOT APPRECIATED THE FACT THAT THE ASSESSEE ITSELF HAS CAPITALISED THE EXPENDITURE AMOUNTING TO RS. 98,88,227/- AS 'INTANGIBLE ASSET'. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT IS RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. 4.2 IN THE COURSE OF PROCEEDINGS BEFORE US, BOTH THE LEARNED DR FOR REVENUE AND THE LEARNED AR OF THE ASSESSEE WERE HEARD AT LENGTH AND JUDICIAL PRONOUNCEMENTS CITED HAVE ALSO BEEN DULY CONSIDERED AND DISCUSSED AT APPROPRIATE PLACED HEREUNDER: 5. GROUND NOS. 1, 4 AND 5 OF REVENUES APPEAL ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED FOR THEREON. 8 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 6. GROUND NOS. 2 AND 3 6.1 IN GROUND NO. 2 (SUPRA), REVENUE CONTENDS THAT THE CIT(A) HAS ERRED IN TREATING THE EXPENSES AMOUNTING TO RS.74,16,169/- AS REVENUE WITHOUT APPRECIATING THE FACT THAT ANY EXPENDITURE INCURRED IN BRINING INTO EXISTENCE ANY ASSET OF ENDURING VALUE IS CAPITAL EXPENDITURE. IN GROUND NO.3 (SUPRA), IT IS CONTENDED THAT THE ASSESSEE ITSELF HAS CAPITALIZED THE SAID EXPENDITURE AND THEREFORE IT WAS WRONG ON THE PART OF THE CIT(A) TO TREAT SUCH CAPITALIZED THE SAID EXPENDITURE AND THEREFORE IT WAS WRONG ON THE PART OF THE CIT(A) TO TREAT SUCH CAPITALIZED EXPENDITURE AS REVENUE IN NATURE. BEFORE US, THE LEARNED DR FOR REVENUE SUPPORTED THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS ON THIS ISSUE. 6.2.1 PER CONTRA, THE LEARNED AR FOR THE ASSESSEE SUPPORTED THE ORDERS OF THE CIT(A) ON THIS ISSUE AND SUBMITTED THAT THE CIT(A) HAS EXAMINED THE FACTS OF THE MATTER AS WELL AS THE LEGAL PRINCIPLES AND HELD THE SAID EXPENDITURE TO BE REVENUE IN NATURE. IN THIS REGARD, THE LEARNED AR PLACED RELIANCE ON AND FILED COPIES OF THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- (I) KEDARNATH JUTE MANUFACTURING CO. LTD., VS. CIT (1971 AIR 2145) AND 9 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 (II) DCIT VS. SAPIENT CORPORATION PVT. LTD., (ITA NO.1856/DEL/2010 DATED 08.11.2011; WHICH THE LEARNED AR SUBMITTED IS SQUARELY ON THE ISSUE OF TRAINING EXPENDITURE BEING REVENUE IN NATURE. 6.2.2 ON BEING SPECIFICALLY QUERIED AT THE BAR, THE LEARNED AR OF THE ASSESSEE CONFIRMED THAT THE ASSESSEE HAD SHOWN THESE AMOUNTS AS INTANGIBLE ASSETS AND THE NOTES ON ACCOUNTS HAVE INCORPORATED THE SAME. AS DIRECTED BY THE BENCH, THE LEARNED AR PLACED ON RECORD, COPY OF THE NOTES ON ACCOUNTS RELATED TO INTANGIBLE ASSETS, THE COMPUTATION OF INCOME AND THE COPY OF AS-26 RELATING TO THE ACCOUNTING TREATMENT OF INTANGIBLE ASSET. 6.3.1 WE HAVE CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND EXAMINED THE ISSUE OF TREATMENT OF THE AFORESAID EXPENDITURE. AS OBSERVED BY THE CIT(A), THE VARIOUS HEADS OF THE AFORESAID EXPENDITURE ARE IRSE ASSESSMENT COST, SALARIES AND TRAINING COST. IT IS NOT IN DISPUTE THAT THESE EXPENDITURES HAVE BEEN CAPITALIZED AND SHOWN UNDER THE HEAD INTANGIBLE ASSETS. IN THE ASSESSEES BOOKS OF ACCOUNT, ADMITTEDLY, EXPENDITURE AMOUNTING TO RS.98,88,226/- HAS BEEN SHOWN AS CAPITALIZED UNDER INTANGIBLE ASSETS; AS ALSO IN THE NOTES ON ACCOUNTS, IT HAS BEEN MENTIONED THAT THE UNAMORTIZED AMOUNT ON ACCOUNT OF INTELLECTUAL PROPERTY IN THE FORM OF EMPLOYEE KNOWLEDGE 10 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 ENHANCEMENT DEVELOPED THROUGH VARIOUS PROGRAMMES AND SUPPORTED BY EMPLOYEES AGREEMENTS, ARE TO BE AMORTIZED EQUALLY OVER IN THE NEXT THREE YEARS AS THE UTILIZATION OF RESOURCES IN THE CURRENT YEAR IS NOMINAL. THEREFORE, IT IS STATED CLEARLY THAT THE INTANGIBLE ASSETS HAS ARISEN ONLY OUT OF EMPLOYEE COST AND TRAINING AND THAT THERE IS AN ENDURING BENEFIT OUT OF THE SAME, WHICH IS BEING SPREAD OVER THREE YEARS. 6.3.2 IT IS ALSO SEEN THAT FOR SUCH TYPES OF TRAINING COSTS, WHOSE BENEFIT CAN BE ENDURING AND SPREAD OVER A FEW YEARS, AS-26 WILL APPLY, AS MENTIONED IN PARA 3 OF AS-26 WHICH IS EXTRACTED HEREUNDER: 3. THIS STANDARD APPLIES TO, AMONG OTHER THINGS, EXPENDITURE ON ADVERTISING, TRAINING, START-UP, RESEARCH AND DEVELOPMENT ACTIVITIES . THIS SUPPORTS THE CONTENTION OF THE ASSESSEE THAT IT WAS CONSTRAINED TO CAPITALIZE THE EXPENSES DUE TO APPLICATION OF ACCOUNTING STANDARDS (AS) AND AMORTIZE IT OVER A PERIOD OF TIME, EVEN THOUGH THE NATURE OF THOSE EXPENSES IS REVENUE IN NATURE. FURTHER, AS WAS HELD IN KEDARNATH JUTE MANUFACTURING CO. LTD., VS. CIT (SUPRA), RELIED UPON BY THE CIT(A), THE ENTITLEMENT OF THE ASSESSEE TO A PARTICULAR DEDUCTION WILL DEPEND UPON THE PROVISIONS OF THE INCOME TAX ACT, 1961 AND NOT ON THE 11 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 ENTRIES IN THE BOOKS OF ACCOUNT. THE RELEVANT PORTION OF THE DECISION OF THE HONBLE APEX COURT IS EXTRACTED HEREUNDER: THE MAIN CONTENTION OF THE LEARNED SOLICITOR GENERAL IS THAT THE ASSESSEE FAILED TO DEBIT THE LIABILITY IN ITS BOOKS OF ACCOUNTS AND, THEREFORE, IT WAS DEBARRED FROM CLAIMING THE SAME AS DEDUCTION EITHER UNDER SECTION 10 (1) OR UNDER S. 10 (2) (XV) OF THE ACT. WE ARE WHOLLY UNABLE TO APPRECIATE THE SUGGESTION THAT IF AN ASSESSEE UNDER SOME MISAPPREHENSION OR MISTAKE FAILS TO MAKE AN ENTRY IN THE-BOOKS OF ACCOUNT AND ALTHOUGH UNDER THE LAW, A DEDUCTION MUST BE ALLOWED BY THE INCOME TAX OFFICER, THE ASSESSES WILL LOSE THE RIGHT OF CLAIMING OR WILL BE DEBARRED FROM BEING ALLOWED THAT DEDUCTION. WHETHER THE ASSESSEE IS ENTITLED TO A PARTICULAR DEDUCTION OR NOT WILL DEPEND ON THE PROVISION OF LAW RELATING THERETO AND NOT ON THE VIEW WHICH THE ASSESSEE MIGHT TAKE OF HIS RIGHTS NOR CAN THE EXISTENCE OR ABSENCE OF ENTRIES IN THE BOOKS OF ACCOUNT BE DECISIVE OR CONCLUSIVE IN THE MATTER. 6.3.3 IT IS SETTLED PRINCIPLE, UPHELD IN SEVERAL JUDICIAL PRONOUNCEMENTS THAT; MERELY BECAUSE THE EXPENDITURE GIVES ENDURING BENEFIT, IT DOES NOT AUTOMATICALLY RENDER IT CAPITAL IN NATURE. A DETERMINATION HAS TO BE MADE AS TO WHETHER THE EXPENDITURE IS IN THE CAPITAL FIELD OR REVENUE FIELD. IN THIS REGARD, THE DECISION RELIED ON BY THE ASSESSEE; OF THE ITAT DELHI BENCH IN THE CASE OF DCIT VS. M/S. SAPIENT CORPORATION PVT. LTD., IN ITA NO.1856/DEL/2010 DATED 08.11.2011 APPLIES SQUARELY TO THE FACTS OF THE CASE ON HAND. THE RELEVANT PORTION OF THE AFOREMENTIONED DECISION OF THE ITAT DELHI BENCH (SUPRA) AT PARAS 6 AND 7 THEREOF IS EXTRACTED HEREUNDER:- 12 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 13 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 14 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 6.3.4 IN OUR VIEW, THE FACTS OF THE ABOVE CASE I.E., SAPIENT CORPORATION PVT. LTD., RENDERED BY THE ITAT DELHI BENCH (SUPRA) AND THE FINDINGS RENDERED THEREIN ARE SQUARELY APPLICABLE TO THE CASE ON HAND. THERE IS NO DISPUTE IN RESPECT OF THE FACT THAT THE EXPENDITURE IN QUESTION, IS INCURRED IN THE FORM OF SALARIES / TRAINING OF EMPLOYEES AND IRSE ASSESSMENT COST, WHICH ARE PURELY IN THE REVENUE FIELD. THERE IS ALSO NO DISPUTE THAT THE SAID EXPENDITURE HAS BEEN EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE ASSESSEES BUSINESS. THERE IS NOTHING ON RECORD TO CONTROVERT THE CONTENTION THAT THESE EXPENSES ARE INCURRED FOR IMPARTING SKILL TO EMPLOYEES TO ENHANCE THEIR KNOWLEDGE. THE FINDINGS RENDERED BY THE CIT(A) IN THIS REGARD HAVE NOT BEEN CONTROVERTED BEFORE US. THE ONLY CONTENTION RAISED BY REVENUE IN THE GROUNDS OF APPEAL IS THAT THE ASSESSEE ITSELF HAS CAPITALIZED THESE EXPENSES; WHICH, IN OUR VIEW, CANNOT BE THE REASON FOR DENIAL OF DEDUCTION, AS HAS BEEN DISCUSSED IN THE PRECEDING PARAGRAPHS 6.3.1 TO 6.3.4 OF THIS ORDER (SUPRA). IN THIS FACTUAL AND LEGAL MATRIX OF THE CASE AS DISCUSSED ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE THAT CALLS FOR INTERFERENCE ON OUR PART AND THEREFORE UPHOLD THE ORDER OF THE CIT(A). CONSEQUENTLY, GROUND NOS.2 AND 3 RAISED BY REVENUE ON THIS ISSUE ARE DISMISSED. 15 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 7. IN THE RESULT, REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 IS DISMISSED. ASSESSEES C.O. NO.47/BANG/2017 ASSESSMENT YEAR 2008-09 8. SINCE THE GROUNDS RAISED IN THE C.O. HAVE EITHER BEEN ADDRESSED IN OUR ORDER IN REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 (SUPRA) OR ARE SUPPORTIVE OF THE IMPUGNED ORDER OF THE CIT(A), THE GROUNDS RAISED IN THE CROSS OBJECTIONS ARE RENDERED INFRUCTUOUS AND ACCORDINGLY DISMISSED. 9. IN THE RESULT, ASSESSEES C.O. FOR ASSESSMENT YEAR 2008-09 IS DISMISSED. 10. TO SUM UP, BOTH REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 AND THE ASSESSEES CROSS OBJECTIONS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2019. SD/- (N.V. VASUDEVAN) VICE PRESIDENT SD/- (JASON P BOAZ) ACCOUNTANT MEMBER BANGALORE, DATED : 10.04.2019. /NS/* 16 ITA NO. 2122/BANG/2016 C.O. NO.47/BANG/2017 COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE ASST. REGISTRAR INCOME TAX APPELLATE TRIBUNAL BANGALORE.