The DCIT(OSD),Range-1, Ahmedabad V. M/s. Bosch Rexroth (India) Ltd., Ahmedabad

ITA 2479/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0655 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 21-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Revenue expenditure; Capital expenditure
• Section: 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. ./ I.T.A. NO.2479/AHD/2013 2. ( ./ I.T.A. NO.2463/AHD/2013 ( / ASSESSMENT YEAR : 2008-09) 1. THE DCIT (OSD) RANGE-1, AHMEDABAD 2. BOSCH REXROTH (INDIA) LTD. 206/2, 207, 214/P SANAND VIRAMGAM HIGHWAY MOUJE IYAVA, TALUKA SANAND, AHMEDABAD / VS. 1. M/S.BOSCH REXROTH (INDIA)LTD. SANAND,AHMEDABAD 2. ASST.CIT (OSD) RANGE-1, AHMEDABAD $ ./ ./ PAN/GIR NO. : AAACM 9898F ( $& / APPELLANTS ) .. ( '($& / RESPONDENTS ) REVENUE BY : SHRI SHRI JAMES KURIAN, SR.DR ASSESSEE BY : SHRI SANJAY R.SHAH, AR )* / DATE OF HEARING 23/08/2016 +,-.* / DATE OF PRONOUNCEMENT 29/08/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THESE CROSS-APPEALS BY THE REVENUE AND THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 2 - AHMEDABAD DATED 23/08/2013 PASSED FOR ASSESSMENT YE AR (AY) 2008- 09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- 2.1. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF HYDRAULIC EQUIPMENT AND ITS PARTS. ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2008-09 ON 24/09/2008 DEC LARING TOTAL INCOME OF RS. 37,19,74,788/-. THE CASE WAS SELECTED FOR S CRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') VIDE ORDER D ATED 19/12/2011 AND THE TOTAL INCOME WAS DETERMINED AT RS.39,86,46, 102/-. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER (AO), ASSESSEE C ARRIED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE ORDER DATED 23/08/20 13 (IN APPEAL NO. CIT(A)-VI/DCIT(SD)/R-1/225/11-12) GRANTED PARTIAL R ELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD.CIT(A) , REVENUE AND ASSESSEE ARE IN APPEAL(S) BEFORE US. 2.2. THE REVENUE IN ITA NO.2479/AHD/2013 HAS RAIS ED THE FOLLOWING GROUNDS:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY CON SIDERING THE CAPITAL EXPENSES OF RS.2.27 CRORES AS REVENUE EXPEN SES. 2. THE CIT(A) HAS OVERLOOKED THE FACT THAT THE EXP ENSES IN QUESTION ARE NOT RECURRING IN NATURE AND HAVE GIVEN BENEFIT OF ENDURING NATURE OF THE ASSESSEE, SUCH EXPENSES CANN OT BE REGARDED ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 3 - AS CURRENT REPAIRS AND ARE THEREFORE, NOT DEDUCTIBL E U/S.30/31 OF THE I.T.ACT, 1961. 2.3. ON THE OTHER HAND, THE ASSESSEE IN ITA NO.2463 /AHD/2013 HAS RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS AND CONTRARY TO THE PROVISIO NS OF LAW & FACTS AND THEREFORE REQUIRES TO BE SUITABLY MODIFIED. IT IS SUBMITTED THAT IT BE SO DONE NOW. 2. THE LEARNED COMMISSIONER HAS ERRED IN NOT ALLOWI NG THE DEDUCTION IN RESPECT OF SOFTWARE EXPENSES OF RS. 18,24,172/- PAI D IN RESPECT OF PURCHASE OF OPERATING SOFTWARE ALLOWABLE AS REVENUE EXPENDITURE U/S 37 OF THE ACT. IT IS SUBMITTED THAT IT BE SO HELD NOW. 2.1. LEARNED COMMISSIONER HAS ERRED IN NOT AL LOWING THE SAID EXPENSES U/S 37 OF THE ACT BY WRONGLY RELYING UPON THE ORDER OF HON'BLE CIT(A) FOR A.Y. 2007-08 WHICH WAS BASED ON WRONG IN TERPRETATION OF FACTS THAT THESE SOFTWARE ARE PURCHASED AS PART OF COMPUTERS AND THEREFORE REQUIRES CAPITALIZATION AND HENCE ELIGIBL E FOR DEPRECIATION. LEARNED COMMISSIONER HAS ERRED IN NOT APPRECIATING THE FACT THAT THE SOFTWARE ARE APPLICATION SOFTWARE AND NOT SYSTEMS S OFTWARE. IT IS SUBMITTED IT BE SO HELD NOW. 2.2. LEARNED COMMISSIONER HAS ALSO ERRED IN R ELYING UPON THE ORDER OF HON'BLE CIT(A) FOR A.Y. 2007-08 WHICH WAS BASED ON THE WRONG PREMISE THAT DEPRECIATION SCHEDULE INCLUDES COMPUTE R WHICH IN TURN INCLUDES COMPUTER SOFTWARE ON WHICH 60% DEPRECIATIO N IS ALLOWABLE AND THEREFORE DEDUCTION OF SOFTWARE EXPENSES CANNOT BE ALLOWED. IT IS SUBMITTED IT BE SO HELD NOW. 2.3. LEARNED COMMISSIONER HAS ERRED IN NOT GI VING DIRECTION TO THE LEARNED AO TO ALLOW THE DEPRECIATION AT THE RATE OF 60% ON THE SOFTWARE EXPENDITURE DISALLOWED IN THE AY 2007-08 & 2006-07, WHILE COMPUTING TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION. ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 4 - 3. WE FIRST TAKE UP REVENUES APPEAL IN ITA NO.2479 /AHD/2013. 3.1. BOTH THE GROUNDS RAISED BY REVENUE BEING INTER -CONNECTED ARE CONSIDERED TOGETHER. 3.2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AN D ON PERUSING THE DETAILS OF MANUFACTURING AND OTHER EXPENSES, AO NOT ICED THAT ASSESSEE HAD DEBITED RS.1,12,17,505/- UNDER THE HEAD REPAIR S AND MAINTENANCE OF BUILDING AND RS.1,15,66,776/- UNDER THE HEAD O THER REPAIRS AND MAINTENANCE EXPENSES. ASSESSEE WAS ASKED TO JUSTI FY THE CLAIM OF EXPENSES AND WHY IT NOT BE TREATED AS CAPITAL EXPEN DITURE. AFTER PERUSING THE SUBMISSIONS OF ASSESSEE, THE AO CONCLUDED THAT ASSESSEE HAD CARRIED OUT COMPLETE RENOVATION OF FACTORY BUILDING WHICH I NVOLVED PLASTERING, FLOORING, REPLACEMENT OF DOORS, ELECTRICAL FITTINGS , ETC. AO WAS OF THE VIEW THAT THE BENEFIT OF EXPENSES RESULTED IN BENEF IT OF ENDURING NATURE AND THE EXPENSES WERE OF CAPITAL NATURE EXPENSES. HE ACCORDINGLY CONSIDERED THE AGGREGATE AMOUNT OF RS.2,27,84,281/- (RS.1,12,17,505 + RS.1,15,66,776) AS BEING CAPITAL IN NATURE AND DISA LLOWED THE SAME. HE HOWEVER, ALLOWED DEPRECIATION @10% AND ACCORDINGLY MADE AN ADDITION ON NET AMOUNT OF RS.2,05,05,853/-. AGGRIEVED BY TH E ORDER OF THE AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) WHO DE LETED THE ADDITION BY HOLDING AS UNDER:- 7.5. IN THE ASSESSMENT ORDER A.O OBSERVED THAT APPELLANT HAD DEBITED TO P&L ACCOUNT A SUM OF RS. 1,12,17,505/- UNDER THE HEAD REPAIRS AND MAINTENANCE OF BUILDING AND A SUM OF RS .1,15,66,776/- UNDER THE HEAD REPAIRS AND MAINTENANCE OF OTHERS; A PPELLANT HAD ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 5 - SUBMITTED LEDGER ACCOUNTS OF BUILDING REPAIRS AND O THER REPAIRS, ALONGWITH THE COPIES OF INVOICES; FOR THE AMOUNTS E XCEEDING RS.1 LAKH; APPELLANT HAD FAILED TO OFFER ANY EXPLANATION AS TO WHY THE EXPENDITURE SHOULD NOT BE TREATED AS CAPITAL EXPENDITURE; THE SAID EXPENDITURE WAS CAPITAL IN NATURE AND ACCORDINGLY IT WAS BEING CAPITALIZED AND DEPRECIATION WAS BEING ALLOWED @ 10%. ACCORDINGLY, AO MADE THE IMPUGNED DISALLOWANCE. 7.6. THE CONTENTIONS OF THE LD.A.R ARE THAT ALL THE INVOICES FOR THE VALUE OF RS,5,000/- AND MORE WERE SUBMITTED TO THE A.O VIDE THE LETTERS 10/11/2011 & 08/12/2011; OTHER REPAI RS INCLUDED FURNITURE REPAIRS, SANITARY & PLUMBING REPAIRS, A/C & WATER C OOLER REPAIRS, COMPUTER REPAIRS, ELECTRICAL EXPENSES ETC.; WITHOUT SPECIFYING A SINGLE INVOICE OR TRANSACTION A.O HAD SIMPLY PRESUM ED THAT THE EXPENSES WERE FOR. COMPLETE RENOVATION OF THE FACTO RY BUILDING; ALL THE EXPENDITURE BY WAY OF FLOORING, LAYING SHEETS AND R OOFS RE-SURFACING ROADS, PROVIDING TRANSPARENT PVC SHEETS, REPLACEMEN T OF DOORS, ELECTRICAL FITTINGS ETC/WERE INCURRED ONLY TO ADDRE SS THE WEAR AND TEAR OF VARIOUS PREMISES OF THE APPELLANT; THERE WAS NO CRE ATION OF ANY NEW ASSET; REPAIRS WERE CARRIED OUT AT THE 2 FACTORY BU ILDINGS AT AHMEDABAD. & BANGALORE AND THE OFFICE BUILDINGS AT MUMBAY, DEL HI, CALCUTTA & BANGALORE; THE INVOICES EXCEEDING RS. 50,000/- IN R ESPECT OF THE BUILDING REPAIRS SHOW THAT THE PAYMENTS WERE MADE T O 23 DIFFERENT PARTIES THROUGH WHICH DIFFERENT TYPES OF REPAIR WOR KS WERE CARRIED OUT; SINCE THE COMPANY IS IN THE BUSINESS OF MANUFACTURE OF HEAVY ENGINEERING INDUSTRIAL GOODS LIKE HYDRAULIC CRANE [ WHICH ARE HEAVY EQUIPMENT], THE MANUFACTURING PROCESS INCLUDING SHI FTING AND STORAGE RESULTS IN LOT OF WEAR AND TEAR TO THE BUILDING; AL L THE PREMISES OF THE APPELLANT COMPANY ARE RENTED EXCEPT ONE AT AHMEDABA D VATVA OFFICE WHICH IS UNDER 99 YEARS LEASE; AS REGARDS THE OTHER REPAIRS, ALL THE NECESSARY DETAILS LIKE LEDGER ACCOUNT OF THE PARTIE S, THE PURPOSE OF REPAIRS, INVOICES OF MORE THAN RS.5,000/- WERE SUBM ITTED TO THE A.O VIDE SUBMISSION DTD. 26/0972011, 18/10/2011, 10/11/2011 & 08/12/2011; THIS EXPENDITURE DID NOT CREATE ANY NEW ASSET; THE AHMED ABAD VATVA OFFICE WAS TAKEN ON 99 YEARS LEASE IN THE YEAR 1978 I.E. 30 YEARS AGO; AS MAY BE SEEN FROM POINT 3.1 OF PAGE-12 OF THE LEASE AGREEMENT APPELLANT IS RESPONSIBLE TO KEEP THE PREMISES IN GOOD AND TEN ABLE REPAIR; AS MAY ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 6 - BE SEEN FROM RESOLUTION DTD. 26/11/2008 IT WAS DECI DED TO PURCHASE LAND AT SANAND WITH A VIEW TO SHIFTING THE FACTORY TO TH AT PLACE/WHICH INDICATES THAT THE APPELLANT WOULD NOT HAVE INCURRE D ANY CAPITAL EXPENDITURE IN RESPECT OF THE BUILDING WHICH IS GOI NG TO BE VACATED; AS REGARDS THE OTHER REPAIRS THE PAYMENTS WERE MADE TO 75 DIFFERENT PARTIES AND KEEPING IN VIEW THE VARIOUS CASE-LAWS R ELIED UPON IMPUGNED DISALLOWANCE IS NOT IN ACCORDANCE WITH LAW. 7.7 IN ACCORDANCE WITH THE SEC. 30 (A)(I) WHERE THE PREMISES OCCUPIED BY THE ASSESSEE AS A TENANT, THE AMOUNT OF EXPENDIT URE PAID ON ACCOUNT OF REPAIRS IS ALLOWABLE DEDUCTION IF THE ASSESSEE H AD UNDERTAKEN TO BEAR COST OF REPAIRS FOR BUILDINGS. IN ACCORDANCE WITH T HE SEC.31 (I) THE AMOUNT PAID ON ACCOUNT OF CURRENT REPAIRS TO MACHIN ERY, PLANT OR FURNITURE IS ALLOWABLE DEDUCTION. AS PER THE EXPLAN ATION BELOW BOTH THE SECTIONS, INSERTED BY THE FINANCE ACT 2003 W.E.F. 0 1/04/2004, SUCH EXPENDITURE SHALL NOT INCLUDE ANY CAPITAL EXPENDITU RE. IN THE INSTANT CASE ALL THE PREMISES OF THE APPELLANT ARE RENTED P REMISES. THE AMOUNT OF EXPENDITURE INCURRED TOWARDS REPAIRS OF BUILDING S IS RS. 1,12,17,505/-. AS STATED BY THE A.O HIMSELF AT PARA -2 OF PAGE-8 OF THE ASSESSMENT ORDER, THE NATURE OF THE REPAIRS WAS FLO ORING, LAYING SHEETS AND ROOFS RE-SURFACING ROADS, PROVIDING TRANSPARENT PVC SHEETS ETC. AOS OBSERVATION AT PARG-4 OF PAGE-8 OF THE ; ASSESSMENT ORDER THAT THE APPELLANT HAD CARRIED OUT COMPLETE RENOVATION OF THE FACTORY BUILDING IS WITHOUT ANY BASIS. AS SEEN FROM THE YEAR WISE DETAILS OF BUILDING REPAIRS FURNISHED IN THE WRITTEN SUBMISSION, APPELL ANT HAS BEEN INCURRING EXPENDITURE EVERY YEAR. IN THE IMMEDIATEL Y PRECEDING ASSESSMENT YEAR IT HAD INCURRED EXPENDITURE OF OVER 72 LAKHS COMPARED TO THE EXPENDITURE OF AROUND 112 LAKHS IN THE YEAR UNDER CONSIDERATION. THE APPELLANT IS IN THE BUSINESS OF MANUFACTURING O F HEAVY ENGINEERING INDUSTRIAL GOODS LIKE HYDRAULIC CRANE INVOLVING HUG E WEAR AND TEAR TO THE BUILDINGS. GOING BY THE NATURE OF EXPENSES INCURRED IT CANNOT BE STATED THAT ANY NEW ASSET HAS COME INTO EXISTENCE . AS REGARDS OTHER REPAIRS OF RS.1,15,66,776/-, IT WAS IN CONNECTION W ITH THE FURNITURE, SANITARY PLUMBING, A/C AND WATER COOLER, COMPUTER E LECTRICAL ETC. AS SEEN FROM THE YEAR-WISE BREAK-UP OF OTHER REPAIRS, APPELLANT HAS BEEN INCURRING EXPENDITURE YEAR AFTER YEAR. TO BE PRECI SE, IT HAD INCURRED EXPENDITURE OF RS.1.11 CRORES IN THE PRECED ING YEAR AS COMPARED TO ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 7 - RS.1.15 CRORES IN THE YEAR UNDER CONSIDERATION. A.O HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUGGEST THAT ANY NEW A SSET HAS COME INTO EXISTENCE OR THE EXPENDITURE WAS TOWARDS REPLACEME NT OF THE EXISTING ASSETS. THEREFORE I AM OF THE VIEW THAT IMPUGNED DI SALLOWANCE OF BUILDING REPAIRS AND OTHER REPAIRS IS NOT IN ACCORD ANCE WITH LAW. RELIANCE IS PLACED IN THIS REGARD ON THE CASE OF AC IT VS. M.P. WAREHOUSING & LOGISTIC CORPN. LTD 52 SOT 40 (INDORE ) (2012). IN THE SAID CASE THE ASSESSMENT YEARS INVOLVED WERE 200 5-06 TO 2008-09, I.E. AFTER INSERTION OF EXPLANATION BELOW SEC.30 & 31. IN THE SAID CASE TRIBUNAL HELD AS UNDER: 'TO DECIDE THE APPLICABILITY OF SECTION 31(I) THE P RIMARY TEST IS NOT WHETHER THE EXPENDITURE IS REVENUE OR CAPITAL IN NA TURE. THE BASIC TEST TO FIND OUT AS TO WHAT WOULD CONSTITUTE CURRENT REP AIR IS THAT THE EXPENDITURE MUST HAVE BEEN INCURRED TO 'PRESERVE AN D MAINTAIN' AN ALREADY EXISTING ASSET AND THE OBJECT OF EXPEND ITURE MUST NOT BE TO BRING A NEW ASSET INTO EXISTENCE OR TO OBTAIN A NE W ADVANTAGE. REPAIR IMPLIES THE EXISTENCE OF A PART OF THE MAC HINE/PLANT OR FURNITURE WHICH HAS MALFUNCTIONS. THE ENTIRE MACH INE/PLANT OR FURNITURE, IF REPLACED, THE EXPENDITURE SO INCURRED WOULD NOT FALL WITHIN THE MEANING OF CURRENT REPAIRS. THE OBJECT OF REPA IR AND MAINTENANCE IS TO PRESERVE AND MAINTAIN EXISTING ASSET AND NOT TO BRING A NEW ASSET INTO EXISTENCE. THE TOTAL REPLACEMENT OF DAMAGED MACHINERY/SHIP OR AN ASSET MAY NOT CONSTITUTE REPAIR, BUT SUBSTITUTION OF OLD/WORN OUT PARTS OF A MACHINE/BUILDING/FACTORY, ETC., IS AN EXPENDITURE O F DEDUCTIBLE NATURE, MEANING THEREBY FOR CLAIMING THE DEDUCTION UNDER TH E PROVISIONS OF THE ACT, NO NEW ASSET SHOULD COME INTO EXISTENCE AN D THE EXPENDITURE MUST HAVE BEEN INCURRED ON THE EXISTING ASSET.' IT IS ALSO SEEN THAT THE APPELLANT ITSELF CAPITALIZ ED AN AMOUNT OF RS.11,10,99,085/- UNDER THE HEAD PLANT AND MACHINER Y AND AN AMOUNT OF RS.65,36,701/- UNDER THE HEAD BUILDING. IT IS NO T A CASE WHEREIN THE ENTIRE EXPENDITURE TOWARDS PLANT AND MACHINERY, BUI LDING AND OTHER REPAIRS HAS BEEN CLAIMED AS REVENUE EXPENDITURE. KE EPING IN VIEW THE FACTS OF THE CASE, THE CASE-LAWS RELIED ON BY THE A .R AND THE ABOVE MENTIONED JUDGMENT, A.O IS DIRECTED TO ALLOW THE EX PENDITURE CLAIMED ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 8 - TOWARDS BUILDING AND OTHER REPAIRS AND WITHDRAW THE DEPRECIATION ALLOWED IN THE ASSESSMENT ORDER. THIS GROUND OF APP EAL IS ALLOWED. 4. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 4.1. BEFORE US, LD.SR.DR SUPPORTED THE ORDER OF AO. LD.AR ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND THE LD.CIT(A) AND FURTHER SUBMITTED THAT THE NECESSARY DETAILS WE RE FILED BEFORE THE AO AND ALSO BEFORE THE LD.CIT(A). LD.AR FURTHER SUBMIT TED THAT ASSESSEE MANUFACTURES HEAVY EQUIPMENTS DUE TO WHICH ASSESSEE HAS TO INCUR EXPENSES ON REPAIRS FREQUENTLY AND THAT SIMILAR E XPENSES WERE INCURRED IN EARLIER YEARS AND THE SAME WERE ALLOWED BY THE R EVENUE AUTHORITIES IN THE SCRUTINY ASSESSMENT PROCEEDINGS. HE FURTHER SU BMITTED THAT LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS THE ISS UE WAS DECIDED IN FAVOUR OF ASSESSEE. HE THUS SUPPORTED THE ORDER OF LD.CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT IS WITH RESPECT TO DISALLO WANCE OF EXPENSES WHICH WERE CONSIDERED TO BE CAPITAL IN NATURE BY TH E AO. WE FIND THAT THE LD.CIT(A) WHILE DECIDING THE ISSUE HAS GIVEN A FINDING THAT CONSIDERING THE NATURE OF ACTIVITIES UNDERTAKEN BY ASSESSEE, THERE IS LOT OF WEAR AND TEAR TO THE BUILDING WHICH NECESSITATES IN CURRING OF EXPENDITURE AND THE EXPENSES WERE NORMAL REPAIR EXPENDITURE. H E HAS FURTHER NOTED ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 9 - THAT GOING BY THE NATURE OF EXPENSES INCURRED IT C ANNOT BE STATED THAT ANY NEW ASSET HAS COME INTO EXISTENCE AND THAT SIMILAR EXPENSES WERE INCURRED BY THE ASSESSEE IN EARLIER YEARS AND HAVE BEEN ALLOWED BY THE REVENUE IN SCRUTINY ASSESSMENTS AND THAT AO HAS NO T BROUGHT ANY MATERIAL WHICH COULD PROVE OF BRINGING ANY NEW ASSE T INTO EXISTENCE OR THAT THE EXPENDITURE WAS TOWARDS REPLACEMENT OF EXI STING ASSETS. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO POINT OUT ANY FALLACY IN THE FINDING OF LD.CIT(A). IN VIEW OF TH E AFORESAID FACTS, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 6. IN THE RESULT, REVENUES APPEAL IN ITA NO.2479/A HD/2013 FOR AY 2008-09 IS DISMISSED. 7. NOW, WE TAKE UP ASSESSEES APPEAL IN ITA NO.2463 /AHD/2013 FOR AY 2008-09. 7.1. FIRST GROUND BEING GENERAL REQUIRES NO ADJUDIC ATION. 7.2. SECOND GROUND IS WITH RESPECT TO SOFTWARE EXPE NSES:- 7.3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A O NOTICED THAT ASSESSEE HAD INCURRED SOFTWARE EXPENSES OF RS.45,60 ,530/- DEBITED UNDER THE HEAD COMPUTER STATIONERY. HE WAS OF THE VI EW THAT BENEFIT OF THE EXPENSES WOULD EXCEED FOR MORE THAN ONE YEAR. HE ACCORDINGLY CONSIDERED IT TO BE A CAPITAL EXPENDITURE AND DISAL LOWED IT BUT HOWEVER, ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 10 - GRANTED DEPRECIATION AND MADE A NET ADDITION OF RS. 18,24,172/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A) WHO DECIDED THE ISSUE AGAINST THE ASSESS EE BY HOLDING AS UNDER:- 4.2. IDENTICAL ISSUE AROSE IN THE IMMEDIATELY PR ECEDING A.Y. 2007-08 IN APPELLANTS OWN CASE. VIDE THE ORDER DTD. 06/02/2013 IN APPEAL NO.CIT(A)-VI/DCIT (OSD)/R-1/293/10-11, IT WAS HELD BY ME AS UNDER:- 4.2. IDENTICAL ISSUE AROSE IN THE IMMEDIATELY PRE CEDING A.Y. 2006-07 IN APPELLANTS OWN CASE. VIDE THE ORD ER DTD. 17/02/2011 IN APPEAL NO.CIT(A)-VI/ADDL.CIT.R-1/299/ 09- 10, MY PREDECESSOR HELD AS UNDER. 5.3. I HAVE CONSIDERED THE FACTS OF THE CASE, ASS ESSMENT ORDER AND APPELLANTS SUBMISSION. APPELLANT PURCHA SED COMPUTER SOFTWARES FOR THE PURPOSE OF ITS BUSINESS HOWEVER COMPUTER SOFTWARE IS PART OF ASSET USED FOR THE PUR POSE OF BUSINESS. IT HAS BEEN HELD IN SEVERAL DECISIONS TH AT COMPUTER SOFTWARE IS A CAPITAL ASSET AND PART OF CO MPUTERS FOR THE PURPOSE OF CLAIM OF DEPRECIATION. AS PER DEPRECIATION SCHEDULE, ITEM NUMBER 5 OF MACHINERY A ND PLANT SECTION IS COMPUTERS INCLUDING COMPUTER SOFTW ARE ON WHICH 60% DEPRECIATION IS ALLOWABLE. SINCE COMPUTE R SOFTWARE IS CLEARLY INCLUDED AS AN ITEM OF ASSET EL IGIBLE FOR DEPRECIATION, CLAIMING THE SAME @100 PERCENT IS NOT CORRECT. IN VIEW OF THIS, THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED. FOLLOWING THE SAID ORDER, IMPUGNED DISALLOWANCE IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 11 - FACTS REMAINING THE SAME, FOLLOWING MY ORDER FOR A. Y. 2007-08, IMPUGNED DISALLOWANCE IS UPHELD. THIS GROUND OF AP PEAL IS DISMISSED. 8. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 8.1. BEFORE US, AT THE OUTSET, LD.AR SUBMITTED THAT LD.CIT(A) WHILE DECIDING THE ISSUE HAD RELIED ON THE DECISION OF HI S PREDECESSOR PASSED IN AY 2007-08 WHEREIN IDENTICAL ISSUE WAS BEFORE IT. LD.AR SUBMITTED THAT AGAINST THE ORDER OF LD.CIT(A), THE MATTER WAS CARR IED BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 02/05/2016 IN ITA NOS.879/AHD/2013 & 3189/AHD/2015 HAD DECIDED THE IS SUE IN FAVOUR OF ASSESSEE. HE FURTHER SUBMITTED THAT SINCE THE FACT S IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF AY 2007-08 AS HAS A LSO BEEN NOTED BY THE LD.CIT(A) AND SINCE IN AY 2007-08 THE ISSUE HAS BEE N DECIDED IN ASSESSEES FAVOUR BY THE COORDINATE BENCH AND THERE FORE FOLLOWING THE ORDER OF THE COORDINATE BENCH, THE GROUND OF THE AS SESSEE BE ALLOWED. LD.SR.DR ON THE OTHER HAND SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT IS WHETHER THE SOFTWARE EX PENSES ARE ALLOWABLE ARE REVENUE EXPENSES. WE FIND THAT THE LD.CIT(A) W HILE DECIDING THE ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 12 - ISSUE HAS NOTED THAT IDENTICAL FACTS AROSE IN ASSES SEES OWN CASE IN AY 2007-08. HE THEREAFTER FOLLOWING THE DECISION OF H IS PREDECESSOR, DECIDED THE ISSUE AGAINST THE ASSESSEE. WE FIND TH AT AGAINST THE ORDER OF LD.CIT(A) FOR AY 07-08 THE MATTER WAS CARRIED BEFOR E THE COORDINATE BENCH OF TRIBUNAL (ITAT B BENCH AHMEDABAD). THE COORDINATE BENCH OF TRIBUNAL VIDE ORDER DATED 02/05/2016 DECID ED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER:- 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS AGAINST THE ACTION OF THE LD. CIT(A) IN TREATING THE EXPENDITUR E OF RS.35,30,328/- TOWARDS PURCHASING AND UPGRADING SOFTWARE AS CAPITA L EXPENDITURE WHICH HAS BEEN CLAIMED BY THE ASSESSEE AS REVENUE E XPENDITURE IN ITS RETURN OF INCOME. THE ITEMIZE BREAK-UP OF THE IMPUG NED EXPENDITURE OF RS.35,30,328/- IS AS UNDER:- SR. NO. PARTICULARS AMOUNT (RS.) 1. SOFTWARE LICENSE 16,07,497 2. AUTO CAD LT - 2007 59,280 3. AUTO CAD SOFTWARE 118,560 4. AUTO DESK SOFTWARE 1,274,624 5. SOFTWARE SUBSCT SER 306,400 6. SPC SOFTWARE 55,120 7. SOFTWARE CHARGES 93,847 8. SOFTWARE INSTALLED 15,0000 TOTAL 35,30,328 THE ABOVE REFERRED EXPENDITURE OF RS.35,30,328/- A RE MAINLY RELATING TO THE PURCHASE OF APPLICATION SOFTWARE AN D UPGRADATION OF EXISTING SOFTWARE. THE LD. ASSESSING OFFICER HAS T REATED THE IMPUGNED EXPENDITURE OF RS.35,30,328/- AS CAPITAL EXPENDITUR E ON THE ONLY FOOTING THAT THE ASSESSEE WILL RECEIVE THE BENEFIT FOR MORE THAN A YEAR AND HAS ALSO ALLOWED 60% DEPRECIATION ON THIS EXPENDITURE O F RS.35,30,328/- AND A DISALLOWANCE OF RS.14,21,131/- HAS BEEN MADE. HOWEVER, FROM ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 13 - GOING THROUGH THE SUBMISSIONS OF THE LD. AUTHORIZED REPRESENTATIVE, WE ARE ABLE TO UNDERSTAND THAT THE IMPUGNED EXPENDITUR E OF RS.35,30,328/- HAS NOT BEEN INCURRED TO PURCHASE ANY NEW SOFTWARE BUT THEY ARE EITHER APPLICATION SOFTWARE TO RUN THE EXISTING SOFTWARE I NSTALLED IN THE COMPUTERS AND ALSO THE EXPENDITURE HAS BEEN INCURRE D TOWARDS UPGRADATION OF THE EXISTING APPLICATION SOFTWARE, B ECAUSE IN THE FAST CHANGING TECHNOLOGY WORLD, THE SOFTWARE, WHICH WAS PURCHASED BY THE ASSESSEE IN THE PREVIOUS YEARS, NEEDS TO BE UPGRADE D OR UPDATED SO AS TO BE SUITABLE WITH THE CURRENT TECHNOLOGIES BROUGHT I N BY VARIOUS COMPETITORS AS WELL AS REQUIRED FOR INCREASING THE OPERATIONAL EFFICIENCY OF THE ORIGINAL SOFTWARE. 9. WE ALSO FIND THAT THE CO-ORDINATE BENCH HAS DEAL T WITH THE SIMILAR ISSUE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 IN ITA NOS. 1328 & 1310/AHD/2011, DATED 29.04.2014, DE ALING WITH THE SOFTWARE EXPENDITURE OF RS.8,73,485/- AS TO WHETHER IT IS A CAPITAL OR REVENUE EXPENDITURE, ALLOWED THE ASSESSEES APPEAL BY OBSERVING AS UNDER:- 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. IT IS AN ADMITTED FACT THAT ASS ESSEE HAD INCURRED RS 8,73,485/- ON SOFTWARE EXPENSES AND WAS CLAIMED AS REVENUE EXPENSES. IT IS THE SUBMISSION OF THE ASSE SSEE THAT THE EXPENSES WERE FOR THE PURCHASE OF SOFTWARE APPLICAT ION HAVING A SHORT LIFE SPAN. AO HAS CONSIDERED THE EXPENSES AS CAPITAL EXPENDITURE AND ELIGIBLE FOR DEPRECIATION @60% AND GRANTED DEPRECIATION OF RS 5,24,091/- AND THEREBY MADE A DI SALLOWANCE OF RS 3,49,384/-. IN THE PRESENT CASE, THE INCURRIN G OF EXPENSES HAS NOT BEEN DISPUTED BY THE REVENUE. IT IS ALSO A FACT THAT THE MATTER PERTAINS TO AY 2006-07 AND IF THE IMPUGNED E XPENSES IS CONSIDERED TO BE CAPITAL EXPENDITURE, THE ASSESSEE WILL HAVE TO BE GRANTED DEPRECIATION @ 60% ON WDV BASIS IN A.Y. 06- 07 AND ALSO IN SUBSEQUENT YEARS. THE DEPRECIATION OF WDV F OR SUBSEQUENT YEARS WILL WORK OUT TO RS. 2,09,630/- (F OR A.Y.07-08), RS. 83,854 (FOR A.Y. 08-09), RS. 33,542(FOR A.Y. 09 -10) AND SO ON. CONSIDERING THE TOTALITY OF THE FACTS, THE TOTA L TAXABLE INCOME OF RS 35.85 CRORE AS DETERMINED BY THE AO, THE CHAN GES THAT ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 14 - WOULD BE REQUIRED TO BE MADE IN SUBSEQUENT ASSESSME NTS ORDERS IF THE DEPRECIATION IS TO BE ALLOWED IN ALL SUBSEQU ENT YEARS AND THE PECULIAR FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE BE ALLOWED IN THE PRESENT CASE. WE MAY HOWEVER ADD THAT THE ALLOWANCE OF THE EXPENDITURE IN THE PR ESENT CASE SHOULD NOT BE CONSIDERED AS A PRECEDENCE FOR ALLOWA NCE OF THE EXPENDITURE. THUS THESE GROUNDS OF THE ASSESSEE ARE ALLOWED. 10. WE FURTHER OBSERVE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ASAHI INDIA SAFETY GLASS LTD (SUPRA ) HAS ALSO DEALT WITH THE SIMILAR ISSUE, WHEREIN THE ASSESSEE INCURRED RE VENUE EXPENDITURE TOWARDS APPLICATION SOFTWARE TO BE RUN ON ORACLE APPLICATION AND THE DECISION WAS GIVEN IN FAVOUR OF THE ASSESSEE BY OBS ERVING AS UNDER:- THE TEST OF ENDURING BENEFIT IS NOT A CERTAIN OR A CONCLUSIVE TEST WHICH THE COURTS CAN APPLY ALMOST BY ROTE. WHAT IS REQUIRED TO BE SEEN IS THE REAL INTENT AND PURPOSE OF THE EXPEN DITURE AND WHETHER THE EXPENDITURE RESULTS IN CREATION AFFIXED CAPITAL FOR THE ASSESSEE. IT IS IMPORTANT TO BEAR IN MIND THAT WHAT IS REQUIRED TO BE SEEN IS NOT WHETHER THE ADVANTAGE OBTAINED LASTS FOREVER BUT WHETHER THE EXPENSE INCURRED DOES AWAY WITH A RECUR RING EXPENSE(S) DEFRAYED TOWARDS RUNNING A BUSINESS AS A GAINST AN EXPENSE UNDERTAKEN FOR THE BENEFIT OF THE BUSINESS AS A WHOLE. IN OTHER WORDS, THE EXPENDITURE WHICH IS INCURRED, WHI CH ENABLES THE PROFIT MAKING STRUCTURE TO WORK MORE EFFICIENTL Y LEAVING THE SOURCE OF THE PROFIT MAKING STRUCTURE UNTOUCHED, WO ULD BE AN EXPENSE IN THE NATURE OF REVENUE EXPENDITURE. FINE TUNING BUSINESS OPERATIONS TO ENABLE THE MANAGEMENT TO RUN ITS BUSINESS EFFECTIVELY, EFFICIENTLY AND PROFITABLY, LEAVING TH E FIXED ASSETS UNTOUCHED, WOULD BE AN EXPENDITURE IN THE NATURE OF REVENUE EXPENDITURE EVEN THOUGH THE ADVANTAGE MAY LAST FOR AN INDEFINITE PERIOD. TEST OF ENDURING BENEFIT OR ADVANTAGE WOULD , THUS, COLLAPSE IN SUCH LIKE CASES. IT WOULD BE ONLY TRUER IN CASES WHICH DEAL WITH TECHNOLOGY AND SOFTWARE APPLICATION, WHIC H DO NOT IN ANY MANNER SUPPLANT THE SOURCE OF INCOME OR ADDED T O THE FIXED CAPITAL OF THE ASSESSEE. [PARA 9] ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 15 - THIS IS THE APPROACH WHICH THE SUPREME COURT HAS AP PLIED EVEN IN CASES WHERE THERE IS A ONCE FOR ALL OR A LUMP SU M PAYMENT. WHAT IS TO BE SEEN IN THE FACTS OF THE INSTANT CASE , IS THAT THE ASSESSING OFFICER, AS A MATTER OF FACT, HAS RETURNE D A FINDING THAT THE EXPENDITURE UNDERTAKEN WAS FOR OVERHAULING THE ACCOUNTANCY OF THE ASSESSEE AND TO EFFICIENTLY TRAIN THE ACCOUN TING STAFF OF THE ASSESSEE. THE TRIBUNAL, WHICH IS DECIDEDLY THE FINA L FACT FINDING AUTHORITY, HAS AFTER NOTICING THE MATERIAL ON RECOR D OBSERVED THAT THE EXPENDITURE WAS INCURRED UNDER VARIOUS SUB-HEAD S, WHICH INCLUDED LICENCE FEE, ANNUAL TECHNICAL SUPPORT FEE, PROFESSIONAL CHARGES, DATA ENTRY OPERATOR CHARGES, TRAINING CHAR GES AND TRAVELLING EXPENSES. THE FINAL FIGURE WAS A CONSOLI DATION OF EXPENSES INCURRED UNDER THESE SUB-HEADS. THE TRIBUN AL RIGHTLY CAME TO THE CONCLUSION THAT NONE OF THESE RESULTED IN EITHER CREATION OF A NEW ASSET OR BROUGHT FORTH A NEW SOUR CE OF INCOME FOR THE ASSESSEE. THE TRIBUNAL CLASSIFIED THE SAID EXPENSES AS BEING RECURRING IN NATURE TO UPGRADE AND/OR TO RUN THE SYSTEM. [PARA 9.1] IN THE BACKGROUND OF THE AFOREMENTIONED FINDINGS, I T CANNOT BE SAID THAT THE EXPENSES BROUGHT ABOUT IN AN ENDURING BENEFIT TO THE ASSESSEE. THE ASSESSING OFFICER WAS PERHAPS SWA YED BY THE FACT THAT IN THE SUCCEEDING FINANCIAL YEAR, I.E., 1 997-98 (ASSESSMENT YEAR 1998-99), THE AMOUNT SPENT WAS LAR GE. FIRST OF ALL, THE EXTENT OF THE EXPENDITURE CANNOT BE A DECI SIVE FACTOR IN DETERMINING ITS NATURE. AS OBSERVED BY THE TRIBUNAL , THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR HAD A TURNOVER OF R S 150 CRORES AND THAT EVEN WITHOUT THIS EXPENDITURE IT WOULD HAV E CONTINUED TO ACHIEVE THE SAID TURNOVER, THOUGH THE EXPENDITURE I N ISSUE WOULD HAVE ENABLED IT TO RUN ITS BUSINESS MORE EFFICIENTL Y. THEREFORE, THE RATIONALE SUPPLIED BY THE ASSESSING OFFICER IN SUPPORT OF ITS ORDER IS FLAWED AND, HENCE, IT WOULD HAVE TO BE REJ ECTED. [PARA 10] SECONDLY, THE MERE FACT THAT THE ASSESSING OFFICER RECORDS THAT THE EXPENDITURE, IN FINANCIAL YEAR 1997-98 (ASSESSM ENT YEAR 1998-99), WAS INCURRED TOWARDS WHAT HE TERMS AS AN 'ON-GOING ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 16 - PROJECT' WOULD NOT IPSO FACTO GIVE IT A COLOUR OF C APITAL EXPENDITURE. A CAREFUL READING OF THE TRIBUNAL'S JU DGMENT SHOWS THAT AFTER NOTICING THE SUBMISSION OF THE ASSESSEE THAT THE EXPENDITURE INCURRED IN THE SAID ASSESSMENT YEAR WA S FOR REMOVING DEFICIENCIES WHICH WERE FOUND IN THE SOFTW ARE INSTALLED IN THE EARLIER ASSESSMENT YEAR, AND THAT OUT OF A S UM OF RS. 1.71 CRORES, A SUM OF RS. 49 LAKHS WAS INCURRED TO MODIF Y, CUSTOMIZE AND UPGRADE THE SOFTWARE INSTALLED, WHILE THE BALAN CE EXPENDITURE WAS USED FOR DEVELOPMENT AND IMPLEMENTA TION, IT RETURNED A FINDING THAT THE EXPENSES WERE INCURRED TO UPGRADE AND RUN THE SYSTEM. IN VIEW OF THESE FINDINGS, THE ASSESSING OFFICER DISCOVERED AN ERRONEOUS PRINCIPLE ON THE BA SIS OF WHICH HE DENIED THE EXEMPTION TO THE ASSESSEE. [PARA 10.1 ] SOFTWARE IS NOTHING BUI ANOTHER WORD FOR COMPUTER P ROGRAMMES, I.E., INSTRUCTIONS, THAT MAKE THE HARDWARE WORK. SO FTWARE IS BROADLY OF TWO TYPES, I.E., THE SYSTEMS SOFTWARE, W HICH IS ALSO KNOWN AS THE OPERATING SYSTEM WHICH CONTROLS THE WO RKING OF THE COMPUTER: WHILE THE OTHER BEING APPLICATIONS SUCH A S WORD PROCESSING PROGRAMS, SPREAD SHEETS AND DATABASE WHI CH PERFORM THE TASKS FOR WHICH PEOPLE USE COMPUTERS. BESIDES T HESE, THERE ARE TWO OTHER CATEGORIES OF SOFTWARE, THESE BEING: NETWORK SOFTWARE AND LANGUAGE SOFTWARE. THE NETWORK SOFTWAR E ENABLES GROUPS OF COMPUTERS TO COMMUNICATE WITH EACH OTHER, WHILE LANGUAGE SOFTWARE PROVIDES WITH TOOLS REQUIRED TO W RITE PROGRAMMES. [PARA 11] THE AFORESAID WOULD SHOW THAT WHAT THE ASSESSEE ACQ UIRED THROUGH A WAS AN APPLICATION SOFTWARE WHICH ENABLED IT TO EXECUTE TASKS IN THE FIELD OF ACCOUNTING, PURCHASES AND INVENTORY MAINTENANCE. THE FACT THAT THE APPLICATION SOFTWARE WOULD HAVE TO BE UPDATED FROM TIME TO TIME BASED ON THE REQUIR EMENTS OF THE ASSESSEE IN THE CONTEXT OF THE ADVANCEMENT OF ITS B USINESS AND/OR ITS DIVERSIFICATION, IF ANY; THE CHANGES BROUGHT AB OUT DUE TO STATUTORY AMENDMENTS BY LAW OR BY PROFESSIONAL BODI ES LIKE THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA, WHICH ARE GIVEN THE RESPONSIBILITY OF CONCEIVING AND FORMULATING THE AC COUNTING ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 17 - STANDARDS FROM TIME TO TIME, AND PERHAPS ALSO, BY R EASON OF THE FACT THAT EXPENSES MAY HAVE TO BE INCURRED ON ACCOU NT OF CORRUPTION OF THE SOFTWARE DUE TO UNINTENDED OR INT ENDED INGRESS INTO THE SYSTEM - OUGHT NOT GIVE A COLOUR TO THE EX PENDITURE INCURRED AS ONE EXPENDED ON CAPITAL ACCOUNT. GIVEN THE FACT THAT THERE ARE MYRIAD FACTORS WHICH MAY CALL FOR EXPENSE S TO BE INCURRED IN THE FIELD OF SOFTWARE I APPLICATIONS, I T CANNOT BE SAID THAT EITHER THE EXTENT OF THE EXPENSE OR THE EXPENS E BEING INCURRED IN CLOSE PROXIMITY, IN THE SUBSEQUENT YEA RS, WOULD BE CONCLUSIVELY DETERMINATIVE OF ITS NATURE. THE ASSE SSING OFFICER HAS ERRED PRECISELY FOR THESE VERY REASONS. [PARA 1 2] THE CONTENTION OF THE REVENUE THAT IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAD NOT WRITTEN OFF THE EXPENSE IN ISSUE, WHILE IN THE SUCCEEDING ASSESSMENT YEAR ONLY A PART OF THE EXPEN SE HAD BEEN WRITTEN OFF AND, THEREFORE, THE ASSESSEE'S OWN UNDE RSTANDING OF THE NATURE OF THE EXPENSE INVOLVED WAS THAT IT WAS EXPENDED ON CAPITAL ACCOUNT IS BE REJECTED. THE REASON BEING: T HAT THE TREATMENT OF A PARTICULAR EXPENSE OR A PROVISION IN THE BOOKS OF ACCOUNT CAN NEVER BE CONCLUSIVELY DETERMINATIVE OF THE NATURE OF THE EXPENSE. AN ASSESSEE CANNOT BE DENIED A CLAIM F OR DEDUCTION WHICH IS OTHERWISE TENABLE IN LAW ON THE GROUND THA T THE ASSESSEE HAD TREATED IT DIFFERENTLY IN ITS BOOKS. [PARA 13 & 13.1] THEREFORE, THE AFORESAID CONTENTION IS OF NO AVAIL TO THE REVENUE. [PARA 13.2] THEREFORE, THE TRIBUNAL WAS CORRECT IN LAW IN HOLDI NG THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON ACCOUNT OF SOFTWARE AND PROFESSIONAL EXPENSES WAS A REVENUE EXPENDITURE. [P ARA 14] 11. APPLYING THE RATIO OF ABOVE DECISION OF HONBLE DELHI HIGH COURT AS WELL AS DECISION OF CO-ORDINATE BENCH IN A SSESSEES OWN CASE, WE ARE OF THE VIEW THAT THE IMPUGNED EXPENDITURE OF RS.35,30,328/- INCURRED BY THE ASSESSEE IS REVENUE EXPENDITURE, BE CAUSE THE SAME HAS BEEN INCURRED TOWARDS THE PURCHASE OF APPLICATION S OFTWARE AND UPGRADATION CHARGES WHICH WERE REQUIRED TO RUN EFFI CIENTLY THE EXISTING ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 18 - SOFTWARE AS WELL AS LICENSE CHARGES FOR USING THE E XISTING SOFTWARE UNINTERRUPTLY SO AS TO RUN THE BUSINESS EFFICIENTLY . WE ARE, THEREFORE, OF THE VIEW THAT THE LD. CIT(A) WAS NOT CORRECT IN CON FIRMING THE DISALLOWANCE OF RS.14,21,131/- AND WE ACCORDINGLY D ELETE THIS DISALLOWANCE. THUS, THE ASSESSEES APPEAL IS ALLOWE D. 9.1. BEFORE US, REVENUE HAS NOT PLACED ON RECORD AN Y MATERIAL TO DEMONSTRATE THAT THE EXPENDITURE INCURRED BY ASSESS EE IS FOR THE PURCHASE ANY NEW SOFTWARE NOR HAS POINTED OUT ANY DISTINGUIS HING FEATURE IN THE FACTS OF THE CASE IN THE YEAR UNDER CONSIDERATION A ND THE FACTS OF THE CASE FOR EARLIER YEARS. BEFORE US REVENUE HAS ALSO NOT PLACED ANY MATERIAL TO DEMONSTRATE THAT ORDER OF THE COORDINATE BENCH OF T RIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS HAS BEEN SET ASIDE BY HI GHER JUDICIAL AUTHORITIES. IN VIEW OF THE AFORESAID FACTS AND FO LLOWING THE REASONING GIVEN BY THE COORDINATE BENCH WHILE DECIDING THE I SSUE IN EARLIER YEARS, THIS GROUND OF ASSESSEE IS ALLOWED. 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED, W HEREAS ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 29 /0 8 /201 6 SD/- SD/- () () (RAJPAL YADAV) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 29/ 08 /2016 2..,.../ T.C. NAIR, SR. PS ITA NO2.2479 & 2463/AHD/2013 DCIT VS. BOSCH REXROTH (INDIA) LTD. (CROSS APPEALS RESPECTIVELY) ASST.YEAR 2008-09 - 19 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-VI, AHMEDABAD 5. 789'45 , 45. , 3 / DR, ITAT, AHMEDABAD 6. 9;<) / GUARD FILE. / BY ORDER, (7' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 23.8.16 (DICTATION-PAD 12- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 24.8.16/26.8.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.29.8.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29.8.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER