M/s Infosys BPM Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-3(1)(1), Bangalore

ITA 491/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1666 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-12-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 20-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MATHIVANAM M
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Capital asset; Depreciation; Bonafide belief; Retrospective amendment; Permanent establishment; Question of law; Non-deduction of tax; Revenue expenditure; Capital expenditure; TDS; Set aside
• Section: 40(a)(ia); 13; 32

Judgement Text

ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU IN THE INCOME TAX APPELLATE TRIBUNAL CBENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBERAND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.491/BANG/2018 ASSESSMENTYEAR:2011-12 INFOSYS BPM LTD. ELECTRONIC CITY HOSUR ROAD BENGALURU PAN NO :AACCP4478N VS. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-3(1)(1) BANGALORE APPELLANT RESPONDENT IT(TP)A NO.1156/BANG/2018 ASSESSMENT YEAR: 2011-12 DEPUTY COMMISSIONER OF INCOME- TAX CIRCLE-3(1)(1) BANGALORE VS. INFOSYS BPM LTD. ELECTRONIC CITY HOSUR ROAD BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI PADAMCHAND KHINCHA, A.R. RESPONDENT BY : SHRI MATHIVANAM M. D.R. DATE OF HEARING : 10.12.2020 DATE OF PRONOUNCEMENT : 11.12.2020 O R D E R PERB.R. BASKARAN, ACCOUNTANT MEMBER: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 04- 01-2018 PASSED BY LD CIT(A)-3, BENGALURU AND THEY R ELATE TO THE ASSESSMENT YEAR 2011-12. ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 2 OF 16 2. THE ASSESSEE IS IN APPEAL BEFORE US ON THE FO LLOWING ISSUES:- (A) DISALLOWANCE OF PROVISION FOR SOFTWARE EXPENSES RS.3,89,30,461/- (B) DISALLOWANCE OF SOFTWARE EXPENSES U/S 40(A)(I) OF THE ACT RS.1,35,82,093/- (C) DISALLOWANCE OF SOFTWARE EXPENSES TREATING THE SAME AS CAPITAL IN NATURE RS.13,80,31,912/- (D) INCORRECT ALLOWANCE OF TDS CREDIT. 3. THE REVENUE IS IN APPEAL BEFORE US ON THE FOL LOWING ISSUES:- (A) DEDUCTION ALLOWED U/S 10A OF THE ACT (B) WHETHER LD CIT(A) HAS POWER TO REMIT THE ISSU E OF DISALLOWANCE OF SOFTWARE EXPENSES TREATING IT AS CA PITAL EXPENDITURE TO THE FILE OF AO? 4. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVI DING BUSINESS PROCESS OUTSOURCING SERVICES. 5. WE SHALL TAKE UP THE APPEAL OF THE REVENUE FIRST . IN ITS APPEAL, THE FIRST ISSUE CONTESTED BY THE REVENUE RE LATES TO DEDUCTION CLAIMED U/S 10A OF THE ACT I.E. WHETHER EXPENSES TH AT WERE REDUCED FROM EXPORT TURNOVER SHOULD ALSO BE REDUCED FROM TH E TOTAL TURNOVER OR NOT. THE ASSESSEE CLAIMED DEDUCTION U/S 10A OF THE ACT. WHILE COMPUTING THE DEDUCTION U/S 10A, THE ASSESSEE REDUC ED COMMUNICATION EXPENSES FROM BOTH EXPORT TURNOVER AN D TOTAL TURNOVER AND ACCORDINGLY COMPUTED AMOUNT OF DEDUCTI ON. THE A.O. WAS OF THE VIEW THAT THE COMMUNICATION EXPENSES SHO ULD BE DEDUCTED FROM ONLY EXPORT TURNOVER AND NOT FROM TOT AL TURNOVER. ACCORDINGLY, HE RECOMPUTED THE DEDUCTION U/S 10A OF THE ACT. THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY FOL LOWING THE ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 3 OF 16 DECISION RENDERED BY HONBLE KARNATAKA HIGH COURT I N THE CASE OF CIT VS. TATA ELXSI LTD. (2012) 349 ITR 98. THE REV ENUE HAS CHALLENGED THE SAID DECISION OF CIT(A) BY SUBMITTIN G THAT THE REVENUE HAS FILED A SLP IN THE HONBLE SUPREME COUR T CHALLENGING THE ABOVE SAID DECISION OF THE HONBLE KARNATAKA HI GH COURT. 6. WE HEARD THE PARTIES ON THIS ISSUE. THE LD. A.R . SUBMITTED THAT THE DECISION RENDERED BY HONBLE KARNATAKA HIG H COURT IN THE CASE OF TATA ELXSI LTD. (SUPRA) HAS SINCE BEEN UPHE LD BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. HCL TECHNOLOGI ES LTD. (2018) 93 TAXMANN.COM 33. WE NOTICE THAT THE DECISION REN DERED BY HONBLE KARNATAKA HIGH COURT HAS BEEN UPHELD BY HON BLE SUPREME COURT IN THE CASE OF HCL TECHNOLOGIES LTD ( SUPRA) WITH THE FOLLOWING OBSERVATIONS: 17. THE SIMILAR NATURE OF CONTROVERSY, AKIN THIS CA SE, AROSE BEFORE THE KARNATAKA HIGH COURT IN CIT V. TATA ELXSI LTD. (2012) 204 TAXMAN 321/17/TAXMANN.COM 100/349 ITR 98. THE ISSUE BEFOR E THE KARNATAKA HIGH COURT WAS WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING THAT WHILE COMPUTING RELIEF UNDER SECTION 10A OF THE I.T. ACT, THE AMOUNT OF COMMUNICATION EXPENSES SHOULD BE EXCLUDED FROM THE TOTAL TURNOVER IF THE SAME ARE REDUCED FROM THE EXPORT TURNOVER? WHI LE GIVING THE ANSWER TO THE ISSUE, THE HIGH COURT, INTER-ALIA, HE LD THAT WHEN A PARTICULAR WORD IS NOT DEFINED BY THE LEGISLATURE A ND AN ORDINARY MEANING IS TO BE ATTRIBUTED TO IT, THE SAID ORDINAR Y MEANING IS TO BE IN CONFORMITY WITH THE CONTEXT IN WHICH IT IS USED. H ENCE, WHAT IS EXCLUDED FROM EXPORT TURNOVER MUST ALSO BE EXCLUDED FROM T OTAL TURNOVER, SINCE ONE OF THE COMPONENTS OF TOTAL TURNOVER IS EXPORT TURNOVER. ANY OTHER INTERPRETATION WOULD RUN COUNTER TO THE LEGI SLATIVE INTENT AND WOULD BE IMPERMISSIBLE. 7. SINCE THE DECISION RENDERED BY LD CIT(A) IS IN C ONFORMITY WITH THE DECISION RENDERED BY HONBLE SUPREME COURT , WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISION RENDERED BY LD. CIT(A) ON THIS ISSUE. ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 4 OF 16 8. THE NEXT ISSUE CONTESTED BY THE REVENUE IS LIN KED TO THE ISSUE OF DISALLOWANCE OF SOFTWARE EXPENSES BY TREAT ING THE SAME AS CAPITAL IN NATURE, BEING CONTESTED BY THE ASSESS EE. HENCE THE RELEVANT GROUNDS OF BOTH THE PARTIES SHALL BE A DJUDICATED TOGETHER IN THE LATER PART OF THIS ORDER. 9. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE ASSESSEE. THE FIRST ISSUE RELATES TO DISALLOWANCE OF PROVISIO N OF RS.3.89 CRORES TOWARDS SOFTWARE EXPENSES. THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.24.97 CRORES AS EXPENSES INCURRED T OWARDS SOFTWARE PURCHASES. THE ABOVE SAID AMOUNT INCLUDED PROVISION FOR SOFTWARE EXPENSES AMOUNTING TO RS.3.89 CRORES. THE A.O. DISALLOWED THE PROVISION FOR SOFTWARE EXPENSES BY O BSERVING THAT IT IS ONLY PROVISION IN NATURE. IT APPEARS TH AT THE A.O. HAS TAKEN THE VIEW THAT THE PROVISION FOR SOFTWARE EXP ENSES IS A CONTINGENT LIABILITY. 10. THE LD. CIT(A) ALSO CONFIRMED THE DISALLOWANCE BY CONCURRING WITH THE VIEW TAKEN BY THE A.O. THE LD. CIT(A) ALSO HELD THAT THE PROVISION FOR EXPENSES IS LIABLE TO B E DISALLOWED U/S 40(A)(I) OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE. IN THIS REGARD, THE LD. CIT(A) FOLLOWED THE DECISION R ENDERED BY BANGALORE BENCH OF TRIBUNAL IN THE CASE OF IBM INDI A PVT. LTD. (2015) 59 TAXMANN.COM 107 WHEREIN IT WAS HELD THAT THE TDS PROVISIONS WILL ALSO APPLY TO PROVISION FOR EXPENSE S CREATED BY THE ASSESSEE. 11. THE LD. A.R. SUBMITTED THAT THE PROVISION FOR S OFTWARE EXPENSES IS CREATED BY THE ASSESSEE AS AT THE YEARE ND AS PER THE ACCOUNTING STANDARDS PRESCRIBED BY INCOME TAX DEPARTMENT AS WELL AS ICAI. AS PER THE ACCOUNTING STANDARS, ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 5 OF 16 PROVISION SHOULD BE MADE FOR ALL KNOWN LIABILITIES AND LOSSES EVEN THOUGH THE AMOUNT CANNOT BE DETERMINED WITH CE RTAINTY AND REPRESENTS ONLY A BEST ESTIMATE IN THE LIGHT OF AVAILABLE INFORMATION. THE LD. A.R. FURTHER SUBMITTED THAT T HE HONBLE SUPREME COURT HAS ALSO HELD IN THE CASE OF ROTORK C ONTROLS INDIA PVT. LTD. VS. CIT (2009) 314 ITR 62 THAT THE PROVISION FOR EXPENSES IS ALLOWABLE AS DEDUCTION. SINCE THE ASSES SEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, IT IS RE QUIRED TO PROVIDE FOR ALL KNOWN EXPENSES AND LOSSES. THE LD. A.R. SUBMITTED THAT THE VARIOUS DEPARTMENTS OF THE ASSES SEE HAD PURCHASED SOFTWARE BEFORE THE YEAREND, BUT RELEVANT INVOICES WOULD NOT HAVE BEEN RECEIVED BY THEM. SINCE THE SO FTWARE HAS ALREADY BEEN PURCHASED AND USED, THE ASSESSEE SHALL BE LIABLE TO PAY FOR THE SAME. THE ASSESSEE, WHILE FINALISING THE ACCOUNTS OF THE YEAR, WOULD COLLATE THE DETAILS OF ALL LIABI LITIES PAYABLE BY IT AND ACCORDINGLY MAKE PROVISION FOR EXPENSES ON T HE BASIS OF AVAILABLE INFORMATION. THE PROVISION FOR EXPENSES SO CREATED SHALL BE VERIFIED BY THE STATUTORY AUDITORS AD THEY HAVE NOT FOUND FAULT WITH IT DURING THE YEAR UNDER CONSIDERA TION. THE LD. A.R. SUBMITTED THAT THE ASSESSEE IS FOLLOWING THIS PRACTICE CONSISTENTLY OVER THE YEAR. ACCORDINGLY, HE SUBMITT ED THAT THE PROVISION FOR SOFTWARE EXPENSES IS AN ASCERTAINED L IABILITY AND ACCORDINGLY IT CANNOT BE CONSIDERED AS CONTINGENT L IABILITY. 12. THE LD. A.R. SUBMITTED THAT THE LD. CIT(A) WAS NOT RIGHT IN INVOKING THE PROVISIONS OF SECTION 40(A)(I) OF T HE ACT FOR THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT THE FI NANCIAL YEAR UNDER CONSIDERATION IS 1.4.2010 TO 31.3.2011. THE HONBLE JURISDICTIONAL KARNATAKA HIGH COURT HAS HELD IN THE CASE OF SAMSUNG ELECTRONICS COMPANY LTD. (2012) 345 ITR 494 THAT THE PAYMENT MADE FOR OBTAINING SOFTWARE LICENSES AR E IN THE ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 6 OF 16 NATURE OF ROYALTY AND HENCE IT IS LIABLE FOR DEDUCT ION OF TAX AT SOURCE. HOWEVER THE ABOVE SAID DECISION CAME TO BE RENDERED ON 15.10.2011. PRIOR TO THAT, THERE WERE CERTAIN T RIBUNAL DECISIONS HOLDING THAT THE PAYMENT MADE FOR PURCHAS E OF SOFTWARE LICENSES ARE NOT IN THE NATURE OF ROYALTY AND HENCE NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE. ACCORDINGLY THE ASSESSEES WERE UNDER BONAFIDE BELIEF THAT THEY WERE NOT LIABL E TO DEDUCT TAX AT SOURCE FROM PAYMENTS MADE FOR SOFTWARE PURCH ASES. UNDER THESE SET OF FACTS, THE VARIOUS BENCHES OF TR IBUNAL HAVE TAKEN A VIEW THAT THE ASSESSEE CANNOT BE FASTENED W ITH THE TDS LIABILITY ON ACCOUNT OF SUBSEQUENT AMENDMENT OR SUB SEQUENT RULING OF COURTS. ACCORDINGLY, THE TRIBUNAL HAS DE LETED THE DISALLOWANCE MADE U/S 40(A)(I) OF THE ACT. IN SUPP ORT OF THIS PROPOSITION, THE LD. A.R. RELIED ON THE DECISION RE NDERED BY BANGALORE BENCH OF TRIBUNAL IN THE CASE OF M/S. ACE R INDIA PVT. LTD. VS. DCIT (IT(IT)A NOS.107 TO 114/BANG/2018 DAT ED 5.10.2020). ACCORDINGLY, THE LD. A.R. SUBMITTED TH AT THE DISALLOWANCE MADE U/S 40(A)(I) SHOULD BE DELETED IN RESPECT OF PROVISION FOR SOFTWARE EXPENSES FOR THE YEAR UNDER CONSIDERATION, SINCE IT PERTAINED TO THE PERIOD PRI OR TO THE DATE OF RENDERING OF DECISION BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF SAMSUNG ELECTRONICS LTD. (SUPRA). 13. ON THE CONTRARY, THE LD. CIT(DR) SUBMITTED THAT THE PROVISION FOR SOFTWARE EXPENSES ARE IN THE NATURE O F CONTINGENT LIABILITY AND HENCE THE SAME WAS DISALLOWED BY A.O. AND LD. CIT(A). IN THE ALTERNATIVE, THE LD. CIT(A) HAS HELD THAT THE PROVISION FOR SOFTWARE EXPENSES IS LIABLE FOR DEDUC TION OF TAX AT SOURCE. SINCE THE ASSESSEE HAS FAILED TO DEDUCT TA X THERE FROM, THE LD. CIT(A) HAS DISALLOWED THE SAME U/S 40(A)(I) ALSO. ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 7 OF 16 14. WE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AN D PERUSED THE RECORD. THE FIRST QUESTION IS WHETHER THE PROV ISION FOR SOFTWARE EXPENSES IS A CONTINGENT LIABILITY OR NOT. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE I S FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THE ASSESSEE BEIN G A COMPANY, IT IS REQUIRED TO FOLLOW ACCOUNTING STANDA RDS PRESCRIBED BY ICAI AND ALSO BY THE CENTRAL GOVERNME NT UNDER THE INCOME TAX ACT. AS PER ACCOUNTING STANDARD-1 PRESCRIBED BY THE CENTRAL GOVERNMENT, THE ASSESSEE IS REQUIRED TO MAKE PROVISION FOR ALL KNOWN LIABILITIES AND LOSSES EVEN THOUGH THE AMOUNT CANNOT BE DETERMINED WITH CERTAINTY. PARAGR APH (4)(I) OF ACCOUNTING STANDARD 1 PROVIDES AS UNDER: PRUDENCE: PROVISION SHOULD BE MADE FOR ALL KNOWN LIABILITIES AND LOSSES EVEN THOUGH THE AMOUNT CANNO T BE DETERMINED WITH CERTAINTY AND REPRESENTS ONLY A BES T ESTIMATE IN THE LIGHT OF THE AVAILABLE INFORMATION. FURTHER, THE HONBLE SUPREME COURT IN THE CASE OF R OTORK CONTROLS INDIA (P) LTD. (SUPRA) HAS EXPLAINED THE N ATURE OF PROVISION FOR EXPENSES CREATED BY THE ASSESSEE AS U NDER: A PROVISION IS A LIABILITY WHICH CAN BE MEASURED B Y USING A SUBSTANTIAL DEGREE OF ESTIMATION. A PROVISION IS RECOGNISED WHEN; (A) AN ENTERPRISE HAS A PRESENT OB LIGATION AS A RESULT OF A PAST EVENT; (B) A RELIABLE ESTIMAT E CAN BE MADE OF THE AMOUNT OF THE OBLIGATION. IF THESE CON DITIONS ARE NOT MET, NO PROVISION CAN BE RECOGNISED. 15. WE NOTICE THAT THE ASSESSEE HAS FURNISHED BREAK UP DETAILS OF PROVISION FOR SOFTWARE EXPENSES CREATED BY THE ASSESSEE AND ALSO THE BASIS FOR ESTIMATING THE SAID EXPENSES. THE LD. CIT(A) HAS EXTRACTED THE SAME IN PARAGRAPH 6 & 6.1 OF HIS ORDER AS UNDER: DURING APPELLATE PROCEEDINGS THE APPELLANT WAS ASK ED TO PROVIDE THE BASIS OF ESTIMATING THE PROVISION AND W HETHER TAX AT SOURCE WAS DEDUCTED ON THE SAME (ORDER SHEET ENT RY DT. 8.11.2017). IN RESPONSE TO THE SAME THE APPELLANT MADE SUBMISSIONS VIDE LETTER SUBMITTED ON 4.12.2017. TH E BREAKUP ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 8 OF 16 OF THE VENDORS TO WHOM PAYMENT WAS TO BE MADE AND F OR WHICH PROVISION WAS CREATED IS AS FOLLOWS: SL.NO. PARTICULARS AMOUNT IN (RS.) 1. CA (INDIA)TECHNOLOGIES P. LTD. 98,12,314 2. WIPRO LIMITED 9,34,510 3. SONATA INFORMATION TECHNOLOGIES LTD. 79,92,715 4. SELECT SOFTWARES (I) P LTD. 6,000 5. MICROSOFT CORPORATION 15,94,890 6. SKELTA SOFTWARE PRIVATE LTD. 1,52,070 7. ARIBA INDIA PRIVATE LTD. 12,50,000 8. THOMSON FINANCIAL 1,33,424 9. BIQ LLC 5,52,000 10. HEWLETT PACKARD SINGAPORE 32,790 11. ORACLE CORPORATION 45,57,088 12. EMC INFORMATION SYSTEMS 1,08,810 13. TUNGSTEN NETWORK 1,18,03,850 TOTAL 3,89,30,461 6.1 THE APPELLANT ALSO MADE FOLLOWING SUBMISSIONS: 2. PROVISION FOR SOFTWARE EXPENSES AMOUNTING TO RS.3,89,30,461 WAS MADE IN RESPECT OF SOFTWARE LICE NSES USED, LICENSE UPDATES, SUPPORT SERVICES, SOFTWARE IMPLEMENTATION SERVICES, SOFTWARE AMC CHARGES ETC AVAILED/UTILIZED DURING THE YEAR FROM VARIOUS VENDO RS. IN THE ABSENCE OF INVOICES RECEIVED FROM VENDORS FOR THESE SERVICES, AT YEAR END, THE RESPECTIVE USER DEPTS PROVIDE THE LIKELY PAYMENTS TO BE MADE FOR THE SOFTWARE LICENSES/SERVI CES UTILIZED DURING THE YEAR. THE APPELLANT MADE PROVI SION FOR THE SAID EXPENDITURE AND INCLUDED THE SAME UNDER THE HE AD SOFTWARE EXPENSES FOR THE YEAR ENDING 31 ST MARCH, 2011. 16. WE NOTICE THAT THE ASSESSEE HAS EXPLAINED THE B ASIS FOR CREATING THE PROVISION FOR EXPENSES. THE LD. A.R. A LSO SUBMITTED THAT THE ACCOUNTS OF THE ASSESSEE HAVE BEEN AUDITED BY THE STATUTORY AUDITORS AND THEY DID NOT FIND ANY FAULT WITH THE QUANTUM OF PROVISION FOR SOFTWARE EXPENSES CREATED BY THE ASSESSEE. HENCE IT IS NOT A CASE THAT THERE WAS NO BASIS FOR CREATING THE PROVISION FOR SOFTWARE PURCHASES. ACC ORDINGLY, WE ARE OF THE VIEW THAT THE PROVISION FOR SOFTWARE EXP ENSES CREATED ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 9 OF 16 BY THE ASSESSEE CANNOT BE CONSIDERED AS CONTINGENT LIABILITY. ACCORDINGLY, WE SET ASIDE THE ORDERS PASSED BY TAX AUTHORITIES IN THIS REGARD. 17. WITH REGARD TO THE DISALLOWANCE MADE BY THE LD. CIT(A), WE NOTICE THAT THE LD CIT(A), ALTERNATIVELY INVOKED SEC. 40(A)(I) OF THE ACT. WE NOTICE THAT THE IMPUGNED PROVISION F OR SOFTWARE PURCHASES HAS BEEN MADE FOR THE FINANCIAL YEAR 2010 -11. THE SAID FINANCIAL YEAR FALLS PRIOR TO THE DATE OF REND ERING OF DECISION BY HONBLE KARNATAKA HIGH COURT I.E. 15.10 .2011, IN THE CASE OF SAMSUNG ELECTRONICS LTD. (SUPRA). THE COORDINATE BENCH OF THE TRIBUNAL HAS TAKEN THE VIEW THAT NO DI SALLOWANCE U/S 40(A)(I) IS CALLED FOR ON ACCOUNT OF A SUBSEQUE NT AMENDMENT OR SUBSEQUENT DECISION OF COURTS. FOR TH E SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OBSERVATION MADE BY THE COORDINATE BENCH IN THE CASE OF INFINEON TECHNOLOGI ES INDIA PVT. LTD. (IT(TP)A NO.405/BANG/2015) 25. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. THE PAYMENT IN QUESTION WAS MADE TO THE NON-RESIDENT IN THE PREVIO US YEAR RELEVANT TO AY. 10-11. THEREFORE THE LAW AS ON 31.3.2010 THE LAST D ATE OF THE PREVIOUS YEAR WAS THAT PAYMENT FOR PURCHASE OF OFF SHELF SOFTWARE WAS NOT IN THE NATURE OF ROYALTY. IN SONATA INFORMATION TECHNOLOGY LTD. V. A CIT (103 ITD 324) DECISION RENDERED ON 31.1.2006, IT WAS HELD THAT PA YMENTS FOR SOFTWARE LICENSES DO NOT CONSTITUTE ROYALTY UNDER THE PROVIS IONS OF THE ACT AND HENCE DISALLOWANCE UNDER SECTION40(A) (IA) OF THE ACT WOU LD NOT BE APPLICABLE. THE CHANGE IN THE LEGAL POSITION ON TAXATION OF COM PUTER SOFTWARE WAS ON ACCOUNT OF THE RULING OF THE KARNATAKA HIGH COURT I N CIT V. SAMSUNG ELECTRONICS CO. LTD . (320 ITR 209), WHICH WAS PRONOUNCED ON 15.10.11 THAT IS MUCH LATER THAN THE CLOSURE OF THE FY 2010- 11. SUBSEQUENTLY, THE FINANCE ACT 2012 ALSO INTRODUCED, RETROSPECTIVELY, EXPLANATION 4 TO SECTION 9 (1 (VI) OF THE ACT TO CLARIFY THAT PAYMENTS FOR, IN TER ALIA. LICENSE TO USE COMPUTER SOFTWARE WOULD QUALIFY AS ROYALTY. DURING THE FY 10-11, THE ASSESSEE DID NOT HAVE THE BENEFIT OF CLARIFICAT ION BROUGHT BY THE RESPECTIVE AMENDMENT. AS SUCH, FOR THE FY 2010-11, IN LIGHT OF THE PROVISIONS OF SECTION 9(1)(VI) OF THE ACT READ WITH JUDICIAL GUIDANCE ON THE TAXATION OF COMPUTER SOFTWARE PAYMENTS, TAX WAS NOT REQUIRED TO BE DEDUCTED AT SOURCE. GIVEN THE PRACTICE IN PRIOR ASS ESSMENT YEARS, THE ASSESSEE WAS OF THE BONA FIDE VIEW THAT THE PAYMENT OF SOFTWARE LICENSE FEE ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 10 OF 16 WAS NOT SUBJECT TO TAX DEDUCTION AT SOURCE UNDER SE CTION1941/195 OF THE ACT. LIABILITY TO DEDUCT TAX AT SOURCE CANNOT BE FA STENED ON THE ASSESSEE ON THE BASIS OF RETROSPECTIVE AMENDMENT TO THE ACT (FINANCE ACT 2012 AMENDMENT THE DEFINITION OF ROYALTY WITH RETROSPECT IVE EFFECT FROM 01.04.1976) OR A SUBSEQUENT RULING OF A COURT (THE KARNATAKA HC IT(TP)A NOS.405 & 474/BANG/2015 IN CIT V SAMSUNG ELECTRONIC S CO. LTD. (16 TAXMANN.COM 141) WAS PASSED ON OCTOBER 15,2011). CO URTS HAVE CONSISTENTLY UPHELD THIS PRINCIPLE AS SEEN IN: ITO V. CLEAR WATER TECHNOLOGY SERVICES (P .) LTD. (52 TAXMANN.COM 115) KERALA VISION LTD. V. ACIT (46 TAXMANN.COM 50) SONIC BIOCHEM EXTRACTIONS (P.) LTD. V. ITO (35 TAXMANN.COM 463) CHANNEL GUIDE INDIA LTD. V. ACIT (25 TAXMANN.COM 2 5) DCI V. VIROLA INTERNATIONAL (20 14(2) TMI 653) CIT V. KOTAK SECURITIES LTD . (20 TAXMANN.COM 846). 26. THE ABOVE DECISIONS HAVE BEEN CONSIDERED AND DI SCUSSED IN THE CASE OF INGERSOLL RAND (INDIA) LTD. (SUPRA) BY THE BANGALOR E BENCH OF THE ITAT AND IT WAS HELD THEREIN THAT PRIOR TO THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SAMSUNG ELECTRONICS CO. LTD . (SUPRA) WHICH WAS PASSED ON 15.10.2011 TRANSACTIONS CARRIED OUT ON PURCHASE OF OFF THE SHELF SOFTWARE ARE NOT LIABLE TO TDS AND HE NCE THERE CAN BE NO DISALLOWANCE U/S.40(A)(IA) OF THE ACT BASED ON SUBS EQUENT DEVELOPMENT OF LAW AFTER THE DATE ON WHICH PAYMENTS ARE MADE. 27. WE ARE OF THE VIEW THAT IN THE LIGHT OF LAW AS LAID DOWN BY THIS TRIBUNAL IN THE CASE OF INGERSOLL RAND (I) LTD. (SUPRA), THE RE CANNOT BE A RETROSPECTIVE OBLIGATION TO DEDUCT TAX AT SOURCE AN D THEREFORE AS ON THE DATE WHEN THE ASSESSEE MADE PAYMENTS TO THE NON-RES IDENT FOR ACQUIRING OFF-THE-SHELF SOFTWARE CANNOT BE REGARDED AS IN THE NATURE OF ROYALTY AND THEREFORE THERE WAS NO OBLIGATION ON THE PART OF AS SESSEE TO DEDUCT TAX AT SOURCE. THE PAYMENT WOULD BE IN THE NATURE OF BUSIN ESS PROFITS IN THE HANDS OF NON-RESIDENT AND SINCE ADMITTEDLY THE NON-RESIDE NT DOES NOT HAVE A PERMANENT ESTABLISHMENT IN INDIA, THE SUM IN QUESTI ON IS NOT CHARGEABLE TO TAX IN THE HANDS OF NON-RESIDENT. CONSEQUENTLY, THE DISALLOWANCE MADE U/S. 40(A)(IA) OF THE ACT HAS TO BE DELETED. WE DIRECT A CCORDINGLY. GROUND NO.14 BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 18. FOLLOWING THE ABOVE SAID DECISION OF COORDINATE BENCH, WE HOLD THAT THE DISALLOWANCE MADE BY THE AO U/S 40(A) (I) IS LIABLE TO BE DELETED FOR THE YEAR UNDER CONSIDERATION. ACCORDIN GLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIR ECT THE AO TO DELETE THE DISALLOWANCE. ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 11 OF 16 19. THE NEXT ISSUE CONTESTED BY THE ASSESSEE IS DISALLOWANCE OF SOFTWARE EXPENSES OF RS.1,35,82,093/- U/S 40(A)(I) OF THE ACT. THE AO DISALLOWED THIS AMOUNT ALSO FOR NON-DEDUCTION OF TAX AT SOURCE FROM THE PAYMENT MADE FOR PURCHASE OF SOFTWARE. WH ILE DEALING WITH THE EARLIER ISSUE, WE HAVE HELD THAT THE ASSES SEE CANNOT BE FASTED WITH TDS LIABILITY ON ACCOUNT OF SUBSEQUENT DECISION OF COURT OR SUBSEQUENT AMENDMENT TO THE ACT. WE HAVE ALSO E XTRACTED THE DECISION RENDERED BY THE CO-ORDINATE BENCH IN THE C ASE OF INFINEON TECHNOLOGIES INDIA PVT. LTD (SUPRA). THE SAID DECIS ION SHALL APPLY TO THIS ADDITION ALSO. SINCE THE YEAR UNDER CONSIDERAT ION FALLS PRIOR TO THE DATE OF DECISION RENDERED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF SAMSUNG ELECTRONICS LTD (SUPRA), FOLLOW ING THE DECISION RENDERED BY THE CO-ORDINATE BENCH IN THE CASE OF IN FINEON TECHNOLOGIES INDIA PVT. LTD (SUPRA), WE HOLD THAT N O DISALLOWANCE U/S 40(A)(I) IS REQUIRED TO BE MADE DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE TH E DISALLOWANCE. 20. THE NEXT ISSUE CONTESTED BY THE ASSESSEE REL ATES TO DISALLOWANCE OF SOFTWARE EXPENSES TREATING THE SAME AS CAPITAL IN NATURE. SINCE THE LD CIT(A) HAS REMANDED THIS ISSU E TO THE FILE OF THE AO WITH CERTAIN DIRECTIONS, THE REVENUE IS QUES TIONING THE AUTHORITY OF LD CIT(A) TO DO SO. 21. THE FACTS RELATING TO THIS ISSUE ARE DISCUSSE D IN BRIEF. WE NOTICED EARLIER THAT THE ASSESSEE HAD CLAIMED EXPEN SES TOWARDS SOFTWARE PURCHASES AS DEDUCTION TO THE TUNE OF RS.2 4,97,00,999/-. THE AO DISALLOWED FOLLOWING ITEMS OUT OF THE ABOVE SAID CLAIM:- PROVISION FOR SOFTWARE PURCHASES - RS.3,89,30,461 DISALLOWANCE U/S 40(A)(I)/(IA) - RS.1,35,82,093 ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 12 OF 16 THE BALANCE AMOUNT WAS RS.19,71,88,445/-. THE AO T REATED THIS AMOUNT AS CAPITAL IN NATURE. THE OBSERVATIONS MADE BY THE AO ARE EXTRACTED BELOW:- 6.3 FOR THE BALANCE AMOUNT OF RS.19,71,88,445/- I T IS SEEN THAT THE COMPANY HAS TREATED IT AS REVENUE EXPENDIT URE. IT IS TO BE STATED THAT CONSIDERING THE LIFE OF SOFTWARE, TH IS EXPENDITURE HAS BEEN INCLUDED IN SECTION 32 OF THE I T ACT AND ACCORDINGLY DEPRECIATION AT THE RATE OF 60% PER YEAR HAS BEEN A LLOWED. THE ASSESSEE HAS NOT GIVEN DATES OF PURCHASES OF THESE LICENSES. HENCE THE DEPRECIATION IS BEING ALLOWED AT THE RATE OF 30% OF RS.5,91,56,534/- AND THE BALANCE AMOUNT OF RS.13,80,31,912/- IS DISALLOWED. THE ASSESSEE WOUL D BE ELIGIBLE FOR CLAIMING DEPRECIATION ON THE BALANCE P ORTION IN THE FUTURE YEARS. 22. BEFORE LD CIT(A), THE ASSESSEE PLACED ITS REL IANCE ON THE DECISION RENDERED BY HONBLE JURISDICTIONAL KARNATA KA HIGH COURT IN THE CASE OF CIT VS. TOYOTA KIRLOSAKAR MOTORS (P) LT D (ITA NO.176 OF 2009), WHEREIN THE HONBLE HIGH COURT HAD HELD THAT THE SOFTWARE LICENCE FEE PAID FOR USE OF SOFTWARE FOR A LIMITED DURATION UPTO TWO YEARS IS ALLOWABLE AS REVENUE EXPENDITURE. HENCE T HE LD CIT(A) ASKED THE ASSESSEE TO FURNISH THE DETAILS OF SOFTWA RE PURCHASES ALONG WITH THEIR PERIOD OF VALIDITY. THE ASSESSEE FURNISHED THE DETAILS AS PER WHICH A SUM OF RS.17.95 CRORES WAS R ELATED TO SOFTWARE LICENSES VALID UP TO 1 YEAR AND THE BALANC E AMOUNT OF RS.1.77 CRORES WAS RELATED TO SOFTWARE IMPLEMENTATI ON, MAINTENANCE SERVICES, SUPPORT SERVICES, SOFTWARE LICENSES HAVIN G VALIDITY OF 1 YEAR OR MORE, SOFTWARE AMC CHARGES, FEE FOR INCLUDED SER VICES, CONSUMABLES, ETC. THE ASSESSEE ALSO FURNISHED SAMP LE COPIES OF PURCHASE INVOICES. 23. THE LD. CIT (A) NOTICED THAT SOME OF THE INVOIC ES WERE RELATED TO FINANCIAL YEAR 2009-10 AND NOT TO THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE LD. CIT(A) RESTORED THE MATTER TO THE FILE OF THE A.O. WITH THE FOLLOWING DIRECTIONS. ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 13 OF 16 ALL PURCHASE OF SOFTWARE LICENSES, FOR WHICH DETAI L OF LICENSE PERIOD IS AVAILABLE ON THE INVOICES OR IS PRODUCED BY THE APP ELLANT AND IF THE SAME IS FOR A PERIOD UP TO TWO YEARS, THE SAME SHOULD BE ALLOWED AS REVENUE EXPENDITURE, PROVIDED THE INVOICE RELATES TO THE FY 2010-11 AND TAX AT SOURCE HAS BEEN DEDUCTED ON THE SAME. IN CASE THE INVOICE RELATES TO SOME EARLIER YEAR, T HE EXPENDITURE NEEDS TO BE DISALLOWED AS PRIOR PERIOD EXPENDITURE. IN CASE RELEVANT INVOICE IS NOT PRODUCED, THE AMOUN T NEEDS TO BE DISALLOWED AS BEING NOT VERIFIABLE. IN RELATION TO EXPENDITURE INCURRED FOR SOFTWARE IM PLEMENTATION, MAINTENANCE SERVICES, SOFTWARE AMC CHARGES AND FEES FOR INCLUDED SERVICES, THE SAME NEEDS TO BE TREATED AS REVENUE E XPENDITURE AND ALLOWED AS SUCH PROVIDED TAX AT SOURCE HAS BEEN DED UCTED ON THE SAME. IN CASE OF NON DEDUCTION OF TAX AT SOURCE TH E SAME NEEDS TO BE DISALLOWED UNDER SECTION 40(A) OF THE ACT. IN RELATION TO EXPENDITURE INCURRED FOR IT CONSUMAB LES E.G. CDS, PRINTER CARTRIDGES ETC., THE SAME NEEDS TO BE TREAT ED AS REVENUE EXPENDITURE. IN CASE OF SOFTWARE WHERE THE SAME CAN BE USED PERP ETUALLY E.G. OPERATION SYSTEM SOFTWARE LIKE WINDOWS, APPLICATION SOFTWARE LIKE MS OFFICE ETC., THE SAME NEEDS TO BE TREATED AS CAP ITAL IN NATURE. THIS IS FOR THE REASON THAT IN CASE OF SUCH SOFTWAR E THERE IS NO RESTRICTION OR LIMITATION ON ITS PERIOD OF USE. NE W VERSIONS OF THESE SOFTWARE KEEP ON BECOMING AVAILABLE IN THE MARKET H OWEVER THERE IS NO RESTRICTION ON THE USE OF THE EARLIER VERSION AN D A PERSON CAN ALWAYS CHOOSE NOT TO BUY THE NEW VERSION AND CONTIN UE WITH THE VERSION. A HIGH RATE OF DEPRECIATION, WHICH IS 60% TAKES CARE OF OBSOLESCENCE OF SUCH SOFTWARE. 24. THE REVENUE IS QUESTIONING THE AUTHORITY OF LD. CIT(A) IN RESTORING THE MATTER TO THE FILE OF A.O. THE ASSES SEE IS CONTENDING THAT THE ENTIRE AMOUNT OF RS.19.71 CRORES SHOULD BE ALLOWED AS REVENUE EXPENDITURE. 25. THE LD A.R SUBMITTED THAT THE HONBLE JURISDI CTIONAL KARNATAKA HIGH COURT, IN A SUBSEQUENT DECISION REND ERED IN THE CASE OF CIT VS. IBM INDIA LTD (2013)(357 ITR 88)(KA R), HAS HELD THAT SOFTWARE EXPENSES IS REVENUE IN NATURE. ACCORDINGL Y HE SUBMITTED THAT THE ENTIRE EXPENSES SHOULD BE ALLOWED AS DEDUC TION. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE HA S TO SHOW THAT THE VALIDITY OF SOFTWARE LICENSES IS LESS THAN TWO YEARS. HE ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 14 OF 16 SUBMITTED THAT THE LD CIT(A) SHOULD HAVE DECIDED TH E ISSUE HIMSELF INSTEAD OF RESTORING THE SAME TO THE FILE OF AO, SI NCE THE LD CIT(A) DOES NOT HAVE POWER TO REMAND THE MATTERS. 26. WE HEARD THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICE THAT THE HONBLE KARNATAKA HIGH COURT HAS HE LD IN THE CASE OF TOYOTA KIRLOSKAR MOTORS (P) LTD (SUPRA) HAS HELD THAT, WHEN THE LIFE OF A COMPUTER OR SOFTWARE IS LESS THAN TWO YEA RS AND THE RIGHT TO USE IT IS FOR A LIMITED PERIOD, THE FEE PAID FOR AC QUISITION OF RIGHT IS ALLOWABLE AS REVENUE EXPENDITURE AND IF THE SOFTWAR E IS LICENSED FOR A PARTICULAR PERIOD, FRESH LICENSE FEE IS TO BE PAI D FOR UTILIZING IT FOR SUBSEQUENT YEARS. IN THE CASE OF IBM INDIA LTD (SU PRA), IT WAS DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT AS UNDER:- 9. THE SECOND SUBSTANTIAL QUESTION OF LAW RELATES TO APPLICATION OF THE AMOUNT UTILIZED FOR PROJECTS OF SOFTWARE IN A SUM OF RS.33,14,298/-. THE TRIBUNAL ON CONSIDERATION OF THE MATERIAL ON RE CORD AND THE RIVAL CONTENTIONS HELD, WHEN THE EXPENDITURE IS MAD E NOT ONLY ONCE AND FOR ALL BUT ALSO WITH A VIEW TO BRINGING I NTO EXISTENCE AN ASSET OR AN ADVANTAGE FOR THE ENDURING BENEFIT, THE SAME CAN BE PROPERLY CLASSIFIED AS CAPITAL EXPENDITURE. AT THE SAME TIME, EVEN THOUGH THE EXPENSES ARE ONCE AND FOR ALL AND MAY GIVE AN ADVANTAGE FOR ENDURING BENEFIT BUT IS NOT W ITH A VIEW TO BRINGING INTO EXISTENCE ANY ASSET, THE SAME CANN OT BE ALWAYS CLASSIFIED AS CAPITAL EXPENDITURE. THE TEST TO BE APPLIED IS, IS IT A PART OF COMPANY'S WORKING EXPENSES OR IS IT EXPENDITURE LAID OUT AS A PART OF PROCESS OF PROF IT EARNING. IS IT ON THE CAPITAL LAYOUT OR IS IT AN EXPENDITURE NECESSARY FOR ACQUISITION OF PROPERTY OR O F RIGHTS OF A PERMANENT CHARACTER, POSSESSION OF WHICH IS CONDITION ON CARRYING ON TRADE AT ALL. THE ASSESSEE IN THE COURSE OF ITS BUSINESS ACQUIRED CERTAIN APPLICATION SOFTWARE. THE AMOUNT IS PAID FOR APPLICATION OF SOFTWARE AND NO T SYSTEM SOFTWARE . THE APPLICATION SOFTWARE ENABLES THE ASSESSEE TO CARRY OUT HIS BUSINESS OPERATION EFFICI ENTLY AND SMOOTHLY. HOWEVER, SUCH SOFTWARE ITSELF DOES NOT WO RK ON STAND ALONE BASIS. THE SAME HAS TO BE FITTED TO A C OMPUTER SYSTEM TO WORK. SUCH SOFTWARE ENHANCES THE EFFICIEN CY OF THE ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 15 OF 16 OPERATION. IT IS AN AID IN MANUFACTURING PROCESS RA THER THAN THE TOOL ITSELF. THUS, FOR PAYMENT OF SUCH APPLICATION SOFTWARE, THOUGH THERE IS AN ENDURING BENEFIT, IT D OES NOT RESULT INTO ACQUISITION OF ANY CAPITAL ASSET. THE SAME MER ELY ENHANCES THE PRODUCTIVITY OR EFFICIENCY AND HENCE T O BE TREATED AS REVENUE EXPENDITURE. INFACT, THIS COURT HAD AN O CCASION TO CONSIDER WHETHER THE SOFTWARE EXPENSES IS ALLOWABLE AS REVENUE EXPENSES OR NOT AND HELD, WHEN THE LIFE OF A COMPUTER OR SOFTWARE IS LESS THAN TWO YEARS AND AS SUCH, THE RIGHT TO USE IT FOR A LIMITED PERIOD, THE FEE PAID FOR ACQUISITI ON OF THE SAID RIGHT IS ALLOWABLE AS REVENUE EXPENDITURE AND THESE SOFTWARES IF THEY ARE LICENSED FOR A PARTICULAR PERIOD, FOR U TILIZING THE SAME FOR THE SUBSEQUENT YEARS FRESH LICENCE FEE IS TO BE PAID. THEREFORE, WHEN THE SOFTWARE IS FITTED TO A COMPUTE R SYSTEM TO WORK, IT ENHANCES THE EFFICIENCY OF THE OPERATION. IT IS AN AID IN MANUFACTURING PROCESS RATHER THAN THE TOOL ITSELF. THOUGH CERTAIN APPLICATION IS AN ENDURING BENEFIT, IT DOES NOT RESULT INTO ACQUISITION OF ANY CAPITAL ASSET. IT MERELY ENHANCE S THE PRODUCTIVITY OR EFFICIENCY AND THEREFORE, IT HAS TO BE TREATED AS REVENUE EXPENDITURE. IN THAT VIEW OF THE MATTER, TH E FINDING RECORDED BY THE TRIBUNAL IS IN ACCORDANCE WITH LAW AND DO NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE SECOND SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESS EE AND AGAINST THE REVENUE. 27. WE NOTICE THAT THE HONBLE HIGH COURT HAS HEL D IN THE CASE OF TOYOTA KIRLOSKAR MOTORS P LTD (SUPRA) THAT THE SOFT WARE EXPENSES ARE ALLOWABLE AS REVENUE EXPENSES, IF THE VALIDITY OF LICENSES IS LESS THAN TWO YEARS. THE HIGH COURT HAS ALSO LAID DOWN THE TESTS THAT SHOULD BE CONDUCTED TO DETERMINE THE NATURE OF SOFT WARE EXPENSES IN THE CASE OF IBM INDIA LTD (SUPRA). ACCORDINGLY, WE ARE OF THE VIEW THAT THE NATURE OF SOFTWARE EXPENSES, I.E., WHETHER IT IS CAPITAL OR REVENUE IN NATURE, HAS TO BE DETERMINED BY FOLLOWIN G THE TWO DECISIONS OF HONBLE KARNATAKA HIGH COURT REFERRED ABOVE. WE NOTICE THAT THE TAX AUTHORITIES HAVE NOT EXAMINED T HIS ISSUE ON THE ABOVE SAID LINES. ACCORDINGLY, WE SET ASIDE THE OR DER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FI LE OF THE AO FOR EXAMINING IT AFRESH IN THE LIGHT OF DISCUSSIONS MAD E SUPRA. ITA NO.491/BANG/2018 INFOSYS BPM LTD., BENGALURU PAGE 16 OF 16 28. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE APPEAL OF REVENUE I S TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DEC, 2020 SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 11 TH DEC, 2020. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.