Tribunals
Summary and Review of Case Laws Decided by Income Tax Appellate Tribunals
Thursday, 09 June 2016 12:22

E-Connectivity Charges are Revenue in Nature as they Do Not Result Either in the Acquisition of Software by the Assessee or in any Enduring Benefit to the Assessee- Mumbai Tribunal

Written by
  • font size decrease font size increase font size
  • Print
  • Email
  • Be the first to comment!
Rate this item
(0 votes)

E-Connectivity Charges are Revenue in Nature

E-connectivity charges incurred by the assessee are revenue in nature as they do not result either in the acquisition of software by the assessee or in any enduring benefit to the assessee

Gist

1. This appeal by the assessee is directed against the final order of assessment passed under section 144C(13) r.w.s. 143(3) of the Income Tax Act, 1961 (in short 'the Act') dated 12.10.2009 in pursuance of the directions of the Dispute Resolution Panel-II (DRP), Mumbai issued under section 144C(5) of the Act on 20.09.2010

2. The assessee-company, engaged in the manufacture and trading of pharmaceutical products, filed its return of income for A.Y. 2006-07 on 29.11.2006 declaring total income of Rs. 23,72,68,243/-

3. The impugned order was passed under section 144C(13) r.w.s. 143(3) of the Act on 12.10.2009 wherein the income of the assessee was determined at Rs. 23,72,70,189/- in view of, inter alia, disallowance of Rs. 20,56,266/- on account of e-connectivity expenses

4. Assessee has assailed the action of the AO in making a disallowance of `20.56,266/- by considering e-connectivity charges as capital expenditure by holding that this expense is incurred for acquiring software and resulting in benefit of enduring nature

5. Honb. Tribunal decided the issue in favour of Assessee respectfully following the decisions of the Coordinate Bench in the Assessee’s own case

Adjudication

Respectfully following the decisions of the Coordinate Bench in the Assessee’s own case for A.Y. 2004-05 in ITA No. 6681/Mum/2013 (supra) and for A.Y. 2009-10 in ITA No. 1442/Mum/2014 dated 18.05.2016 we hold that the e-connectivity charges of Rs.Rs. 20,56,266/- incurred by the assessee are revenue in nature as they do not result either in the acquisition of software by the assessee or in any enduring benefit to the assessee. In this view of the matter, we direct the AO to delete the aforesaid disallowance of Rs. 20,56,266/- made in this regard. Consequently, ground No. 1 of the assessee’s appeal is allowed.

Cases Referred to

Asahi Safety Glass Ltd (346 ITR 329)

Additional Info

Read 2303 times Last modified on Thursday, 09 June 2016 12:58
Amit

Amit is a Chartered Accountant and a part of Taxpundit's Support Team. He has experience in various industry sectors including manufacturing, power and utilities, financial services, alternative investments etc. He is a passionate blogger and keep writing articles on Income Tax for various publications.

This email address is being protected from spambots. You need JavaScript enabled to view it.

Leave a comment

Thank you for reading! We welcome and appreciate your comments, but at the same time, make sure you are adding something valuable to this article. If you have any serious queries, suggestions or anything related to this article, feel free to share them, we really appreciate that.

If you want to give us any feedback or report any errors, you can email your concerns on taxpundit@taxpundit.org and we'll revert back soon.

Most Popular Case Summary

  • Default
  • Title
  • Date
  • Random
load more hold SHIFT key to load all load all

Recommended Articles

 

Have you done Analysis of any Case? Tell Us About It.

SITE INFORMATION

All content herein is the copyright of Taxpundit. No images, text, or any other content may be, reproduced or redistributed without the express written consent of Taxpundit.

All Rights Reserved. All Content Copyright.

Newsletter

Subscribe to our newsletter and stay updated on the latest developments and special offers!

Company Master Data Since 1900. More than 1.75 Million Records. Register/Login to get FREE access. Read more
Toggle Bar