Ita 313/2013 v. Acl Wireless Ltd.through

.,N THE HIGH COURT OF DELHI AT NEW DELHIreservedon ^ 23-2013%JudgmentSept-mbe.Judgmentpronouncedon. 10 uecem CIT - 1 ITA 313/2013 Appellant ThroughMr. Abhishek®''-Standing Counsel & Ms.Anshul Sharma, Advocate. Versus ACL WIRELESS LTD.Through Nemo Respondent gg^E MR. JUSTICESANJIVKHANNAHON'BLEMR. JUSTICESANJEEVSACHDEVA RANJEEV SACHDEVA, J. For order see ITA No. 254/2013 L. ANJEEVSACHDEVA,J. lo"" DECEMBER, 2013St SANJIV KHANNA,J. ITA 313/2013 Page 1 of 1 Signature Not VerifiedDigitally SignedBy:AMULYA ^ *JN THE HBGH COURT OF DELHI AT NEW DELHI ox,Judgmentreservedon :23^^^September.2013Judgmentpronouncedon;10 December,20 +ciT-1 ITA.254/2013 Sc 313/2013 /• ACUWIRELESSltd.Through 8HOMM^EI¥iR. JUSTSp^^SAJM^!VKHAMNAI HOM'BLESVIR. JUS^pES^N'OEEVSACHDEVA SACHDEVA,J. 'i|' 1.ITA No.. 254/^013 p^feHainstd''Asses§ment^04 and impugnsorder of ITAT dated 2B.08.^p;i2&ITANo.313/2013 pertains to Assessment,Year 2007-08and impugnsorder of ITAT dated 19.10.2012. I 2.These appealshave been filed by the Revenue undersection 260A of the Income Tax Act,' 1961 (for short Page lot" 23 ITA 254/2013 «& 313/2013 "the Act") impugningthe ordersITAT has acceptedtheIappealsof theAssesseeanddeletedtheadditionsmade by the AssessingOfficer\A/ith regardto productimprovementexpenseS;VirrOIhe.;->As„sessingOfficerhadtreatedit^iDrovbmemf^^^as thei'pro^jgct capitalexpenditureanddisallowedequivalent',arih'ount as+'--vrevenue ;expenditure'.'ITAT:hasheld to the'contrai^k;?The; Assesseeis a. companywhichis involved'lnthe'V-" ."'•businessof softwgX^ik',d,fe;y;i%l:5i55ri3ent.Thecommercia•Ii'•I;j1 operations'started' •In •''/H ihe; V feihaifibialMYear 2002-03. Thi'H•|\ Assessee provides/wireless .solutions for mobile•^consumersandenterprises:..ThesoftwareI..;&/'•#'developmentrelateslto:the fieldof ihstantsrrie.ssdgingv...i> J.--X't,•>'.->f-0'(IM);It employedandfunctionedwithZ/a ^barnofsoftwareprofessionals.They deVelojDed .hew softwareand were alsoinvolvedin: continDousimprovementinthe existingsoftwarein terms of improvements,speed,usage,storageand providingenhancedfeatures.TheAssesseehadsignedrevenuesharingagreements with mobile service providerslike Airtel, Vodafone,etc. iTA 254 of 2013 4.During the Assessrripnt.Year2003-04, the Assesseehad capitalized the* pfodiUct developmentexpensesfor ^^theproduct(software) launehe'^Hin therelevant assessniehtyearf However, un(|iei^the^fheadhad capitalized the* pfodiUct developmentexpensesfor ^^theproduct(software) launehe'^Hin therelevant assessniehtyearf However, un(|iei^the^fhead,y Productlmprove|rhentExpenses',the Assesseeft'asclaimedRs.90,37/^5^^'jagexpendituf^'"%claimedRs.90,37/^5^^'jagexpendituf^'"%5. ;•The Assessee was asked by the AssessingOfficer tpii% explain as to why^the exp,ehsg,s incurred on produdt% improvementsh,o:uld^nidt"bei<GBpitaliIn response,Six .".-'ri'!. , i'-.,I'v'-y"-'Si.Wwas ;;.sybm;itt^d,;:v:that,, the'^1mp,r6vem;pi^v;.^o^'^% improvementsh,o:uld^nidt"bei<GBpitaliIn response,Six .".-'ri'!. , i'-.,I'v'-y"-'Si.Wwas ;;.sybm;itt^d,;:v:that,, the'^1mp,r6vem;pi^v;.^o^'^v.,1•.0'software';.was'a ,, regularfeatureah^.f^3in€ethetechnoiagy'ofJmSfeijgiphpn^^fastestchangingtechridlogies' and; ^tci" keeppace,theAssesseewasrequiredto upgrade/improve/modifyits product on constantbasis.Product improvementwas part and parcel of the businessof the Assessee.technoiagy'ofJmSfeijgiphpn^^fastestchangingtechridlogies' and; ^tci" keeppace,theAssesseewasrequiredto upgrade/improve/modifyits product on constantbasis.Product improvementwas part and parcel of the businessof the Assessee. ITA 254/2013& 313/2013 ITA 254/2013& 313/2013 The expenses incurred by the Assessee for productsiimprovement did not result in any ' new product,i.!howevermodified and new featureswere added toIithe existing product,jdepending,,.onrnarket/technologyrequirements.,,; TheAssesseeclaimedthese in nature as Jhe wereexpenses to |b^ revenue sampbeingincurredin the 'ordinary^course^©f bTheJ'said expinses were essential to. stayljn theIFi'S"'s"'->1,'•.•iff?'#'I'j;-0litiginess of rapidly'changing technological world qf#1I'Iimobile communications.y.i 6. I The Assessing .Opi^r, i/i||e ^js assessment orderdated23?0.d.2dQ6^•treatedi the said",expenses'ascapital ,expenditure;on the ground!that the 'software the ^d there washadflbeteWcapitilize^ by y^ssessee',a dedicated"Kci-i-.team''-of professionalsI-5whcgser job- was tocarry out further improvementin the software-andtheexpenses incurred were to enhance the value of thecapital asset resulting in enduring ibenefit.TheAssessingOfficer thusdisallowed: theproduct 8. ImprovementexpensesofRs.90,37,605/-holdingthem to be capita!innature. The CIT (Appeals),vide his order dated 02.02.2010,dismissedthe appeal of the Assesseeand confirmedthefindingsoftheAssessing,.Officer-:- thattheexpiensesincurredbythespecialized\ tearn');-,were•/elated 'toprodudt-;develbprrieht andresultedinI':'."freleaseofanewversion'.ofthesoftwarewithenhancedfeaturesyov6r,the earlierversion. The Cl^(Appeals)confirmedthe findingsof the Assessing1Officerthat the natureof activityundertakenby thei"•.. softwaredevelopmentteamhad resultedin creationi•Jofnewproductsandassets,whichwerfe; havingenhanced-featuresof enduringi benefit;"', '' •. Aggrievedby the order dated 02.02.2012of the CIT(Appeals),the Assesseefiled an appealbefore theITAT,whovidetheorderdated28.08.2012have. agreed with the contentionof the Assessee. The ITAT noticedthat in the immediatelyprecedingassessmentyear,totalexpenditureincurredby theAssesseewas of Rs. 10,68,788/-,which was allowedby theAssessin^gOfficer andin thesucceedingassessmentyear,expenditureofRs],1:,25,76,T45/-was::alsoallowedby the,AssessingOfficer.Th,e ITATfurther'!;noticedt i^t '-theclaim :.of theAssess'^^eof'>,.i3•^yR^i2^5,43,448/r -toWardS'ppbductimproij/em'^ntexpensesinthe'^'-'-year''2wasalsoni|t\'tdisallowed.In vieW of the fact' that expenditurein then• r,'f!immediateprecedingassessmentyearandin the •li'§V'._ immediatesucceedingassessmentyearhadbe.^htl'V• :' •'&•allowedaind^ no ' disallowahce -iHadM'been rpjade'w>-y•••.•• •tdwaf'dk-', product,improvementexpefi.ses'fortheAssessrrietnt,th^f^TAT'''h^that thedisallowance'f'macJe"''in the'^ ybar underconsiderationwas not justified. 10. The ITAT also noticedthe fact that the softwarewasdevelopedin the earlieryear andduringthe year ITA254/2013&313/2013 under consideration,improvementwas done and onaccountofwhich,theAssesseehadincurredexpendituretowardssalary,communicationexpenses,hostingcharges,equipmenthire charges,officejent,electricalexpenses/'!-.-, legalandprofessional^Expensesandconsultancycharges.TheITATheldtheseexpensestobe' reyenueinVrt"AI'nature and set" a&jde" the ,findings of the Asse,ssi^^gji officer and CIT '(/^ppealfe)'th'^^^^expens^ we^capitalin nature."-r'.fjviaiIThe ITAT reliedon;'thevdjecof the Delhi Hig|i"I'.S,:Court in -the cBse o^ CIT vs. •Asahi^Sndia Saf^y•'••!/iGlass' '• Ltd../• (2012^.346 ITR 329 ("DfeL.;..-i 'The.V-, Delhi,jflighCo'iirtrelyingonvariousjudgmehts''J,including^'iv •decisionsof the S'upreme Court "held asf,under;- ft I .11 .f; • "the test of!enduringbenefit is not a'certainor a conclusivetest which the courts can applyalmostby rote;. What is requiredto be seen isthe real intent and purpose of the expenditure ft I .11 .f; • "the test of!enduringbenefit is not a'certainor a conclusivetest which the courts can applyalmostby rote;. What is requiredto be seen isthe real intent and purpose of the expenditure andwhether' the'expenditureresultsincreationof fixedcapitalfor the Assessee.It isimportanttobearinmindthatwhatisrequiredtobeseenisnotwhethertheadvantageobtainedlasts forever.butwhethertheexpense;jncuri:ed-- does^, away;, withar,ecurrihg,expehse(s)defrayed towards-runqjng|;- a .business as .;agaihst an expense un'dettake^^;p/•y,ifor "the benefit-of"i''-•the businessas a whole.In./"''^other words, the-expenditurewhich is incurre.d)ij''•'• •fwhichenablesthe,'prof.it-rnakingstructureto|i'rjwork moreefficientlyleaving the source of theprofit-makingstructure untouched, would, in,|jourview,be.;;ariexRen,seinthenatureof•••' ' "v'IifVrevenueexpenditure.Fine, tuningbusiness• 'iv-' ',v'#opieratibnsutoenable the management=.to run ;§»V its, '.xbukin.ess"" effectively,effieiently'/'-vahd/"'<p,rdfitably ; leaving,thefixed assetsuntouchedwouldbe, an ' expenditurein 'thenatureofrevenueexpenditureeventhoughtheadvantagemaylastforanindefiniteperiod.Thetestofenduringbenefitoradvantagewould thus collapsein such like cases.It would,in our view,be only truerin cases which deal V withtechnologyandsoftwareapplication,whichdonotinanymannersupplantthesource of income or added to the fixed capitalof the Assessee." 12.The ITAT also-reliedon-the judgment of.,the Delhi HighCourt in'1:hercase idf 1ndo Rama Symthet/c^ fNp/A Ltd..iTR 18'.wher^^the e6,ui;fcha%held..sI''' if'""Court in'1:hercase idf 1ndo Rama Symthet/c^ fNp/A Ltd..iTR 18'.wher^^the e6,ui;fcha%held..sI''' if'"";tMat the= expenditure^ariGurrediwhi^was in'the; natureJfOf salaries, wages,-^paitsJI'ma^^des|g# atid^"I^"Iil engineeringfee, etc. and incui^redin the normal courslil'I;! ofbusinesstowardstheassignmentgivent'cV',,•'I:!consultants for the! purposes of;improving operational!•<<.p'il'I;! ofbusinesstowardstheassignmentgivent'cV',,•'I:!consultants for the! purposes of;improving operational!•<<.p'efficiencyand was pot towards acquiringany enduringb^t|efit--inVth^;;"capHai'fieibusirfe^s^v;hloreefficiently and.profitahilY.ff-^ wasallowable is;businessexpenditure.""• 'b^t|efit--inVth^;;"capHai'fieibusirfe^s^v;hloreefficiently and.profitahilY.ff-^ wasallowable is;businessexpenditure.""• ' 13.The ITAT held that no capita! asset had been acquiredbytheAssesseeandthemajorportionoftheexpenseson accountof salarypaid,rent, consultancybytheAssesseeandthemajorportionoftheexpenseson accountof salarypaid,rent, consultancy charges,electricitycharges,etc. were not for creatingany capitalassetUsed for enduringbenefitbut wereincurredin thenormalcourseof businessandwerethus revenuein nature. 14.Having, heard, counsel for the rev.enueand Gp,nsiderjngthe^grouhdsdf appeal,we find no meritiiri/theappeal.The findings recorded by the I'TAT are factual. \^he .IHTAir?,; hasheldthatcihthe,immediatelypne'Qedit|gili'f•'• f/v assessmentyear,'totalexpenditureincurredbyth'e•1'KI;•Assesseetowardsproductimprovementwasdfli^^ 'IRs.10,68,788/-,whjich*:was-allbwedby the Assessing•'I'•'|vOfficerand;, in 'thesucceeding'assessmentye^r,expenditureof'•Rs.'t-25,76,145Awas also sallowedbythe 'AssessingOfficer.Furtherthat the' clciim'''oftheAssesseeofRs.2;05,43,448/-towardsproductimprovementexpensesin the year 2006-07was alsonot disallowed. 15.TheITAThasheldthatinviewofthefactthatITA 254/2013 & 313/2013 254/2013 & 313/2013 & 313/2013 313/2013Page 10 of 23 ITA 254/2013 & 313/2013 254/2013 & 313/2013 & 313/2013 313/2013 expenditurein the immediate preceding assessmentyear and in the immediate succeeding assessmentyear had been allowed and no disallowance had beenmade towardsproduct improvementexpenses'fortheAssessment' Year 2006-07; ;therdisallo\)vancemade inthe :i(;earunder:Considerationis not justified, '"j, 15.TheITAThasheldthatinviewofthefactthatITA 254/2013 & 313/2013 254/2013 & 313/2013 & 313/2013 313/2013Page 10 of 23 ITA 254/2013 & 313/2013 254/2013 & 313/2013 & 313/2013 313/2013 expenditurein the immediate preceding assessmentyear and in the immediate succeeding assessmentyear had been allowed and no disallowance had beenmade towardsproduct improvementexpenses'fortheAssessment' Year 2006-07; ;therdisallo\)vancemade inthe :i(;earunder:Considerationis not justified, '"j, 16.Jhe irrAT has heild[that;the:s9ftwarewas de^elope^inrithe ..earlier years' and during theyear'•'J,und^^^rithe ..earlier years' and during theyear'•'J,und^^^s'l consideration,improvementwas done and on accout|t;;•?' • • •'h' ofwhich,theAssesseehadincurredexpenditure:'•towardssalary,corhmunicationexpenses,hostiqg;;•?' • • •'h' ofwhich,theAssesseehadincurredexpenditure:'•towardssalary,corhmunicationexpenses,hostiqg'^'charges, equipment 'hii"e charges,-office rent, electri.eal. V;-,v-'^^#. V;-,v-'^^#expenses,''-^legalai7id, professional , e'xpehSes -y andThese .have beenThese .have beenconsultancy !charges.expensesheld to be revenuein nature.'held to be revenuein nature.' 17.The ITAT has found that no capital asset had beenacquired or createdby the Assessee..The major of onacquired or createdby the Assessee..The major of onportion the expenses account of salary paid, ITA 254/2013&313/2013 rent,,consultancycharges,electricitycharges,etc.werenotforcreatinganycapitalassetusedforenduringbenefitbutwereincurredin . thenormalcourse of business, and were revenuein nature. 18.The As.sessee:is engagedin the-business'o.^,providingwireiesssolutionfcir mobile consuhnersand.ent^^rise.The Rsciifiware,in }:issuei^^ rih/i thefield '^ofins1:anti7,-4'-iJ;U%^messagingwhich- i,is' •usedsin.' mobilephoninq";,,.Thei§^ ^-/v..'^'1[^product'of theAssesseerelatesto mobilephonbjV-;'•••" • ' ' •••"'^1E]lii communication/messaging.''i'Ther'^ technology of mobillH'•^,Mphoningis rapidly chahging; .and improvingday by day'.v);,'*•' ••0/Updatesto the existingsoftwareare providedvirtually,r.•ro'n,day- to day' basis; -The requirementbf.,mobiledsers•fe,iA^''''•h•r'"' ''•''^''-0keeps, changingrapidly.To kee'p pace'wjt'htlnie rapidchangingHequirembht'of-mobileuserSi|;:thesoftwareprovidersaremaking'improvementsin theexistingsoftwareandprovidingnewupdatesandproductfeaturesbymodifyingtheexistingfeaturesandbyaddingnewfeaturestotheexistingproduct.The company which is not able to keep pace with theincreasingdemandsfor newer productsand featuresis left behind for not being able to keep pace with theimprovementsin ttpe industry:Keeping in view therapid changingrequirements,every companyin thefieldofsoftwaredevelopmentspeciallyib't mobilephbning'hasto keep' modifying and enhanc^ing'^their'''••' 'I' ' "/productsandprovide'updates'onregular'^^basjis...--a''•iiySofiiware upgradation/isrequired to keep and "ensure--.r, ,, I4; marketabilityof th§saidproduct.Saleabilityof - a1/fjsoftware or upgrade'lasts driiy as long as a newd^v;.:, ,•.-B-''I,updateorupgrade1shot' available.TheperiodBetween'5ileikupgrade'and,the other is hbt^-;s^ubst^ptialonliahd'Ss'such,there may be no, enduri.ng!:b^.n^fitofthesoftware.Thisisclearandapparent -fromtheamounts spent on poftware improvement. 19.Tokeeppacewiththerequirementsandensureproduct saleability, software development companieshavetoconstantlyincurexpendituretoupgrade, ITA 254/2013&'313/2013 improve and remove problem areas of the software.They have to employ professionalswhose job is tocontinuouslyupgrade the softwareand provide newerfeaturesand updates on a regular basis. The shelf lifeof the software .without constant .im^provement would•'\, 'i.,''''v . •'•'/ • • ".'1be very small./'•: 20. Expenditurewhichv;enables;the;profit making;strudt|Jre morethe source morethe source/}to 'v)Aofk efflqi^ntl^leavi;ng^'V makingstructureuntouched,wouldberevenuei.f 1 . ill, nature. 21.': The facts as noticed^herein above show that ti'b•vf•vf"Revenue-r.ha's,notdisputed , thefollowingfactualpd&iti6J-••#pd&iti6J-••# 19.Tokeeppacewiththerequirementsandensureproduct saleability, software development companieshavetoconstantlyincurexpendituretoupgrade, ITA 254/2013&'313/2013 improve and remove problem areas of the software.They have to employ professionalswhose job is tocontinuouslyupgrade the softwareand provide newerfeaturesand updates on a regular basis. The shelf lifeof the software .without constant .im^provement would•'\, 'i.,''''v . •'•'/ • • ".'1be very small./'•: 20. Expenditurewhichv;enables;the;profit making;strudt|Jre morethe source morethe source/}to 'v)Aofk efflqi^ntl^leavi;ng^'V makingstructureuntouched,wouldberevenuei.f 1 . ill, nature. 21.': The facts as noticed^herein above show that ti'b•vf•vf"Revenue-r.ha's,notdisputed , thefollowingfactualpd&iti6J-••#pd&iti6J-••# (A)Th'e'^Assessee.'Was irivolved in -business' of softwaredevelopmeh.t.,, ,,developmeh.t.,, ,, (B)The software developed by the Assessee was"used inmobile phones and instant messaging.mobile phones and instant messaging. (C)The original cost for development of software wascapitalised.The quantum of the said developmentcost was/is not in dispute or under challenge.capitalised.The quantum of the said developmentcost was/is not in dispute or under challenge. (D)Therespondent-Assesseeincurredproductimproverrientexpenseswhich^ relatedtoupgradation,^ihiprbvenlent, -removal o^glitchesofimproverrientexpenseswhich^ relatedtoupgradation,^ihiprbvenlent, -removal o^glitchesofvthe existing or already developed '.software,,The.^ quantum of expensesarid the nature of-.ch.aracte^rof'/'/the expenses-incurred,i.e. softvvareimprovementdnd,,fef'^'upgradationwas^js/not.disp'uted or questigped -l^yH|ifljthe Revenue.•%i;|;• ' • .^I'fljthe Revenue.•%i;|;• ' • .^I'22 4 Tine question raised' Is; wHether expenses incurred or^'I•. areas in. anliyi upgrading, improving'or-rerhovihgproblenn%'f/-Existing old product, shall be capitalised or treated^asThe of thethat'I•. areas in. anliyi upgrading, improving'or-rerhovihgproblenn%'f/-Existing old product, shall be capitalised or treated^asThe of thethatreyen.ueexpe finding tr.ibunal^^.j^^^^werewerethese . upgradationsrequiredcqristahtly andperpetually.iThe Asdessee had to keep>'pacewith therapidly changing requiret¥ientsof the mobile phoneusers.TheAssesseewascompetingwithothersoftware providers.Thus, new features,upgrades,perpetually.iThe Asdessee had to keep>'pacewith therapidly changing requiret¥ientsof the mobile phoneusers.TheAssesseewascompetingwithothersoftware providers.Thus, new features,upgrades, ITA 254/2013 & 313/2013 23. patchesfor removingglitcheshad to be provided,tokeep up with matchingneeds and requirementsof themobile phone users. The aforesaid-exp'feshditure did not bring into existenceanew assetbijtrectifiedand .improvedtheproductbeing sold. It is accepted that there has to bejecurringexpenditurewhichhastobeincurredin'; theSaid"businesstoensuresaleofthesoftware.,Thisexpenditurewas incurred for removal of obstructions),(1.'•K)^ restrictionsor disabilitiesbh the sale and to ensureS that therewas demandof the saidproduct.Theseiwerenormalday-to-dayexpensesforrunningtheb%ines's-in'question and did not create%ndijTihgor advaht'ageor benefit over a long period time-' Whiledetermininganddecidingaquestionwhethertheexpenditureiscapitalorrevenueinnature,thedeterminationshouldbe basedupon considerationoffacts and circumistancesand by applyingprinciplesofcommercialtradingandbusinessexpediency. ii 24. Enduringbenefit test is not a universaltest and canbreaksdown.We findthat the saidprincipleshavebeen rightly appliedby the tribunalin the facts of thepresentcase to hold that expenditure.incurredwasrevenue in'n&tureand not capital; ii 24. Enduringbenefit test is not a universaltest and canbreaksdown.We findthat the saidprincipleshavebeen rightly appliedby the tribunalin the facts of thepresentcase to hold that expenditure.incurredwasrevenue in'n&tureand not capital; In Q^se the expenditure isfVnot incurred? oh tli^, said/s.r_^capital-assetthe', sarne would ybeeorne unsalable \andiobsolete.Thereforeto ensuremarketabilityf--of tljj^e)vIexistingrepeatedand cohstgnt icost had to be incurred•• •• • ^, i•,•,Mj•] toupgrade andremove^ glitches etc.In^ucp'Ij; circumstancesin AlembicChemical Works Co. Ltc)'.•,•• ••!•"%. CIT [(1989)17^ ITR 377 (SC)] the SupremeCourtjbfidia hasrheld;'asunder#'"•••'^'tli'e' -"jmprovisationintheprode^s^aridtechn.diogyin" sbrtle:'areas'of: the# enterprisewas supplen^entalto the existingbusinessandtherewasnomaterialtoholdthatitamountedtoaneworfreshventure.Thefurthercircumstancethattheagreementpertainedto a product already in the line of fI % the Assessee'sestablishedbusinessand not toanewproductindicatesthatwhatwasstipulatedwasanimprovement,intheoperationsof theexistingbusinessanditsefficiencyand,profitabilitynot removedfromtheareaof theday-to-daybusinessof theAssessee'sestablishedenterprise.,if.•H'J,K\Itappearstousthat'theanswer "to ,.the'';|v'f.'.questionsreferredshouldbe onthe basis that,,)-'''"the financialoutlaylunder'the agreementwajs;i<fAfor the better,nduct."'.andImprovennentofthe existing business andjshould,therefore,beheldtoberevenueexpenditure.Referencemay also be jinade,tothe, .observationsof thisfcount'inCIT y: .Ciba of IndiaLtd.[19,68.]69 ITR692.^# Thereisalsonosingledefinitive, criterionwhich,by itself,iis determinativeas to/whethera particularoutlayis capital: or revenue.The'oncefor all' payment test is also inconclusive.What is relevantis the purpose,ofthe outlayand its intendedobjectand effect,consideredin a commonsenseway havingregardto the businessrealities,in a givencase, the test of'enduringbenefit'mightbreai< down-In CIT v.AssociatedCement CompaniesLtd. [1988]172ITR 257 (SC) at p. 262, this court said;. "As ' dtDservedby theSupreme. Courtinthe decisionin Empire JuteCo. Ltd. y. CIT_ [1980] 124 ITR 1\(SC), that therg:;may%i:cases . where --• 'expenditure,everi?if%,.' *•''''Uvincurredfor obtaininganadvantage.-[df%1,enduring^ benefit,may, none,theless,'bef''*onrevenueaccountandthetestofenduringbenefitmay break down.It isnot every, advantageof enduringnatureacquired,.by'ahAssesseethat brings the', .. .I-;''.;'-casewithin, the principleslaid.; i'downin, thiktest."\A/hat=is imaterialto, cons.iden|, isj/''' .;'- 'thenatureoftheadvantagein. ^'acommercialsenseandit ,is .only .wherethe advantageis in thecapital .field thattheexpenditurewouldbedisallowableon an applicationof this test"" f.i:'yf•. , ^\^';;^ .^ iV\i\''a v;' 25.Wennaynoticethatintheimmediatepreceding ITA 254/2013 & 313/2013 assessmentyearandin theimmediatesucceeding7,assessmentyear to the year in issue, expenseshavebeenallowed.In the AssessmentYear 2006-07,theclaimof the Assesseetowardsproductimprovementexpenditurehas|, not beendisallowed.'Themajorportion'ofthejexpenses were incurredibWard's^salarypai&, .r^nt; consultancy charges, electricity chacges,!• ,•,iV•',•••••- •:. r,ii'V&•.etc.'v^wViichare'not expensesincurred towardsrci^reating•'!• -»J. -r\V'iM:f'anf%apitalasset fqr'dndurihg'-benefitsbut are normmft day to day expenses and'are th'us revenue in nature. !l|r-=fHi..26 I The finding recorded by the .ITAT are factual. Nothirtig'i,. X,I''•i^as been,pointed out for us to hold that the finding dre of the factualperverse-.;In.yiew findings recQrd|ia byrAT„: m!3 SLibstantial question of .layv^'ajriisesforconsideratiorY1n4hepresent appeal:^t; :i :r'' 27.In the AssessmentYear 2007-08,revenueexpensesof Rs.6,86,87,898/-as claimed has been disallowed by ITA 254/2013&313/2013 , the AssessingOfficer vide order dated07.12.2009onthe ground that the expenditureis capitalin nature. 28. 27.In the AssessmentYear 2007-08,revenueexpensesof Rs.6,86,87,898/-as claimed has been disallowed by ITA 254/2013&313/2013 , the AssessingOfficer vide order dated07.12.2009onthe ground that the expenditureis capitalin nature. 28. 28.In an appealby the Assessee,the CIT (Appeals)videorderdated0,5.01.2012heldtheexpendituretoberevenueoinnature, and deletedthe disallowanceby theAssessingOfficer.TheCiT (Appeals) 'followedtheA''•-•Rule of Consistencysince the AssessingOfficer' badI'-•.• ••••V'Vihirnself allowedthis'to. be/revenuein thepr.ecediliigS and succeedingassessm'eht:year.'sirini' .••.•29.il The ITAT vide order dated 19.10.2012 has noticed••%•••:;.••-jW%thatfor the AssessmentYears2004-05to 2006-07,1••'•.1the Assessing.Officer, has allowedsimilar expenditjiJreand , for ,theAssessmentYears2008-0.920,09-10also,theAssessingOfficerhashimselfajjowedthesaid expenditure. 30.In the presentcase, the ITAT had allowedthe appealof the Assesseeand treatedthe saidexpenditureasrevenue.The expenseswere incurredin the course of day to day businessoperationsof the Assesseeandtheoperationsbeingroutineinnaturebywayofprovidingvalue added servicesof the customers.TheITATnoticedthat.themobileservicesrequiredcontinued,' tipgradationandmonitoringandtheexpenditure,in questionwasincurredas, aniatterof'. 'i.-,' , '.rpptine for the business ahd •commercialexpediencies6f the Assessee'sbusiness and as such, the exp,§nd/es,V'iitowardsproductdevelopmentwerealloWeda:•c;,5V revenue••||expenditure,31.The findingsare factual.In yiew, of the factualfindingslandreasoninggiis/ien by us Tor' the AssessmentYear2b03-04,<-andi"''alsG'i in: ;viewJ^of the: "fa'bt"'thatl'TheAssessingOfficerhashimselfallowedsimilarexpenses'Tor'the^AssessmentYeaP'20P4-d5to 2006-07 and 2008-09and 2009-10;we find-noinfirmityintheorderof theITATandfindthatnosubstantialquestionof law arises in the present appeal. 32.The appeals are accordinglydismissed v\/ith no ordersas to costs.•SANJEEV:S%pHDEVA,J.•J'5 ."in. •rJi10*'^ DECEMBER,2013'• SANjiv KHANN^jJ.St%p.0««.i.-.f1f', -I •!,••?•I'Vt?li'fK%'h' -r>in..' f'l/!Ws;'\]x,'!• -•'•'v.i)..••>••.'! -•,•/''•'A ITA 254/2013 & 313/2013 Page 23 of 23