The Commissioner Of Income Tax – 10, Mumbai v. Uhde India Private Limited, Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.2107 OF 2012 The Commissioner of Income Tax – 10, Mumbai..Appellant. Versus Uhde India Private Limited, Mumbai ..Respondent. Mr.Tejveer Singh for the appellant.Mr.F.B. Andharujinha with Mr.Atul K. Jasani for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 6[th] March 2013 P.C. : Office objections waived. 2.In this appeal by the Revenue for assessment year 2004-2005, following questions of law have been proposed for our consideration. “a)Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the provisions made are on account of ascertained liabilities ?law, the Tribunal was right in holding that the provisions made are on account of ascertained liabilities ? b)Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that software development law, the Tribunal was right in holding that software development 3.In so far as question (a) is concerned, the assessing officer disallowed the claim of provisions made aggregating to Rs.5.61 crores in respect of contracts on the ground that they were not ascertained liabilities. The Commissioner of Income Tax (A) upheld the order of the assessing officer. On further appeal, the Tribunal on examining each of the contract entered into between the respondent – assessee and its clients has recorded a finding of fact with regard to the provisions made and determined that some of the provisions are made on the basis of ascertained liabilities, while others are not. The Tribunal on the basis of the results of its examination of the facts allowed the provisions made to the extent they were ascertained in nature and disallowed those which were made on the basis of the estimates. Since the finding of the Tribunal is essentially a finding of fact, we see no reason to entertain question (a) as proposed. 4.In so far as question (b) is concerned, the Tribunal has held that the expenses incurred on account of software development was in the nature of software maintenance expenses i.e. in the nature of annual maintenance contracts, upgradation and installation of antivirus. In the aforesaid facts, the Tribunal concluded that these expenses cannot result in any benefit of enduring nature so as to be called capital expenses as contended by the Revenue. In these circumstances, the aforesaid expenses was allowed as revenue expenditure. As the finding of the Tribunal is based on finding of fact, we see no reason to entertain question (b) as proposed. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)