IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No. 366 of 2014 Date: 17.06.2014 Between:
The Commissioner of Income Tax-IV, Hyderabad.
… Appellant And M/s. Nagarjuna Agrichem Limited, Hyderabad.
… Respondent This Court made the following:
THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No. 366 of 2014 ORDER: (Per the Hon’ble The Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be preferred and admitted against the impugned judgment and order of the learned Tribunal in relation to the assessment year 2004-05 on the following suggested questions of law:
“1. Whether on the facts and circumstances of the case, the Hon’ble ITAT was correct in holding that expenditure incurred on acquisition of license for use of software for 25 years is a one- time expenditure, hence, revenue in nature?
2. Whether on the facts and circumstances of the case, the Hon’ble ITAT was justified in directing the Assessing Officer to include the ‘deemed export sales’ in the ‘export turnover’ for the purpose of calculating deduction under Section 80HHC of the Income Tax Act, without appreciating the decision of the Bangalore Bench of the ITAT in Wipro Ltd. Vs. DCIT wherein it was held that the assessee was not eligible for deduction on ‘deemed export sales’?
We have heard Mr. Prasad, learned counsel for the appellant, and gone through the impugned judgment and order of the learned Tribunal.
The learned Tribunal on fact found that the expenditure incurred on acquisition of license for use of software for 25 years is revenue in nature. We are in agreement with the findings of the learned Tribunal since the expenditure in connection with the carrying of business is not a capital investment. Unless the license is procured, the business cannot be run. Expenditure incurred on account thereof irrespective of length of period cannot loose its character to term capital.
Mr. Prasad says that there are different views of the High Courts on this issue. We think that this was not the ground with which the appeal has been preferred. Moreover, we do not find that the judgments of the High Courts spoken of were cited before the learned Tribunal. So we have to examine the impugned order of the learned Tribunal as it is. We cannot examine in the context of subject what would have been debated. We therefore uphold the judgment of the learned Tribunal.
On the second ground we find that the learned Tribunal has recorded on fact that the deemed export sales are duly certified by the concerned agencies. It is not a case that certificate is false and fabricated and it is also admitted position that accounting system is mercantile one. Hence, going by the accounting method the tax authorities have taken note of the turnover and granted benefit. Accordingly, we find no reason to interfere with the judgment and order of the learned Tribunal.
The appeal is accordingly dismissed.
Mr. Prasad says that there is a judgment of the learned Tribunal, which held otherwise. Unfortunately, that judgment was not cited before the learned Tribunal and there is lapse on the part of the learned lawyer, if so, at all.
Miscellaneous petitions, if any, pending in this appeal shall stand dismissed. No order as to costs.
K.J. SENGUPTA, CJ SANJAY KUMAR, J Date: 17.06.2014 ES