TaxTMI 
TaxTMI 
2013 (5) TMI 731
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....ein? 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in holding the training expenses as revenue expenses?" 2. The relevant facts of the case are that in the year under consideration the assessee who is wholly owned subsidiary of Honeywell International Inc. returned income of Rs.15,63,19,080/- by way of filing return on 30th November, 2006. The assessee company is primarily engaged in the business of assembling and manufacturing system sensors. The return was processed under sec.143(1) and thereafter the case was selected for scrutiny by way of issuance of notice under sec. 143(2) on 07.09.2007 followed by another notice under sec. 143(2) sent along with questionnaire under sec. 143(1) on 29.04.2008/08.09.2009. The Assessing Officer observed that in the year under consideration the assessee had undertaken international transactions with its associated enterprises and as the value of international transaction was more than Rs.15 crores after following the procedure laid down in sec. 92CA of the Act the international transaction entered into by the assessee with the associated enterprises was referred to the Transfer Pri....
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....nd it must be the direct source of profit and not means to earn any other profit. Reliance was placed upon the judgment of Apex Court in the case of Cambay Electric Supply Industrial Co. Ltd. vs. CIT (1978) 113 ITR 84 (SC). Similar observation it was observed in regard to the "derived from" had been made by the Apex Court in the case of CIT vs. Sterling Foods (1999) 237 ITR 579 (SC) and Hindustan Lever Ltd. vs CIT (1999) 239 ITR 297 (SC). Reference was made to the observations made by the Apex Court in the context of the word "derived" wherein it had been held that it is not a term of art and its use in the definition indeed demands an enquiry into the genealogy of the product, but the enquiry should stop as soon as the effective source is discovered, as had been held by the Privy Council in the case of Kamakhaya Narayan Singh (1948) 16 ITR 325 .Strength was also drawn from CIT vs. Madras Motors Ltd./M.M. Forgings, 257 ITR 60 (Mad.) which position was also considered by the Apex Court in the case of Pandian Chemicals Ltd. Vs. CIT (2003) 129 Taxman 539 (SC). In view of this position the AO was of the view that it is clear that the telecommunication charges amounting to Rs.13,78,384/....
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....includes such expenses. If such expenses are not included in the consideration received in convertible foreign exchange, deduction of such expenditure from the consideration received does not arise. Normally in a transaction of purchase and sale there are two types of conditions between the parties. One condition' is where price quoted of goods is inclusive of all expenses or in other words, price quoted is only in respect of goods. Another condition is where price of goods and charges of expenses are separately stated. In a case where such expenses are to be separately charged, invoices are prepared showing value of the goods and such expenses. if. the quoted price is inclusive of such expenses, then consolidated value of the goods is only mentioned in the invoice. In a case where only value of goods is quoted, expenses are borne by the supplier. In cases where expenses have not been separately charged, the convertible foreign exchange received is consideration of the goods only. Where such expenses are separately charged in the invoices, the consideration received in convertible foreign exchange includes the value of the goods and such expenses. If the consideration received is o....
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....ome item of expenditure is excluded from the numerator then the same effect will have to given to the denominator also as the numerator and the denominator in its case is the same i.e. export turnover.........." 4.3 Considering these submissions the CIT(A) came to the following conclusion:- "5. I have gone through the submissions of the appellant and have also considered the facts and evidences on record and have perused the AO's order. In the appellant's group company ease, the Karnataka HC in the case of CIT Vs. TATA Elxsi Ltd. Honeywell Technologies Solutions Lab (P) Ltd., Quality Engg. and Software Technologies (P) Ltd., Dell International Services India (P) Ltd., AOL Online India (P) Ltd. and Ors. 247 CTR 334 [2011].have held that when the 'total turnover' includes "export turnover", the very same meaning given to the "export turnover" by the legislature is to be adopted while understanding the meaning of the "total turnover". Further, it is also noted that the "total turnover" is sum total of "domestic turnover" in the appellant's case, the "export turnover" will be equal to "total turnover". Hence, if an item of expenditure is excluded from "export turnove....
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....on the assessment order. 7. We have heard the rival submissions and perused material available on record. On a careful consideration of the same, we are of the view that in the peculiar facts and circumstances of the case, the impugned order deserves to be upheld as the view taken by the CIT(A) relied upon the coordinate orders of Hyderabad Bench in the case of Patni Telecom (P) Ltd. And Cymbal Information Services (P) Ltd. also finds support from the judgement of the Jurisdictional High Court in the case of CIT vs Genpact India (cited supra). The judgement relied upon by the AO in the context of "expression attributable to" and "derive from" addresses, the settled legal position however in the facts and circumstances of the present case, the nature of expenses in the context of deduction u/s 10A in the peculiar facts and circumstances of the case has been considered. No contrary view of the Jurisdictional High Court or of the Hon'ble Apex Court has been brought to our notice in order to canvass that the impugned order deserves to be upset. Being satisfied with the reasoning and finding, ground no-1 of the department is dismissed. 8. The facts pertaining to the next issue add....
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....er peripherals. In view of the decision of the jurisdictional High Court in the cases mentioned above the AO is directed to allow depreciation on computer as well as computer peripherals @ 60%. Hence, these grounds of appeal are allowed." 10. Aggrieved by which the Revenue is in appeal before the Tribunal. The learned DR placed reliance upon the assessment order. However, in the face of judgments of the jurisdictional High Court on the issue, he had nothing more to say. 11. The learned AR on the other hand, relied upon the judgments taken into consideration by the CIT(A) of the jurisdictional High Court. It is also his submission that there is no contrary view on the issue as such the impugned order may be affirmed. 12. We have heard the rival submissions and perused the material available on record. On a careful consideration of the same, we are of the view that the impugned order cannot be faulted with on this ground. The issue whether the computer peripherals i.e. printers, inverters, modems, routers for network connectivity, EPABX, tape drive etc. are integral parts of the computer is no longer in question as the issue has consistently been decided in favour of the ass....
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....raining to the employee before they can carry out their work/functions. The disallowance it was stated had been made by the AO without providing cogent reasons and is based on assumptions, surmises and conjectures. Reliance was placed upon the judgment of the Apex Court in the case of Empire Jute Co. Ltd. vs. CIT (1980) 124 ITR 1 for the following proposition:- "if the outgoing expenditure is so related to the carrying on or conduct of the business that it may be regarded as an integral part of the profitearning and not for acquisition of an asset or a right of a permanent character, the possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure." Reliance was also placed upon another judgment of the Hon'ble Apex Court in the case of Dalmia Jain & Co. Ltd. vs. CIT (1971) 81 ITR 754 for the following proposition:- "The principle which has to be deduced from decided cases is that, where expenditure laid out for the acquisition or improvement of a fixed capital asset is attributable to capital, it is capital expenditure but if it is incurred to protect the trade or business of the ass....
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.... expenses are for different branches and in the nature of assessee's business training has to be imparted. The issue it was submitted has been considered by the coordinate Delhi Bench of the Tribunal in the case of Schneider Electric India (P) Ltd. vs. Addl. CIT (2008) 16 DTR (Del)(Trib)275, a copy of which has also been filed before the Bench. Inviting attention to the head note therein culled out from Para 23 of the said order, it was submitted that the Coordinate Bench had held that the expenditure on recruitment and training was required to be incurred by the assessee company on regular basis having regard to the nature of his business and the refresher courses were being conducted regularly by it to update its employees with fast changing techniques of production, marketing etc. In these facts the Coordinate Bench had held that it cannot be said to have resulted in accrual of any enduring benefit to the assessee company and if at all there was such benefit accrued to it, the same was certainly not in the capital field and was held to be revenue expenditure. The facts it was submitted are identical as such the claim deserves to be allowed and has rightly been allowed by the CIT....