2018 (4) TMI 1534

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....he assessment year were in the nature of capital expenditure? (ii) Whether expenditure incurred towards software, which results in fine tuning of business operations and enables the Appellant to run its business effectively and efficiently, leaving the fixed assets untouched, is a revenue expenditure or a capital expenditure? (iii) Whether in the facts and circumstances of the case, the Tribunal was correct in law in upholding the order passed by the CIT(A) without giving any reasons for the same?" 2. The assessee/bank incurred expenditure as amounts spent towards acquiring various categories of software; the Assessing Officer (A.O) after ascertaining the assessee's view, concluded that the software expenses charged to the Revenue could ....

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.... meant for banking and bank related operation and the motive for acquiring them was to optimize performance and streamline the efficiency of the bank. Learned counsel relied upon the judgment of the Supreme Court reported as Alembic Chemicals Works Co. Ltd. v. CIT (1989) 177 ITR 377 (SC). He also relied upon a Division Bench judgment in CIT v. Asahi India Safety Glass Ltd. (2012) 346 ITR 329. 4. The learned counsel for the revenue urged that the question of law has to be answered in favour of the revenue, firstly because of the concurrent nature of the findings rendered by all the authorities, which were consistently adverse to the assessee. It was secondly urged that the CIT(A) conducted a detailed enquiry as to the nature of the software....

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....our view, be an expense in the nature of revenue expenditure. Fine tuning business operations to enable the management to run its business effectively, efficiently and profitably; leaving the fixed assets untouched would be an expenditure in the nature of revenue expenditure even though the advantage would thus collapse in such like cases. It would, in our view, be only truer in cases which deal with technology and software application which do not in any manner supplant the source of income or added to the fixed capital of the assessee."  6. In Alembic Chemicals Works (supra), while dealing with the replacement of what was considered to be an asset of enduring nature i.e. the moulds used for creating penicillin for culture of antibio....