TaxTMI 
TaxTMI 
2021 (3) TMI 741
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....The appeal was admitted by a bench of this Court vide order dated 31.07.2015 on the following substantial questions of law: "(i) Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessee is eligible for claim of Rs. 23,05,49,466/- as revenue expenditure without appreciating that the assessee has spent the same on networking of 125 branches with a centralized processing solution and the activity has a long term benefit, warranting capitalization of the expenditure spent for the same? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing deduction of Rs. 1,00,000/- under Section 36(1)(vii) even though the assessee did not rece....
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....f the amount to income of the assessee. The assessee debited the aforesaid amount as write off of non convertible debentures under 'provision and contingencies in the statement of computation of income'. The aforesaid claim was disallowed by the Assessing Officer. The assessee had also claimed the aforesaid amount as expenditure for computerization of its 125 branches which were networked with a centralized processing solution. The assessee claimed the aforesaid expenditure as revenue expenditure The Assessing Officer capitalized the aforesaid expenditure and allowed depreciation at the rate of 12.5%. The Assessing Officer added a sum of Rs. 1,00,000/- since, assessee did not have any income from rural branches during the Assessment....
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....ital asset having enduring benefit and constitutes a capital expenditure. It is also urged that if an expenditure has resulted in acquisition of capital asset either tangible or intangible, the same would constitute capital expenditure. It is also pointed out that the fact that intangible asset has been provided for depreciation under Section 32(1)(ii) of the Act would demonstrate that intangible asset is capital asset eligible for depreciation. It is also pointed out that the tribunal has failed to take into account the fact that in the decision of IBM INDIA LTD. rendered by this court, the expenditure incurred was towards acquisition of an application software which has a limited period of operation. However, in the instant case, not only....
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....expenditure incurred towards core banking solution software is a common expenditure in the banking industry to enable it to render quality services to its customers and Reserve Bank of India has made it mandatory for all the banks to have core banking solution software. (v) The core banking solution software effectively substitutes manpower costs and results in effective ultilization of the manpower and therefore, the expenditure incurred is revenue in nature and cannot be considered as capital expenditure. (vi) Alternatively, it is submitted that the entire exercise is revenue neutral as assessee is earning profits year after year. 6. With regard to second substantial question of law, it is urged that tribunal has rightly held that....
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....n IBM India Ltd. supra does not apply to the case of the assessee has not been considered. No reasons have been assigned for holding that decision rendered in the case of IBM India Ltd. Applies to the facts of the case of the assessee. Therefore, in view of contentions raised by both the parties before us, we deem it appropriate to quash the order passed by the tribunal so far as it pertains to findings of substantial question of law No.1 and remit the matter to the tribunal for decision afresh in accordance with law after considering the rival submissions made on both sides. Therefore, the first substantial question of law is answered accordingly. 8. The second substantial question of law is covered by decision of this court in 'COMMI....