TaxTMI 
TaxTMI 
2023 (12) TMI 1133
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....s Assessment Year (AY) 2008-09. Via the instant appeal, the appellant/revenue seeks to assail the order dated 28.09.2020 passed by the Income Tax Appellate Tribunal [in short, "Tribunal"]. 6. A perusal of the appeal discloses that the following questions of law are proposed for consideration, by this Court: "(i) Whether on the facts and circumstances of the case ld. ITAT erred in law in considering M/s Helios & Matheson Information Technology ltd. as functionally non comparable without considered the finding of the TPO i.e. it satisfied all the qualitative and quantitative filters adopted by the TPO to be considered as comparable? (ii) Whether on the facts and circumstances of the case ld. ITAT erred in law in considering M/s Tata Elxsi Ltd. as functionally non comparable without considered the finding of the TPO i.e. it satisfied all the qualitative and quantitative filters adopted by the TPO to be considered as comparable? (iii) Whether on the facts and circumstances of the case ld. ITAT erred in law in considering M/s Persistent Systems Ltd. as functionally non comparable without considered the finding of the TPO i.e. it satisfied all the qualitative and quantitative fil....
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.... on the purchase of proprietary software licenses and training resulted in an 'enduring benefit' to the respondent/assessee and therefore, are in the nature of 'capital' expenditure. 10. Insofar as the expenditure incurred on software license is concerned, the addition amounted to Rs. 1,36,03,473/- [albeit, after allowing for depreciation at the rate of 60%]. 10.1 On the other hand, the stand of the respondent/assessee was that the software was licensed to it. It was also the assertion of the respondent/assessee that the arrangements had a tenure of one (1) year. 10.2 In sum, the respondent/assessee contended before the statutory authorities that it had no ownership of the licensed software and that it was only a licensee. The thrust of the respondent's/assessee's submission was that the proprietary and intellectual property rights in the software in issue remained with the vendor and that the terms of the license prohibited commercial exploitation of the software. 11. The statutory authorities, which included the Assessing Officer (AO) and Dispute Resolution Panel (DRP), were not persuaded by the aforementioned submissions made on behalf of the respondent/assessee. As indicate....
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....nduring benefit. It is in our view, now somewhat trite to say that the test of enduring benefit is not a certain or a conclusive test which the courts can apply almost by rote. What is required to be seen is the real intent and purpose of the expenditure and whether the expenditure results in creation of fixed capital for the assessee. It is important to bear in mind that what is required to be seen is not whether the advantage obtained lasts forever but whether the expense incurred does away with a recurring expense(s) defrayed towards running a business as against an expense undertaken for the benefit of the business as a whole. In other words, the expenditure which is incurred, which enables the profit-making structure to work more efficiently leaving the source of the profit-making structure untouched, would in 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 may last for an indefinite period. Test of enduring benefit or advantage....
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....sively determinative of its nature. The assessing officer has, in our view, erred precisely for these very reasons." [Emphasis is ours] 17. The ratio of the judgment rendered in the Asahi India Safety Glass Ltd., in our view, would apply to the facts of this case, and therefore, no substantial question of law arises with regard to the said issue. 18. This brings us to the issue concerning the amount expended by the respondent/assessee on training its employees. The record shows that training expenses, amounting to Rs. 1,82,00,680/-, were incurred by the respondent/assessee during the period in issue towards venue cost, faculty charges, training material (which included manuals and books), equipment, and participation in seminars and conferences. Concerning this expense, as noticed hereinabove, the AO disallowed the deduction on the ground that they resulted in 'enduring' benefit and hence, were incurred on the 'capital' account. 19. The Tribunal, however, as alluded to hereinabove, has ruled in favour of the respondent/assessee. 20. The observations made by the Tribunal in this behalf are set forth hereafter: "40. So, following the aforesaid decision rendered by Hon'ble ....