CIT vs. IFFCO TOKIO GENERAL INSURANCE CO LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . . . ITA 1165/2011 . . . CIT ..... Appellant . Through Mr. Sanjeev Sabharwal, Adv. . . . versus . . . . . IFFCO TOKIO GENERAL INSURANCE CO LTD..... Respondent . Through . . . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE R.V.EASWAR . . . O R D E R . 21.10.2011 . . . Whether a particular expense is a capital expense or a revenue expense normally is a mixed question of law and facts. However, we are not inclined to issue notice in this appeal under Section 260A of the Income Tax Act, 1961 (Act, for short) because the Assessing Officer in his order dated 30th September, 2008 passed under Section 143(3) read with Section 147 of the Act has not dealt with the factual background of the case at all. The discussion in the order reads as under:- . ?2. During the course of assessment proceedings, it is observed that deduction of Rs.1,24,39,896/- (by way of information and technology expenses) on account of computerization expenses were allowed as revenue expenditure whereas computerization expenses give an advantage of enduring benefit to the assessee. The assessee was, therefore, asked to explain why it should not be added back. The assessee?s representative attended and submitted as below:- . ?The IT expenses of Rs.1,24,39,896/- have been incurred at head office as also at various branches. ? Nature of expenses are as under:- . . Call Centre charges . . Software Maintenance . . Post Warranty Maintenance . . DR Sit Prof charges . . Lease line . . Licence Fee Fire Wall . . Access Control . . MS Office licence. . All the expenses incurred are of revenue nature which have correctly been debited to IT expenses and examined during the assessment proceedings u/s 143(3) by the then Assessing Authority.? . The assessee?s argument is not acceptable the information and technology expenses are of capital nature. Accordingly, the sum of Rs.1,24,39,896/- is disallowed and added to the total income.? . . . In the said factual background, we do not see any reason to interfere with the findings recorded by the CIT (Appeals) which have been affirmed by the ITAT as the Assessing Officer did not make any base or foundation in his order. The appeal is accordingly dismissed. . . . . . SANJIV KHANNA, J. . . . . . R.V.EASWAR, J. . OCTOBER 21, 2011 . NA . . . 27 .