ACIT CIRCLE-11(4) NO. 14/3, 5TH FLOOR NRUPTHUNGA ROAD, BENGALURU, BENGALURU vs. M/S IBA HEALTH INDIA P. LTD., CHENNAI

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ITA 871/BANG/2013Status: DisposedITAT Bangalore06 September 2019AY 2005-062 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the total tax effect of the deleted disallowances was below Rs. 50 Lakhs. Consequently, the appeal filed by the revenue was not maintainable due to the low tax effect.

What were the facts?

The revenue filed an appeal against the CIT(A)'s order deleting certain disallowances made by the Assessing Officer. The disallowances pertained to product development expenditure, software purchase, and interest on international financial transactions.

What were the issues?

The primary issue was the maintainability of the revenue's appeal before the ITAT due to a low tax effect. The underlying issues involved the nature of product development expenditure, software purchase, and the determination of arm's length interest rates for international transactions.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH : BANGALORE

Before: SHRI N.V. VASUDEVAN, VICE- & SHRI ARUN KUMAR GARODIA

For Respondent: Shri S.T. Seshadri, JCIT (DR)
Hearing: 28.08.2019Pronounced: 06.09.2019

O R D E R

Per Shri A.K. Garodia, Accountant Member

1.

This appeal is filed by the revenue and the same is directed against the order of ld. CIT(A)-IV, Bangalore dated 11.03.2013 for Assessment Year 2005-06.

2.

The grounds raised

by the revenue are as under. “1. The order of the Learned CIT (Appeals), in so far as it is prejudicial to the interest of revenue, is opposed to law and the facts and circumstances of the case.

2. The CIT(A) was not justified in deleting the disallowance made in respect of Product Development Expenditure of Rs.88,58,638/-

3. The CIT(A) ought to have appreciated that the expenses are capital in nature as the assessee company has developed intangible assets from which it derives revenue by lincensing of such intangible assets.

4. The CIT(A) was not justified in deleting the disallowance made in respect of expenditure on software purchase amounting to Rs.94,143/-

5. The CIT(A) ought to have appreciated that the expenses related to purchase of software which would be used for the development of its healthcare product. Hence the assessee derives enduring benefits from such software.

6. In the facts and circumstance of the case, the learned CIT(A) erred in holding that USD LIBOR is the correct rate to be adopted for evaluating the arm's length rate of international financial transaction

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