Praga Tools Ltd. v. CIT

ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 6,, PUNE vs. SOFT TECH ENGINEERS PVT.LTD,, PUNE

In the result, Appeal of the Revenue is dismissed

Bench: Shri S.S.Godara & Dr. Dipak P. Ripoteआयकरअपीलसं. / Ita No.2581/Pun/2017 िनधा"रणवष" /Assessment Year: 2014-15 The Assistant Soft Tech Engineering Pvt. Ltd., Commissioner Of Income Vs Unit-5A, The Pentagon, Tax, Shahu College Road, Near Satara Circle-6, Pune. Road, Telephone Exchange, Pune – 411009. Pan: Aaccs 3857 L Appellant/ Revenue Respondent/ Assessee Assessee By Shri Nikhil Mutha – Ar Revenue By Shri S P Walimbe – Dr Date Of Hearing 06/06/2022 Date Of Pronouncement 22/07/2022 आदेश/ Order Per Dr.Dipak P.Ripote, Am: This Appeal Filed By The Revenue Is Directed Against The Order Of Ld.Commissioner Of Income-Tax(Appeals)-4, Pune’S Order Dated 30.05.2017 ,Involving Proceedings Under Section 143(3) Of The Income Tax Act, 1961, For The Assessment Year 2014-15. The Revenue Has Raised The Following Grounds Of Appeal: “1. On The Facts & In The Circumstances Of The Case, The Ld.Commissioner Of Income Tax(A) Has Erred In Allowing The Amount Of Rs.3,13,93,146/- Being Claim For Professional Fees & Contracting Expenses & Rs.61,03,239/- Being Managerial Expenses Relating To Software Development While The Same Should Be Capitalized & Not To Be Allowed As Revenue Expenses.

…of an asset or a right of a permanent character. the possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure.” Unquote. In the case of Parag Tools Ltd vs CIT Hon’ble AP High Court FB (1980)123 ITR 773 held , Quote “ Where the expenditure has a direct nexus, connection or relation to the carrying on of or conducting the business of the assessee, it must be regarded as an integral part of the profit-making process. In such a case, it must be held to be a revenue expenditure. Where the purpose and object of the expenditure is to acquire an asset…