Case Law Details
ACIT Vs M/s Linde Engineering India Pvt. Ltd. (ITAT Delhi)
Assessee incurred license expenses towards WAN and local hardware, annual fee which has been treated by Assessing Officer to be capital expenditure. It is observed that assessee has to incur these expenses annually on which tax has been deducted. Assessee claimed license expenses of 49,62,461/- in Profit and Loss account for the year under consideration out of total invoice amount of Rs.83,51,907/-. We agree with the observation of Ld. CIT (A) that the license expenses incurred by assessee do not create any asset but only provides means for running the business with a view to earn profits. Hon’ble Supreme Court in the case of Alembic Chemicals Works Co. Ltd vs. CIT reported in (1989) 177 ITR 377 has observed that;
“The ideas of ‘once for all’ payment and ‘enduring benefits’ are not to be treated as something akin to statutory conditions; nor are the notions of ‘capital’ or ‘revenue’ a judicial fetish.”
Under such circumstances we do not find any infirmity in the addition being deleted as assessee has capitalised the value of the structures on which depreciation has been allowed.
FULL TEXT OF THE ITAT JUDGMENT
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