DCIT Vs Gujarat Industries Power Co. Ltd (ITAT Ahmedabad)
Facts- The main issues/ grounds that are to be considered in the present appeals are –
1. Disallowance of corporate debt restructuring expenses;
2. Disallowance on upgradation of software expenses;
3. Loss due to foreign exchange difference rate.
Conclusion- With regard to disallowance of corporate debt restructuring expenses it is held that this issue is been settled by the judgement of the honourable Supreme Court in the case of India cements Ltd wearing it is held that loan is not an asset or a advantage of enduring nature and expenditure incurred in connection with obtaining loan is not capital expenditure.
With regard to disallowance on upgradation of software expenses it is held that as per jurisdictional High Court in the case of CIT -Vs- N.J. India Invest (P.) Ltd. Expenditure on maintenance, back-up and support services to existing hardware and software is revenue in nature, and therefore allow the expenditure as revenue in nature.
With regard to loss due to foreign exchange difference rate it is held that the issue is directly covered by the judgment of Hon’ble Delhi High Court in the case of CIT Vs. Industrial Financial Corporation of India Ltd., wherein it has been held that where the assessee enters into a contract for purchase of foreign currency on a future date at pre-determined rates, the difference between the forward contract rate and exchange rate on the date of entering into contract has to be recognized as income or expenses, which ascertained and definite in terms of contract and would be alone as business expenditure in the year of entering into forward contract itself, though as per the contract part payment is to be succeeding year.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This is a bunch of four appeals filed by the Revenue and assessee and cross objection filed by the assessee. The details are as under:
