Case Law Details
DCIT Vs Group M Media India Pvt Ltd (ITAT Mumbai)
ITAT Mumbai held that the assessee has merely got the license to use the software for its daily business requirement and has never owned the same. Further, such expense was used for business purpose on yearly rent basis it has not given any enduring benefit. Hence, such expense are revenue in nature.
Facts- The assessee company is into the business of media planning, buying and implementing activities. AO noticed that the assessee during the year under consideration had claimed software expenses to the tune of Rs.2.99 crore as revenue expenditure on the payments made to foreign countries. However, TDS applicable was not deducted while making such payment.
Further, the assessee by filing application for raising additional ground in its cross objection stated that Refund of excess Dividend Distribution Tax (DDT) paid, it was submitted by assessee that the AO and Commissioner of Income Tax Appeal (CIT(A)) ought to have appreciated that dividend paid by Group M India to its Singapore shareholder, Group M Asia Pacific Holdings Pte Limited, was liable to tax as per the beneficial tax rate of 10% under Article 10(2) of the India – Singapore Tax Treaty, and thereby, ought to have held that the DDT paid by Group M India in excess of the 10% tax rate should be refunded to Group M India on the ground that the same was a legal ground raised on the basis of decision rendered by Coordinate Bench of Delhi Tribunal in case of Giesecke & Devrient (India) Pvt. Ltd. wherein it was held that DDT rate should be restricted to the tax rate on dividend under the relevant tax treaty and DDT paid in excess of the tax treaty rate should be refunded to the taxpayer.
Conclusion- Held that the assessee has merely got the license to use the software for its daily business requirement and has never owned the same and the assessee has paid on yearly basis. When the expenses for taking software was used for business purpose on yearly rent basis it has not given any enduring benefit to the assessee nor any capital has been created, the Ld. CIT(A) has rightly treated these expenses as revenue expenditure as such we find no scope to interfere into the impugned findings returned by the Ld. CIT(A).
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