CIT v. Infosys Technologies Ltd.

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The Tax Publishers2012 TaxPub(DT) 1640 (Karn-HC) : (2012) 349 ITR 0606 : (2012) 205 TAXMAN 0059 INCOME TAX ACT, 1961 --Capital or revenue expenditure--Expenditure incurred for corporate membership in clubs, ISO certification, repair and maintenance of leased premisesNature of expenses--During the relevant year, assessee made payments towards acquisition of membership in clubs, for obtaining ISO certification and for repairs and maintenance of leased premises. AO treated these expenses as capital expenditure and allowed depreciation on leased premises. Assessee contended that these expenses were revenue in nature and, therefore, should be allowed under section 37(1). Held: The expenses incurred towards obtaining corporate membership, the amount spent towards obtaining ISO certificate and the expenses incurred towards repair and maintenance of leased premises have been held to be revenue expenditure and not as capital expenditure as contended by revenue. The said substantial questions of law had been answered against the revenue and in favour of assessee in ITA. No. 2975 /2005, disposed off on 21-10-2011, ITA. No. 3011/2005 disposed off on 21-10-2011 and ITA. No. 2973/2005 disposed off on 4-11-2011 respectively, following the reasons as signed in the said judgments, therefore, these expenses were allowed as revenue expenditure. Income Tax Act, 1961, Section 37(1) INCOME TAX ACT, 1961 --Deduction under section 80HHE--Computation Fluctuation in foreign exchange rate --During the year under consideration, assessee claimed the benefit of fluctuation in valuation of currency regarding actual amount realised by assessee in respect of software export. AO was of the view that as per Explanation C to section 80HHE, only actual amount of foreign exchange received in India can be included in the export turnover for computation of deduction. Accordingly, he denied the benefit of fluctuation in value of currency. Held: Exchange rate fluctuation should be taken into consideration for computing deduction under section 80HHE as the fluctuation in the valuation of currency which has to be converted to foreign currency has direct nexus to the export of software and can never be included as income from other sources. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1640 (Karn-HC) : (2012) 349 ITR 0606 : (2012) 205 TAXMAN 0059

INCOME TAX ACT, 1961

--Capital or revenue expenditure--Expenditure incurred for corporate membership in clubs, ISO certification, repair and maintenance of leased premisesNature of expenses--During the relevant year, assessee made payments towards acquisition of membership in clubs, for obtaining ISO certification and for repairs and maintenance of leased premises. AO treated these expenses as capital expenditure and allowed depreciation on leased premises. Assessee contended that these expenses were revenue in nature and, therefore, should be allowed under section 37(1). Held: The expenses incurred towards obtaining corporate membership, the amount spent towards obtaining ISO certificate and the expenses incurred towards repair and maintenance of leased premises have been held to be revenue expenditure and not as capital expenditure as contended by revenue. The said substantial questions of law had been answered against the revenue and in favour of assessee in ITA. No. 2975 /2005, disposed off on 21-10-2011, ITA. No. 3011/2005 disposed off on 21-10-2011 and ITA. No. 2973/2005 disposed off on 4-11-2011 respectively, following the reasons as signed in the said judgments, therefore, these expenses were allowed as revenue expenditure.

Income Tax Act, 1961, Section 37(1)

INCOME TAX ACT, 1961

--Deduction under section 80HHE--Computation Fluctuation in foreign exchange rate --During the year under consideration, assessee claimed the benefit of fluctuation in valuation of currency regarding actual amount realised by assessee in respect of software export. AO was of the view that as per Explanation C to section 80HHE, only actual amount of foreign exchange received in India can be included in the export turnover for computation of deduction. Accordingly, he denied the benefit of fluctuation in value of currency. Held: Exchange rate fluctuation should be taken into consideration for computing deduction under section 80HHE as the fluctuation in the valuation of currency which has to be converted to foreign currency has direct nexus to the export of software and can never be included as income from other sources.