CIT Vs. INFOSYS TECHNOLOGIES LTD

JUDGEMENT

(1.) This appeal is filed by the Revenue being aggrieved by the order passed by the Income-tax Appellate Tribunal (hereinafter called as "the ITAT") in I. T A. No. 113.0/Bang/2003, dated April 7, 2006, wherein the appeal filed by the Revenue has been dismissed and the appeal filed by the assessee in I.T.A. No. 1022 of 2003 is allowed in part confirming the order passed by the Commissioner of Income-tax (Appeals). The material facts leading up to this appeal are as under:

(2.) The Assessing Officer, after considering the contentions raised by the assessee, held that the expenditure incurred towards acquisition of corporate membership in the clubs, amount spent towards obtaining the ISO certification and the amount spent towards repair and maintenance of the leased premises ought to be treated as capital expenditure and not as revenue expenditure as claimed by the assessee. Further, he held that the contention of the assessee that he should have the benefit of fluctuation in the value of currency in respect of software export, cannot be accepted. Accordingly, the Assessing Officer passed the order of assessment. Being aggrieved by the said order an appeal was preferred by the assessee.

(3.) The appellate authority by order dated July 4, 2003, allowed the appeal and held that the expenses incurred towards acquisition of corporate membership in clubs, expenses incurred towards obtaining the ISO certification and the amount spent towards repairs and maintenance on the leased premises should be treated as revenue expenditure and not as capital expenditure. It also upheld the contention of the assessee that the assessee is entitled to have the benefit of fluctuation in the value of rupee in respect of the value of expert of software made by him. Accordingly, allowed the appeal. Being aggrieved by the same the Revenue preferred an appeal and the assessee also has preferred an appeal regarding the other findings, which are not the subject-matter of this appeal. The Income-tax Appellate Tribunal by a common order dismissed the appeal filed by the Revenue. Being aggrieved by the same, this appeal is filed raising the following substantial questions of law for consideration of this court, which are as under: