CIT Vs. ACL WIRELESS LTD

JUDGEMENT

(1.) ITA No. 254/2013 pertains to Assessment Year 2003- 04 and impugns order of ITAT dated 28.08.2012 & ITA No.313/2013 pertains to Assessment Year 2007-08 and impugns order of ITAT dated 19.10.2012.

(2.) These appeals have been filed by the Revenue under section 260A of the Income Tax Act, 1961 (for short "the Act") impugning the orders ITAT has accepted the appeals of the Assessee and deleted the additions made by the Assessing Officer with regard to product improvement expenses. The Assessing Officer had treated the product improvement expenses as capital expenditure and disallowed equivalent amount as revenue expenditure. ITAT has held to the contrary.

(3.) The Assessee is a company which is involved in the business of software development. The commercial operations started in the Financial Year 2002-03. The Assessee provides wireless solutions for mobile consumers and enterprises. The software development relates to the field of instant messaging (IM). It employed and functioned with a team of software professionals. They developed new software and were also involved in continuous improvement in the existing software in terms of improvements, speed, usage, storage and providing enhanced features. The Assessee had signed revenue sharing agreements with mobile service providers like Airtel, Vodafone, etc.