Karnataka High Court
The Commissioner Of Income Tax vs M/S The Karnataka Bank Ltd on 12 April, 2010
Bench: K.L.Manjunath, B.V.Nagarathna
IN THE HIGH COURT OF KARNATAKA AT B.A.NGfi~IdOR.E:
DATED THIS THE 1. 21" DAY OF APRIL. 2010
PRESENT
T}--IE I1OI\I=I3I.I; MR. J'{JS'FICE KL. MAI:\'IJUNA.':*%:-I N If ff *'
AN I)
"ma I-iON'BLI~3 MRS. JUSTICE I\IAI.§ARAj1*I--'SIN'A 4' « 0- I T
I.T.A.No.30:%,i12005'--- ._
BETWEEN: "
1.. THE COMMISSIONER OF' ~I.I:\ICOIx2I"'E
C RBUILDING. A'I'1'AVARAf' _
MANGPJJORE .0 ' *
THE JOINT COMI»IISSIO:$IER INC'OME:fI*Ax (Assistant).
SPECIAL RANGE, g::IR,£3_u"IL£2ING_.¢_ '
ATTAVARA. MAI\;*OALC';_RE-...;..__ '
[Q
...APPELLANTS
(BY "SR1. M' II," ADVOCATE]
AND: V' % V' V E
1\/I/S THE. IIfiA_I2'1\3;\'1':AI{zx I-1?3«A:NK_I.,'l'lI)
HEAE). OIe*IrICIa:-;». KODIALBAIL
RESPONDENT
"'T'..'6I{I3YTf)S~RI QSARANOAN. SR. ADVOCATE FOR . *- B L ACHARYA. ADVOCATE) 'I'HIS E..'f.'I§\.IS SILSD U/S.2f30--A OF E.'i'.ACT, I901 ARISING OREIELR DATED 11-05-2005 PASSED IN ITA NO.
, '1._'_"f?8;<BANG;r2000 FOR THE: ASSESSMENT YEAR 1997-1998. ."_'-_.13RAYI'?-I_G""i'HA'I' THIS 1~-IONBLE COURT MAY BE, PLEASED TO: I.
--.fI'ORI\/1U;LA'I'E THE SUBS'I'AE\I"1'IAI, QU'{€3S'".I.'IONS OF LAW STATED I 'l_"3H.}fR]Z«;'IN AND ETC, _ fig, the said amount has to be treated revenue expenc_1_iture which has been erroneously aeCe'pt.ed by the 'E'ribu2='ié1i».. further submits that when for the first time tile:€1:(>;1iij'ti'ti':::;s1 "
were i1"ista1lled by the bank and s()t't.x\z21i~'e'"xv"as aiso _.i1'its-tel1edT.ik>}"-.« the first tirne. the said expenditure is tf0_be_ treated as expenditure. Though. no 111at.e1;ia'1::I";as beeri the Assessee to show that it was-;.V_by that the software was installed so expenditure is revenue in nattii*e;;VVL:the of such material Coutd net t;':wé 't'1'e1d'"th»;1t' i.t_w'a's revenue expenditure. Li.
5. Pe1*',(_:0i1t.'1'a,V' ::._.
e_hief(14i*1ri1:e"c*, Counsel s1ipp0rt:i1'1g the order of the u"'t1.'_ 41fil3.L11:ia'12¥si1b_ifnit:s that t}'ie1'e was already cc.-mput,ei'3system estab1_i_s_hed by the bank and that by way of u;5gra£té1t,£.Qri.._0i: f'Qf"vi,mpr0vii1g the said system. software was pu1'ChaSei:i'anCtthef'ef()re the expenclittiie in that 1'egai'd has to 'treatect :iiSh§'t"3V€11'u€ experictiture 311d that the 'l"1'ibur1al was 5 'ju's\t;itfi_eVd; Lira' 1:1o1CliI1g so. i' (2 material on record as to whether the expenditure incurred was when the computer systems were established for the first:
time by the bank. and for that purpose soft implemeritatiori charges were incurred by the be1rii{"'ti;r;~iri an already established eomptiterised syst.em.- «wash replacement of the existing or obsolete software .by afmorgei advanced or modern software in =y}*i--i.tth ex'/ei1Vt., w_r};uId have been treated revenue eXper_iditur.e. Sineev no material in this regard is placed by the 1fespoéj3'deit1.t{v"Assessee, we are of the View that the matet:er h'a's~-to back to the Assessing to the respondent Assessee to all evidence on record and make outgua ease the expenditure incurred tttt Mimplerneritatiori was by way of irnprevi:4:23iti'ori'"er L1y'pgradz1tion or whether the said expenditure in('e-ii1-revd'.Vf'o1- the first time when the bank was 4""etim;5'L1t,er1zetE-"arid there was a crhazige in the system of V'V_";11ai1'1tei'iai'ice of acc0'unt.s by way of com.puteriyzaticm_ 'I'h'er»ei--'o1*e. the siibstantial question of law raised in this 2%..
D_#,,/'"''' appeal r1eeci not 'me e:1'1swe1*ec1 in \--'i('.\-'\»-' of the 1'emanci made to the Assessing Offi(~.er.
8. Accordirlgiy. we set aside the order of £116'"1"1*«ibLa,_1ia3___ and remand the matter to the Assessing Officerteu question in the Eight of the aforesaid obscng'-afjigrisz, V - V 1 IUDGE bvr