a)A part of the business being handled by the erstwhile TATA IBM was handed over to the assessee-company in view of bifurcation of the software and hardware business.
b)For the transfer of domestic customer database and the man power, the assessee paid certain amount to TATA IBM which was claimed as business expenditure.
c)The AO taking a view that expenditure in question resulted in enduring benefit to assessee, disallowed assessee's claim. Further, the CIT(A) upheld the order of AO. The Tribunal, however, allowed assessee's claim. The aggrieved-revenue filed the instant appeal.
High Court held in favour of assessee as under:-
1)In the instant case, insofar as payment for getting domestic customer database was concerned it was clear that assessee had only got the right to use that database. The company which had provided such database was not precluded from using such database. Hence, the expenditure was incurred for the use of database and not for acquisitions of such database.
2)In respect of payment made towards transfer of human skill, it had been made towards the expenses incurred for training and on recruitment. Such expenses were under revenue field, and ,therefore, the payments had been made to save such revenue expenses as per the agreement.
3)TATA IBM had spent lot of money to impart training to those employees who were transferred to the assessee-company. They were trained in the field of software.
4)They had opted for employment with assessee-company and for their past services in TATA IBM, expenditure had been incurred. Hence, the expenditure incurred on transfer of human skill was also in nature of revenue expenditure. – CIT V. IBM GLOBAL SERVICES INDIA (P.) LTD  46 taxmann.com 55 (Karnataka)