TaxTMI 
TaxTMI 
2013 (2) TMI 127
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....ar relevant to the concerned assessment year, the assessee had debited a sum of Rs.1,88,66,731/- towards purchase of computer software. The Assessing Officer, while completing the assessment, disallowed software expenses of Rs.1,88,66,731/- by considering it as capital expenditure and allowed depreciation at the rate of 60% amounting to Rs.1,13,20,038/-. Hence, a sum of Rs.75,46,693/- was disallowed. The relevant finding of the Assessing Officer reads as follows:- "4.1 I have considered the facts of the case, As per established law and procedure, an expenditure incurred for the purchase of software has to be necessarily treated as capital expenditure. Further, the software has been added to the Schedule of Depreciation with effect from the assessment year 2003-04 onwards. The assessee is however eligible for depreciation @ 60% on such capitalization of software purchase/development. Considering the facts of the case, I feel it is appropriate to capitalize this expenditure. The assessee is however eligible for depreciation on this. In this manner, I compute the depreciation at Rs.1,13,20,038/- and bring to tax the balance of Rs.75,46,693/-". 3.2 On further appea....
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....re is not made for acquisition of new asset. In other words, no capital asset was brought into existence when the renewal license fee was paid. The payment was made only for acquiring the right to use the software for a limited period. The payment was not made for the purpose of acquiring any property or rights of a permanent character. The payment made was a normal, recurring and regular working expense of the assessee in the process of carrying on its business. Therefore, there was no enduring benefit of lasting character was derived from the said expenses and the payment was made in the normal course for the purpose of earning profits and the same constitutes revenue expenditure. 3.5.1 The Assessing Officer had treated the said expenses as capital in nature on the basis that the "computer software" has been brought within the block of assets in the assessment year 2003-04. In order to decide whether the said expenditure is a capital expenditure or not, one has to look into the following elements, namely, i) enduring benefit of the asset; (ii) tenure of the software license; (iii) whether an asset is acquired for earning income or not; and (iv) the value of the asset or the mode....
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....der of learned CIT(A) on this issue. This ground of appeal by the revenue is rejected". 3.5.4 In the light of the above, we hold that the CIT(A) was justified in treating the expenses of Rs.1,88,66,731/- as revenue expenditure. Therefore, ground no.2 raised in revenue's appeal is rejected. Ground No.3 : 4. The above ground reads as follows :- "The learned CIT(A) erred in directing the Assessing Officer to reduce travel expenses, professional charges and branch office expenses and other expenses from the total turnover for the purpose of computing deduction under section 10B relying on the decision of the Karnataka High Court in the case of M/s Tata Elxsi in ITA No.70/2009. However, the above decision has not yet been accepted and the issue has not reached finality". 4.1 The aforesaid ground is not maintainable for the reason that the Assessing Officer has not excluded travelling expenses, professional charges and branch office expenses and other expenses from the export turnover. Hence, the same is rejected. 5. Exclusion of telecommunication expenses from the total turnover Ground No. 7 : The CIT(A) erred in directing....
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....cts to be competitive in the global market and consequently earn precious foreign exchange for the country. This aspect has to be borne in mind. While computing the consideration received from such export turnover, the expenses incurred towards freight, telecommunication charges, or insurance attributable to the delivery of the articles or things or computer software outside India, or expenses if any incurred in foreign exchange, in providing the technical services outside India should not be included. However, the word total turnover is not defined for the purpose of this section. It is because of this omission to define 'total turnover', the word 'total turnover' falls for interpretation by this Court; ........In section 10A, not only the word 'total turnover' is not defined, there is no clue regarding what is to be excluded while arriving at the total turnover. However, while interpreting the provisions of section 80HHC, the courts have laid down various principles, which are independent of the statutory provisions. There should be uniformity in the ingredients of both the numerator and the denominator of the formula, since otherwise it would produce anomalie....
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....me". 5.7.1 In the light of the above judgment of the Hon'ble High Court of Karnataka, ground nos.7 and 8 are dismissed. Set off of carried forward losses and unabsorbed Depreciation prior to allowing deduction under section 10B (Ground Nos.4, 5 & 6) 6. The brief facts in relation to the above issue are as follows:- In the assessment completed, the Assessing Officer held that the set off of carry forward business loss and unabsorbed depreciation has to be given prior to allowing of deduction under section 10B of the Act. Accordingly, he had exhausted the carry forward business loss and unabsorbed depreciation in the preceding assessment year leaving nothing for the current assessment year. Therefore, the Assessing Officer had denied the benefit of set off of brought forward business loss and brought forward depreciation. 6.1 It was submitted before the first appellate authority that the assessee has carry forward business loss and unabsorbed depreciation to the subsequent year for set off. It is, further, submitted that the stand of the assessee has been accepted by the jurisdictional Bangalore Tribunal in assessee's own case for the assessment year 2004-05. ....
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....is order as Annexure-1. The Assessing Officer is, therefore, directed to verify the correctness and the authenticity of the claim of the assessee of availability of brought forward depreciation as claimed in Annexure-1 by the assessee and to take appropriate decision in accordance with law. We make it clear that the assessee would be entitled to carry forward of unabsorbed depreciation pertaining to past years only if it is allowed to be carried forward in each of the respective years. It is ordered accordingly. In the result, ground nos.4 and 6 are dismissed and ground no.5 is allowed for statistical purposes. Assessee's appeal (ITA No.428/Bang/2012) 7. Originally, the grounds raised by the assessee were elaborate and argumentative and, hence, grounds were revised and four concise grounds were filed subsequently. In the course of hearing of the appeal, the learned AR did not press ground nos.3 and 4 and, hence, the same are dismissed as not pressed. The surviving grounds, namely, ground nos. 1 and 2 reads as follows:- Ground No.1 : The learned CIT(A) is not justified in upholding of the action of the learned DCIT in reducing certain expens....