TaxTMI 
TaxTMI 
2015 (9) TMI 9
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....law by holding that the payment made to Cadence Systems Ireland Ltd. ("Cadence") for purchase of software (software was capitalized in the assessee's accounts), amounts to royalty under the Act and the India- Ireland Tax Treaty and therefore, tax was required to be deducted at source on the said payment. 4. The learned AO has erred in law by holding that since tax was not deducted at source from the payment made towards purchase of software, tax depreciation claimed on computer software amounting to Rs. 1,747.680 is not allowable as a deduction under section 40(a)(i) of the Act. 5. The learned AO has erred in law by not considering that even if the tax depreciation is disallowed resulting in an income, Kawasaki India, being a unit registered under the Software Technology Parks of India (STPI) Scheme and having satisfied the conditions prescribed under section 10A of the Act, is eligible to claim deduction under the aforesaid section. 6. The learned AO erred in levying interest of Rs. 115.197 under sections 234B of the Act. The appellant submits that each of the above grounds is independent and without prejudice to one another. 3. The only issue raised for our consideration and....
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....he issue of disallowance of depreciation by applying the provisions of section 40(a)(i) of the Act is covered in favour of the assessee by the above said decisions of the Tribunal. 5. On the other hand, the learned Departmental Representative has submitted that there is no dispute that the assessee has made the payment for purchase of software which is in the nature of royalty and therefore the provisions of section 195 are applicable on such payment for deduction of tax at source. He has further submitted that it is also not in dispute that the assessee has not deducted the TDS in respect of the payment in question and therefore the assessee has violated the provisions of section 195 of the Act and consequently, the provisions of section 40(a)(i) of the Act are applicable in the case under consideration. The learned Departmental Representative has contended that there is an intricable link between the provisions of sections 40, 195 & 201 of the Act. Once the assessee has failed to comply with the provisions of section 195, the provisions of section 40(a)(i) of the Act are applicable. Has relied on the orders of the authorities below. 6. We have considered the rival submissions a....
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....0 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",- in the case of any assessee- [(i) any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable,- outside India; or in India to a non-resident, not being a company or to a foreign company, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200 : Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under subsection (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Explanation.-For the purposes of this sub-clause,- "royalty" shall have the same me....
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....the Hon'ble Punjab & Haryana High Court in the case of Mark Auto Industries Ltd. (supra) in pars 5 & 6 as under: "5. Adverting to questions (ii) and (iii), the issue which arises for consideration is whether the assessee could be disallowed claim for depreciation under Section 40(a)(i) of the Act on the ground that the payments made for technical know-how which had been capitalized, no tax deduction at source has been made thereon. The Tribunal while accepting the plea of the assessee, in para 3, had noticed as under: "3. Ground no. 4 is against deletion of an addition of Rs. 6,88,1751- made by the AO on account of deduction of depreciation on technical know-how as the assessee failed to deduct tax in accordance with the provision contained in section 40(a)(i). The finding of the learned CIT(A) was that the assessee had incurred, expenditure by way of technical know-how, which was capitalized amount as made in the return of income. Since the assessee had not claimed deduction for the amount paid, the provisions contained in section 40(a) (i) were not attracted. The learned DR could not find any fault with this direction of the CIT(A) also although she referred to page 4 of the as....