TaxTMI 
TaxTMI 
2016 (4) TMI 30
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....or software development and maintenance on the alleged ground that the same is capital expenditure,. 2. The appellant prays that the said Software Development Expenditure be treated as revenue expenditure and be allowed as a business expenditure. GROUND II 1. The CIT(A) erred in upholding the action of the A,O. in treating loan of 1,25,01,689/- taxable u/s. 68 of the income Tax Act, 1961 ("the Act") and further enhancing the income to Rs. 1,61,15,409/- on alleged ground that the same is unexplained credit within the meaning of section 68 of the Act. 2. The Appellant therefore prays that the said addition be deleted. GROUND III: The Appellant craves leaves to add to, alter and / or amend the above grounds of appeal." Ground No.1 2. Vide ground No.1, the assessee has agitated the action of the Ld. CIT(A) in confirming the disallowance of a sum of Rs. 17 lakhs holding the same as a capital expenditure as against the claim of the assessee that the same being of revenue in nature. During the year under consideration, the assessee incurred various expenses for software development and maintenance amounting to Rs. 44,34,703/-. Th....
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....nch of this Tribunal in the case of "ACIT vs. Sanghvi Savla Stock Brokers Ltd." (2014) 43 Taxmann.com 323 (Mum-Trib.). The Tribunal in the said decision has very elaborately discussed about the nature of the software expenses and has observed that software keep on changing at a very past pace with the growing requirement in the day to day business. Most of the software become obsolete in short span and new and upgraded versions are required for better functioning and that any expenditure on such an up-gradation or buying of software for facilitation and efficient working of operations through computers in day to day business management is to be treated as revenue in nature until and unless it is established that the software installed has a very long lasting life and enduring benefit on a capital asset. The relevant observations made by the Tribunal in para 12 of the said decision, for the sake of convenience, are reproduced as under: "............. Whether any particular expense falls in the capital field or revenue field has to be judged, looking to the nature of expenses and various tests laid down by the courts from time immemorial. In this age of computerization, vari....
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....nhancing the income to Rs. 1,61,15,409/- on account of unexplained credits u/s 68 of the Act. The brief facts leading to the above addition are that the AO noticed that the assessee had taken unsecured loan amounting to Rs. 1,88,62,689/-, outstanding balance of the same at the year-end being Rs. 4,66,72,689/-. It was stated that out of the total outstanding unsecured loans, an amount of Rs. 4,12,47,000/- belonged to the assessee's holding company 'Marketing and Brand Solutions (India) Pvt. Ltd'. (in short M & B) and the balance of Rs. 54,25,689/- to 'Modi Entertainment Ltd.' (in short Modi) (a related company). The amount belonging to Modi, represented excess amount received during the current assessment year against the advance given by the assessee in earlier years. That during the year under consideration, an amount of Rs. 1,34,37,000/- had been received by the assessee from M & B. The AO treated the loans of Rs. 1,25,01,689/- as unexplained credit in the books of the assessee in the light of the provisions of section 68 of the Act on the ground that the entries in respect of these loans remained unexplained. Being aggrieved by the said addition, the assessee preferred appeal....
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....essee were, in fact, not the loans. These, in fact, were the security deposits received by the assessee from the retailers. The Ld. A.R. has brought our attention to the application dated 17.07.14 moved for admission of additional evidence wherein it has been stated that the assessee was in possession of various documents such as retailer application forms, distributor agreement and the relevant receipts depicting the receipt of amount from various persons along with retailer application form. The said retailer application froms were not only signed by the respective parties but also having the photographs of the each party affixed along with name, address etc. duly mentioned thereupon. The Ld. A.R. has further submitted that the above stated documents were sufficient enough to prove the genuineness of transactions and the source of credits into the accounts of the assessee. It has been explained that these documents pertained to a 10 year old period and the assessee was making all out effort to trace the same, however, despite best efforts the same could not be produced before the lower authorities. Since the said documents have now been retrieved and the same go to the root of th....
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....round No.1 13. Ground No.1 is relating to the action of the Ld. CIT(A) in deleting the disallowance of interest of Rs. 47,84,336/-. The Ld. CIT(A), while deleting the said disallowance of interest, has observed that the loan amount in question was in fact the security deposits received by the assessee from the retailers and that the same was used for the purpose of business of the assessee. 14. The Ld. D.R., in this respect, has submitted that the finding of the Ld. CIT(A) are virtually not based on any concrete evidence on the file in this respect. 15. After going through the order of the Ld. CIT(A) on this issue and considering the submissions of the Ld. Representatives of the parties, we think it proper to restore this issue also to the file of the AO in the light of our observations made above while restoring the issue of addition of Rs. 1,61,15,409/- made under section 68 by the lower authorities in relation to ground No.2 of the assessee's appeal. Since this issue is interlinked and connected with the issue raised vide ground No.2 in the assessee's appeal, we therefore, direct the AO to decide this issue also afresh in the light of evidences furnished by the assessee....