TaxTMI 
TaxTMI 
2016 (7) TMI 1180
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.....3 of the impugned order. On the other hand, the ld. counsel for the assessee, Shri A.K.Ghosh, defended the relief granted to the assessee by inviting our attention to accounting standard 26, which were not followed by the Assessing Officer. Our attention was invited to pages 446, 448 and 449 of the paper book by further submitting that IPR's useful life should not exceed ten years by contending that deprecation is governed by appendix of Income Tax Rules, wherein, rate of depreciation is provided at the rate of 25%, whereas, the Assessing Officer has applied rate of 10% for the whole year. It was also pleaded that the assessee was assessed u/s 143(3) of the Act by the same Assessing Officer for A.Y. 2007-08 to 2012-13, granting relief to the assessee by the Assessing Officer except 2008-09 (present appeal) and that addition was also deleted by the ld.CIT(A). Likewise, no addition was made for A.Y. 2009-10 and A.Y. 2011-11, therefore, it was pleaded that on the issue of consistency also, the assessee is having a good case in its favour. 2.1. We have considered the rival submissions and perused the material available on record. If the observation made in the assessment order, leadi....
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.... an Asset 58. Expenditure on an intangible item that was initially recognised as an expense by a reporting enterprise in previous annual financial statements or interim financial reports should not be recognised as part of the cost of an intangible asset at a later date. Subsequent Expenditure 59. Subsequent expenditure on an intangible asset after its purchase or its completion should be recognised as an expense when it is incurred unless: (a) it is probable that the expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standard of performance; and (b) the expenditure can be measured and attributed to the asset reliably. If these conditions are met, the subsequent expenditure should be added to the cost of the intangible asset. Amortisation period 63. The depreciable amount of an intangible asset should be allocated on a systematic basis over the best estimate of its useful life. There is a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. Amortisation should commence when the asset is available for use. 64. ....
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....x and two-third per cent of its total built-up floor area and shall include any such building in the factory premises. 3. In respect of any structure or work by way of renovation or improvement in or in relation to a building referred to in Explanation 1 of clause (ii) of sub-section (1) of section 32, the percentage to be applied will be the percentage specified against sub-item (1) or (2) of item 1 as may be appropriate to the class of building in or in relation to which the renovation or improvement is effected. Where the structure is constructed or the work is done by way of extension of any such building, the percentage to beapplied would be such percentage as would be appropriate, as if the structure or work constituted a separate building. 4. Water treatment system includes system for desalination, demineralisation and purification of water. 5. Electrical fittings" include electrical wiring, switches, sockets, other fittings and fans, etc. 6. Commercial vehicle" means "heavy goods vehicle", "heavy passenger motor vehicle", "light motor vehicle", "medium goods vehicle" and "medium passenger motor vehicle" but does not include "maxi-cab", "motor-cab", "tractor" and....
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....swamy Satsang vs CIT 193 ITR 321 (SC) xiv. Aggarwal warehousing & Leasing Ltd. 257 ITR 235 (MP) The sum and substance of the aforesaid judicial pronouncements is that on the basis of principle of judicial discipline, consistency has to be followed and once in a particular year, if any view is taken, in the absence of any contrary material, no contrary view is to be taken as finality to the litigation is also a principle which has to be followed. Before us, no contrary facts or any adverse material was brought on record by the Revenue, therefore, we find no infirmity in the finding/conclusion of the ld. First Appellate Authority. We affirm his view being uncontroverted on fact. 2.4. Thus, totality of facts, clearly indicates that the assessee is a software development company and the cost of the development of the software is an intangible asset and the product license are IPR's. In view of the provision of the Act and AS-26 and further the fact that the cost of development of the software is an intangible asset and the IPR's is the product, license is not in dispute, therefore, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals) to mak....
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....e i.e. Skype Bank and to remit the same to the assessee company in India. Further statement was also made by the ld counsel for the assessee that the said 3I Infotech, Dubai has not rendered any part of the services in or from India and all the services for generating export order in favour of the assessee were rendered from abroad. It was also stated before the Bench that this is the only agreement with the 3I Infotech , Dubai entered into by the assessee company and there is no other agreement entered into by the assessee with 3I Infotech, Dubai with respect to this transaction of banking software been supplied by the assessee to Skype Bank, Nigeria. The ld counsel submitted that 3I Infotech , Dubai has been granted non-exclusive license by the assessee company , of which the assessee company is the owner of the said proprietary software . The said 3I Infotech has sublicensed the said proprietary software to Skype Bank, Nigeria on the terms and conditions set forth in the agreement. The ld AR relied upon the decision of Hon'ble Madras High Court in the case of CIT v. Farida Leather Company in Tax Case Appeal No. 484 of 2015 , judgment dated 20-01-2016. The ld counsel made stateme....
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.... front end commission as are paid by the assessee company to M/s 3I Infotech, Dubai , the pith and substance of the agreement of the assessee with the foreign agent M/s 3I Infotech, Dubai is for arranging export order of software in favour of the assessee company and since it could not be brought on record by the Revenue that services were rendered from or in India by the said foreign agent i.e. 3I Infotech nor it could be brought on record that any technical services or technical knowhow or technical expertise, experience or expertise is provided by the 3I Infotech, Dubai and also the front commission pertains to the period prior to the new circular no. 7/2009 dated 22.10.2009, we hold that there was no liability on the part of the assessee to deduct tax at source on the said payment u/s 195 of the Act and the AO erred in invoking the provisions of Section 40(a) of the Act read with Section 195 of the Act. We confirm the orders of the CIT(A). We order accordingly. 4. The next ground pertains to addition made on account of sale of $ 70,000/- (Rs.28 lakh) to M/s Mushreq Bank, being unaccounted sales. The ld. DR advanced arguments in support of the addition made by the ld. Assessing....
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....tract as per which 50% of the license fee and 50% of the implementation was to be received as advance during F.Y. 2006-07. The assessee raised the 50% of the balance amount of implementation during F.Y. 2008-09 as the project was completed during that year only. There was merger bank with HDFC bank. During the F.Y. 2007-08, the bank requested customization work. The assessee raised the bill as per the terms of the contract but the recognition of the Revenue in service sector depends on nature of agreement and nothing has been brought on record to suggest that, right, interest and title passed on the customer during the year itself. There is no question of suppression of sale as has been alleged. We affirm the stand of the ld. Commissioner of Income Tax (Appeals). 6. The next ground pertains to addition of Rs. 19,00,044/- ($ 48200) on account of M/s Ducont FZ-LLC, being unaccounted sales as per agreement with M/s Duncont FZLLC. The crux of argument on behalf of the Revenue is identical to the ground raised by defending the addition made by the ld. Assessing Officer. On the other hand, the ld. counsel for the assessee, contended that this ground is similar to ground no.2. 6.1. We h....
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....ion shall apply to the front end commission of Rs. 62,83,660 paid by the assessee to 3i Infotech, Dubai and Rs. 19,00,044/- paid by the assessee to M/s Ducont FZ-LLC in the instant ground of appeal 8. The last ground raised by the assessee pertains to applicability of section 145(1) and 145(3) in rejecting the books of accounts by the Assessing Officer. The crux of the argument on behalf of the Revenue is identical to the ground raised. On the other hand, the ld. counsel for the assessee contended that the assessee followed accounting standard, AS-26 and there is no adverse comment by the auditor, therefore, the books of account were rejected by the Assessing Officer. 8.1. We have considered the rival submissions and perused the material available on record. The books of accounts were rejected by the ld. Assessing Officer on the plea that accounting standard were not complied with by the assessee. However, we note that the books of accounts were audited by M/s Delloitte Haskins, one of the big audit firms, who have not commented anything adverse/deviation in their audit report, thus, we find no infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals). We affirm....
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.... asset. As per clause 9 of AS-26 (page 464 of the paper book), the following are not components of the cost of internally generated software:- (a) Selling, administration and other general overhead expenditure unless this expenditure can be directly attributable to the development of the software; (b) Clearly identified inefficiencies and initial operating losses incurred before software achieves the planned performances; and (c) Expenditure on training the staff to use the internally generated software. 9.3. In view of the above, we note that the ld. Assessing Officer has not pointed out any infirmity in the explanation of the assessee. The totality of facts, clearly indicates merits in the contention of the assessee and as canvassed by the assessee, the ld. Assessing Officer made the addition to the cost of treating the proportionate value of incidental expenses ignoring the standard practices adopted by the assessee. In view of the explanation of the assessee, we allow this ground and more specifically when for earlier assessment year, the department had been accepting the claim of the assessee and in the impugned year, no contrary facts were brought on record. 10. ....
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....o the facts of the case and further holding that it is applicable prospectively, thus, this ground of the assessee is also allowed. 13. The last ground pertains to making disallowance of Rs. 1,14,681/- u/s 40(a)(ia) of the Act instead of disallowing of Rs. 4,000/- on which TDS amounting to Rs. 453 was remitted in the government treasury after end of the relevant financial year. The ld. counsel for the assessee advanced argument which is identical to the ground raised. 13.1. We have considered the rival submissions and perused the material available on record. We note that in para 8 of the assessment order, the ld. Assessing Officer has mentioned the auditor report (clause 27) (b)(iii) with respect to details of payment and tax deducted at source as is explained in the table provided in para 8 of the assessment. The ld. counsel for the assessee, explained that there was typographical error in writing the due date of remittance to the government. We have perused the record and find merit in the contention of the AR because instead of 07th February of 07th March, 2000, it was on 07th February and 07 March, 2009, thus, since there is no loss to the Revenue. The claim of the assessee ....