TaxTMI 
TaxTMI 
2011 (12) TMI 680
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....om non-STP unit against profits of the STP unit before arriving at the deduction u/s 10A of the Act Rs. 44, 85,010/-. 2. The brief facts of the case are that the assessee company which is engaged in the business of designing of automobile parts for heavy and light vehicles filed its return of income on 01-12-2003 declaring a loss of Rs. 98,45,908/-. During the assessment proceedings u/s 143(3) of the IT Act, the AO observed that the assessee's claim of software expenditure amounting to Rs. 48,25,946.48 pertains to one year license payment. The AO called for the details of the software expenditure and the duration of the license and it was found that even in the cases where the license validity is more than one year and which will result ....
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....r the assessee Shri K.P.Kumar, while reiterating the submissions made before the authorities below submitted that all the software are the operating software which become outdated and cannot be used further, if the annual maintenance contracts (AMC) are not renewed. Thus, according to the learned counsel for the assessee there is no enduring benefit to the assessee from these software expenditure. He also drew our attention to the details of the software which are treated as capital in nature, as culled out by the CIT(A) at page-4 of his order to demonstrate the nature of the expenditure. Further, in support of his contentions, he placed reliance upon the following decisions; a) CIT Vs Associated Cements Co.Ltd.,(SC) 172 ITR 257 b) IB....
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....munication technology, enables the assessee to carry on its business operations effectively, efficiently, smoothly and profitably, but, such software by itself does not work on a stand alone basis, as it has to be fitted to a computer system and only then enhances the efficiency of the operation and the payment for such application software though there is an enduring benefit, does not result in acquisition of any capital asset and it merely enhances the productivity or efficiency and hence to be treated as revenue expenditure. Since the nature of software in question before us is similar, respectfully, following the above decision, we have to hold that the software expenditure incurred by the assessee for acquisition of application of s....
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....0-A unit under section-72. The loss incurred by the assessee under the head profits and gains of business or profession has to be set off against the profits and gains if any, of any business or profession carried on by such assessee. Therefore, as the profits and gains u/s 10-A is not be included in the income of the assessee at all, the question of setting off the loss of the assessee of any profits and gains of business against such profits and gains of the undertaking would not arise. Similarly, as per section 72(2) unabsorbed business loss is to be first set off and thereafter unabsorbed depreciation treated as current years depreciation u/s 32(2) is to be set off. As deduction u/s 10-A has to be excluded from the total income of the a....