TaxTMI 
TaxTMI 
2019 (7) TMI 799
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....ring the Financial Year 2008-09 under section 40(a)(ia) of the Act amounting to Rs. 2,58,64,790 without appreciating the factual and technical submissions made by the Company in this regard. 2. The learned CIT(A) erred, in law and in facts, in capitalising the software expenses amounting to Rs. 5,41,11,457 after providing depreciation at the rate of 45% without appreciating the detailed submissions made by the Company that such expenses do not result in any enduring benefit to the Company and such expenses are revenue in nature. 3. The learned CIT(A) has erred, in law and in facts, by disallowing Marked to Market ("M2M") loss amounting to Rs. 14,40,59,736 on the basis that the said loss is notional and contingent in nature and has not appreciated the factual and technical submissions made by the Appellant. 7. The learned CIT(A) has erred, in law and in facts, in directing the Assessing("AO") to levy interest under section 234B of the Act. 8. The learned AO has erred, in law and in facts, in levying interest under section 234C of the Act on the assessed income of the Company whereas the same has to computed on the returned income of the Company." 3. Brief facts of the case ....
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....llowance of Marked to Market loss amounting to Rs. 14,40,736/- on the ground that the loss is notional and arise on account of re-statement of contract and contingent in nature. The ld. AR submitted that the assessee is following system of entering into hedging contracts for hedging its purely foreign currency receivables in order to mitigate the risk of foreign exchange fluctuations. The AO has relied on the CBDT instruction which is clearly not applicable and relied on the evidence and judicial decisions. 5.3 Contra, the learned DR supported the order of the CIT(A) and submitted that the claim of the assessee of AMC expenses has to be verified and assessee could not substantiate in assessment proceedings on notional loss on MTM. 6. We heard the rival submissions and perused material on record. On the first disputed issue with respect to capitalization of software expenses and allowing of depreciation, we found the issue as envisaged by the ld. AR is covered in favour of the assessee by the decision of the co-ordinate bench of Tribunal in assessee's own case for the assessment year 2008-09 in ITA No.862/Bang/2013 wherein paras. 6.2 and 6.3 page 4 which read as under: "6.2 Per ....
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....'s Ground No.2 is treated as allowed for statistical purposes." 7. We, follow the ratio of decision and judicial procedure and restore this disputed issue of purchase of software expenses, to the file of the AO with directions to examine and consider the evidences filed by the assessee and this ground of appeal is allowed for statistical purposes. 7.1 On the second disputed issue of disallowance u/s 40(a)(ia), the contention of the ld. AR is that assessee has purchased software and does not required TDS and AMC expenses do not come within the purview of applicability of TDS provisions. Whereas, the learned DR submitted that software expenses of AMC are subject to TDS and the ld. AR filed material and explained that the company has not been granted any Rights in the software purchase and only obtained limited Rights for usage. We found that these aspects and information were not dealt in the assessment proceedings. Therefore, we remit this issue to the file of the AO to verify and examine the applicability of TDS provisions with material evidence filed and judicial decisions and the ground of appeal is allowed for statistical purposes. 7.2 The ld. AR made submissions on loss ....
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....t the software engineers cannot be equated with 'workmen' as envisaged under Rule 2(s) of Industrial Disputes Act 1947 by placing reliance on the orders of ITAT which are not applicable to the facts of the case. 4. On the facts and in the circumstances of the case the learned CIT(A) erred in law in directing the AO to exclude reimbursement of specific expenditure both from the export turnover as well as from total turnover for the purpose of computation of deduction u/s 10A, without appreciating the fact that the statute allows exclusion of such expenditure only from export turnover by way of specific definition of export turnover as envisaged by Sub-clause (4) of Explanation 2 below Subsection (8) of Section 10A and the total turnover has not been defined in this Section. 5. On the facts and in the circumstances of the case the learned CIT(A) erred in directing the AO to compute deduction u/s 10A in the above manner by placing reliance on the decision of Hon'ble High Court of Karnataka in the case of M/s Tata Elxsi Ltd., which has not become final since the same has not been accepted by the Department and SLPs are pending before the Hon'ble Supreme Court. 6. ....
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....m of Sec.80JJA of the Act whether it relates to a chip manufacturer or it relates to an IT enabled services firm has to be seen from the parameters laid down under that section for giving such deduction. In our opinion, there cannot be any dispute that development of computer software tantamounts to production of an article or thing. As mentioned by the learned AR, Finance Act, 2013 amended Sub-sec.80JJAA, the words "manufacture or production of an article nr thing" was substituted with manufacture of goods from factory". Hence, denying such deduction for an assessment year prior to assessment year 2013-14, only for a reason that the assessee was engaged in production of computer software may not be proper. Now the only question that remains is whether the claim of the assessee could be considered from the perspective of the definition of workman as given in the Industrial Disputes Act, 1947. Sec.2(5) of Industrial Disputes Act, 1947 defines a workman as under; "Workman means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment ....
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....4,029,70,736 which included the wages of Rs. 4,87,64,029 in respect of the new workmen employed during the year ended 31st March, 2000 relevant to the asst. yr. 2000-01. As there was no claim for relief under s. 80JJAA for the asst. yr. 2000-01, the relief in respect of the workers employed in asst. yr. 2000-01 cannot be considered for relief under s. 80JJAA in the asst. yr. 2001-02. As such the appellant will be entitled for relief under s. 80JJAA of Rs. 1,09,52,012 being 30 per cent of the additional wages of Rs. 3,65,06,707 (Rs. 8,52,70,736 - Rs. 4,87,64,029) in respect of the new workmen employed during the previous year relevant to the asst. yr. 2001-02. Similarly, for asst. yr. 2002-03 the appellant has claimed deduction of Rs. 4,78,05,176 being 30 per cent of the wages of Rs. 1,59,30,588 which also included the wages of Rs. 4,38,68,182 pertaining to the new workers employed in the previous year 1999-2000. For the reasons mentioned above the appellant is not entitled for relief under s. 80JJAA in respect of the wages pertaining to the workers employed in the previous year 1999-2000. As such the appellant would be eligible for relief of Rs. 3,46,44,722 being 30 per cent of the....
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....see which are extracted at pp. 5 and 6 of this order. After carefully considering the same, we are inclined to accept the reasons shown by the learned CIT(A). The learned CIT Departmental Representative could not assail the finding reached by the learned CIT(A) by bringing in any valid materials. The order of the CIT(A) is confirmed. It is ordered accordingly. No doubt, in assessee's own case for the assessment year 2007-08, this Tribunal in relation to a claim of similar deduction had held as under; 36. We also find that the Tribunal in the case of Texas Instruments Pvt.Ltd., in 1TA No.1/ Bang/2011, dated 07-09-2012, for the assessment year 2005-06, at para-10.7, has remitted the matter back to the CIT(A) for fresh consideration. Hence, we are inclined to restore this issue back to the file of the AO with a direction to rededicate the issue by passing a speaking order, of course, after giving effective opportunity of hearing to the assessee. The asesssee is also hereby directed to cooperate with the AO by producing the details as called for by him". 14. In the light of the facts here and the law in this regard, we are of the opinion, that the matter requires a fresh look....