2021 (3) TMI 784

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....ceedings, the AO noticed that the assessee debited a sum of Rs. 17,11,41,734/- towards software purchases. The assessee submitted before the AO that it was trading in software owned by Altair Inc., which owns the Intellectual Property (IP) rights as well the remarketing rights of the computer software and related materials. Altair India has been granted distribution rights under a specific distribution agreement for marketing and distributing this software in India and a few other countries. These software procurements were against back to back orders from end customers. In short, it was submitted that the income of the Assessee was only in the nature of a trading profit obtained by the assessee and not any revenue in nature of fee. Some of....

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....oftware purchases are held disallowed from being claimed as revenue expenditure. If any of the Appellate Authorities were to hold that the expenditure is allowable without TDS being made therefrom, then the whole amount is held as capital expenditure on which assessee is eligible for a depreciation @ 60 % as applicable." 4. The addition made by the AO was confirmed by the CIT(A) and on further appeal by the assessee, the Triubnal in IT(TP)A No.171/Bang/2014 by its order dated 03.05.2017 remanded the issue to AO for considering the claim of the assessee that it had deducted tax at source on the payment made to the non-residents. The following were the relevant observations of the Tribunal: "22.As regards the other grounds of appeal relat....

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....l order of assessment. This application filed by the assessee under section 154 of the Act was rejected by the AO by an order dated 03.05.2018 in which the AO has observed that there is no mistake apparent in the Order Giving Effect dated 31.01.2018. Against the aforesaid order of the AO passed under section 154 of the Act, assessee filed an appeal before the CIT(A). The CIT(A) was of the view that in the original order of assessment under section 143(3) of the Act, the AO had not only disallowed the payment made to non-residents for non-deduction of tax at source, but also made an alternative case that the expenditure was capital in nature. The CIT(A) was of the view that in respect of alternative case made by the AO in the original order ....

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....was submitted by the learned Counsel for the assessee that the issue with regard to whether the expenditure is capital or revenue no longer survives in view of the directions of the DRP dated 29.11.2013. which have become final. The AO, therefore, while giving effect to the order of the Tribunal dated 31.01.2018 cannot go into the question as to whether the expenditure is capital or revenue. Learned DR however relied on the order of the CIT(A). 9. After considering the rival submissions, we are of the view that the issue that was remanded by the Tribunal in the order dated 03.05.2017 was only to verify whether the assessee had made TDS. The question whether expenditure can be regarded as capital in nature has already been decided by the DR....