2025 (3) TMI 1115

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....of the case are that the assessee is a private limited company and engaged in software development business. Return for assessment year 2014-15 furnished on 29.11.2014 declaring income of Rs. 8, 74, 700/-. The case selected for scrutiny through CASS followed by validly serving notices u/s 143(2) and 142(1) of the Act. Information called for by Ld. Assessing Officer was duly supplied and the assessment was completed assessing income of Rs. 30, 64, 753/- after making following additions/disallowances :- (i) Disallowance of professional fees for patent drafting at Rs. 15, 69, 849/-. (ii) Disallowance of translation expenses for software development at Rs. 5, 17, 630/-. (iii) Disallowance u/s 14A of the Act at Rs. 1, ....

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....serve that during the year assessee incurred Rs. 15, 69, 849/- as legal charges for filing patent application. Ledger Account of patent, copyright and trademark expenses is placed at page no.70 to 71. Ledger Account of expenditure towards professional charges incurred for the professional services mainly includes the amount charged by M/s Evalue Serve against the invoices raised for patent drafting, docketing attorney and USPTO charges. Undisputedly, the patent for which the alleged expenditure was incurred has not been registered till date. It has been stated before us by Ld. Counsel for the assessee that the assessee has followed Accounting Standard 26 and since the patent for which the expenditure was incurred has not been capitalized in....

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....nduring benefit. Further, the intention of the expenditure is to facilitate sales and not develop software. Therefore, since the alleged expenditure towards translation expenses for software development has been incurred in the regular course of business for the year under consideration, the same is hereby treated as 'revenue expenditure' and the claim made by the assessee deserves to be allowed. Finding of Ld. CIT(A) is reversed and ground no.3 of the assessee is allowed. 11. Ground no.4 relates to disallowance u/s 14A of the Act. Though the assessee has claimed that Ld. Assessing Officer has not made proper satisfaction, we however considering the fact that the assessee had earned dividend income from mutual funds investments only at R....