TaxTMI 
TaxTMI 
2025 (6) TMI 1620
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....vide order no. ITBA/NFAC/S/250/2024-25/1067351446(1), dated 06.08.2024, passed against the assessment order by ACIT Circle 12(3)(2), Mumbai u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the "Act"), dated 06.12.2019, for Assessment Year 2017-18. 2. Grounds of appeal raised by the Revenue are as under: 1. Whether on the facts and circumstances of the case, the Ld. CIT(A) justified in deleting the addition on the account of Non- deduction of TDS foreign payment u/s 40(a)(i) of Rs. 6,67,05,092/-. 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) is justified in allowing the claim of Unexplained expenditure disallowed u/s 69C. 3. Whether on the facts and circumstances of the....
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....rant addition under Section 69C of the Act Disallowance of software expenses of Rs. 61,67,654 5. Erred in objecting the order of Ld. CIT(A) that software expenses of Rs. 61,67,654 made by the Appellant are capital expenditure and not revenue in nature. 6. Without prejudice to the above, erred in not granting the depreciation amounting to Rs. 37,00,592 (being 60% of Rs. 61,67,654) in respect of the expenditure held as capital in nature in relation to the computer software. The Appellant craves, to consider each of the above grounds of cross-objection without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of cross-objection. 3. Brief facts of the ....
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....ion has been made for this amount on account oof non deduction of tax at source resulting into a disallowance u/s 40(a)(i) and also as unexplained expenditure u/s 69C since source for the same not explained. Assessee has claimed an expense of Rs. 5,29,55,091/- out of the said total expense while computing income under the head 'profits and gains from business'. Balance amount of Rs. 1,37,50,001/- has been added back in the computation in accordance with section 40(a)(i) owing to non-deduction of tax at source, it being year-end provision. This fact is noted by the ld. Assessing Officer in the impugned assessment order in para 4.4 and is thus undisputed. Copy of computation of total income is placed in the paper book at page 32-33 which has ....
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....bmitted that the said transaction has been undertaken at arm's length price for which detailed transfer pricing documentation is maintained. Form 3CEB was also filed which is placed on record in the paper book, reporting the impugned transaction. Also, assessee demonstrated that it had duly deducted and deposited appropriate TDS under Section 195 of the Act while making payment to Wunderman Pte. Ltd. for which copy of Form 15CAs and Form 15CBs on a sample basis were filed are also placed on record in the paper book. It is stated that assessee has duly deducted and deposited appropriate taxes on Rs. 5,29,55,091/- (where applicable) during the year and the balance amount of Rs. 1,37,50,001/- is sou moto disallowed u/s 40(a)(i). Hence, adverse....
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....ated above, assessee then submitted that management fees paid to Wunderman Pte is revenue expenditure as the same is expended out of commercial expediency, incurred wholly and exclusively for the purpose of smooth functioning of its business operations. Accordingly, the same should be allowed as deduction under Section 37 of the Act. 4.5. Ld. CIT(A) after considering the aforesaid details and explanations along with documentary evidence, held in favour of the assessee by deleting the addition made by the ld. Assessing Officer on account of unexplained expenditure under Section 69C and disallowance under Section 40(a)(i). 5. We have perused the aforesaid submissions and the material placed on record in the paper book. The factual posit....
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....nd thus treated the same as capital expenditure. No depreciation was allowed while treating the same as capital in nature. 6.2. Contention of the assessee is that these expenses are incurred towards IT support services including software license fee and are not for acquiring any right in the software. These are for use and maintenance of the licenses rather than their acquisition. Thus, the said expense are revenue expenses and therefore, deductible under the provisions of section 37(1) of the Act. According to the assessee, aforementioned expenses are required to carry out day to day business operations and are annual /recurring in nature. These are software in the nature of application software which can be installed on the computers f....