TaxTMI 
TaxTMI 
2025 (9) TMI 1564
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....567/Bang/2020. In that case, the Tribunal set aside the issue to the file of the AO for fresh adjudication after admitting additional evidence. The ld. counsel further submitted that the assessee has also filed additional evidence in this year showing that the useful life of the software was less than one year. Hence, it should be allowed as revenue expenditure. It was prayed that the matter may be remitted back to the AO with similar directions. 4. On the other hand, the learned DR did not object if the issue is set aside to the AO for fresh adjudication as per the law. 5. We heard both sides and examined the materials available on record. We find that in A.Y. 2012-13, the Tribunal remitted the issue to the AO for fresh adjudication vide order dated 21.06.2022. The relevant extract of the order of the ITAT is reproduced herein below: "16. We have considered the rival submissions and perused the material on record. The additional evidence now produced before us goes to the root of the matter to decide the issue whether the expenditure incurred towards software is in revenue or capital field. Therefore the additional evidence is admitted taken on record for adjudicati....
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....revenue expenditure and these softwares if they are licensed for a particular period, for utilizing the same for the subsequent years fresh licence fee is to be paid. Therefore, when the software is fitted to a computer system to work, it enhances the efficiency of the operation. It is an aid in manufacturing process rather than the tool itself. Though certain application is an enduring benefit, it does not result into acquisition of any capital asset. It merely enhances the productivity or efficiency and, therefore, it has to be treated as revenue expenditure. In that view of the matter, the finding recorded by the Tribunal is in accordance with law and does not call for any interference. Accordingly, the second substantial question of law is answered in favour of the assessee and against the Revenue. 11. The third substantial question of law relates to the computation of the income under the provisions of section 115JA of the Act. 12. The case of the assessee is that, while computing, within the meaning of section 115JA, the provision made for doubtful debts should not be added as it does not amount to provision made for meeting liabilities other than ascertaine....
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....apital asset. 19. The decision relied on by the ld. DR in Toyota Kirloskar Motor (P) Ltd. (supra) was rendered based on the specific facts in that case where the software viz., 'lotus notes' had shelf life of less than two years based on which the Hon'ble High Court held that it is revenue in nature. The decision cannot be applied generally to state that any software having a shelf life of more than two years is capital in nature since the decision in Toyota Kirloskar Motor (P) Ltd. (supra) was with respect to a particular software and that the nature of software whether it is a system software or application software needs to be analysed to decide the treatment under the Act. 20. In view of the above discussion, we remit the issue back to the AO to verify the facts afresh after considering the breakup of the software expenses submitted as additional evidence filed by the assessee and decide the issue after taking into consideration the ratio laid down by the jurisdictional High Court in the case of IBM India Ltd. (supra). Needless to say that assessee shall be given reasonable opportunity of being heard. This ground of the assessee is allowed for statistical purp....
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....overnment of India. Furthermore, the concession fee for the first 10 financial years was payable in 20 equal half-yearly installments starting from 11th year after commencement of the operation. 53. Therefore, the assessee made provision on account of concession fees payable for each year starting from A.Y. 2010-11 and accordingly made provision in the year under consideration at R. 53.55 crores. The provision in the respective assessment years were claimed as expenditure and accordingly the amount of Rs. 53.55 crores claimed as expenditure in the year under consideration. Furthermore, the 10-year period expires, and the assessee started making actual payment from the year under consideration and thereby made actual payment in the year under consideration amounting to Rs. 88.54 crores. 54. The AO disallowed the claim of the assessee by invoking the provision of section 43B of the Act. The AO held that the concession fee payable to the Government is covered by the provision of section 43B of the Act which states any sum payable by way of tax, duty, cess or fee, by whatever name called shall be allowed as deduction on actual payment basis. The assessee is required t....
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...., which was disallowed by the AO by invoking the provisions of section 43B of the Act. The assessee contends that the concession fee is not covered under the purview of section 43B of the Act, and hence the deduction is allowable on accrual basis. 61. It is an undisputed fact that the assessee had entered into a concession agreement with the Ministry of Civil Aviation dated 5th July 2004, under which it was granted the exclusive right to design, develop, finance, construct, operate, and maintain the Bangalore International Airport. In consideration of these rights, the assessee was obligated to pay a concession fee to the Government of India at 4% of its gross revenue. As per the agreement, such concession fee was payable in 20 equal half-yearly instalments starting from the 11th year of commencement of operations. Accordingly, the assessee made a provision of Rs.53.55 crores during the year under consideration and also made an actual payment of Rs.88.54 crores, as the 11-year deferment period had concluded. 62. The AO invoked section 43B of the Act, which mandates that any sum payable by way of tax, duty, cess, or fee shall be allowed as a deduction only on actua....
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.... MTM loss in dispute is allowable under section 43AA of the Act. He also relied on the judgment of the Hon'ble Supreme Court in the case of CIT Vs Woodward Governor India Pvt. Ltd. reported in 179 Taxman 326. However, the disallowance was made because documents could not be filed earlier by the assessee in support of impugned loss. The assessee has now filed additional evidence. Hence, it was prayed that the issue may be set aside to the AO for verification and adjudication. 13. Per contra, the learned DR did not object to setting aside the matter for verification and fresh adjudication as per law. 14. We have carefully considered the rival contentions and perused the record. It is a settled position in law that foreign exchange fluctuation gains or losses are not contingent in nature, but arise from existing obligations as on the balance sheet date. The Hon'ble Supreme Court in the case of CIT vs. Woodward Governor India Pvt. Ltd. (179 Taxman 326) has held that loss on account of foreign exchange fluctuation in respect of monetary items as on the balance sheet date is an allowable expenditure. 14.1 With the introduction of section 43AA by the Finance Act, 2018, the statut....