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2009 (5) TMI 561 - ITAT MADRAS-CAllowance or disallowance of amortized license fees - AO disallowed and added ₹ 10,26,667 on the ground that amortization was not permissible under the IT Act, except under ss. 35D, 35DD and 35DDA – Assessee needed a license to host and resell the LMS of Sun - The provisions of s. 37(1) are general as well as residual in nature and can be resorted to only when the provisions of ss. 30 to 36 are not applicable in a given case - The 'matching principle' allowing amortization of expenses, in a situation where the Act is silent in this regard, is a 'Judge-made' law - Its application has to be restricted to cases where a revenue expenditure results in a continuing benefit to the business of the assessee over a number of years, and allowing the entire expenditure in the year in which it is incurred is likely to distort the profit of that particular year Disallowance of amortized development fees – It was held that claim of the development fee is of the same nature as the licence fee discussed in the previous ground Unearned income - assessee was following mercantile system of accounting - the revenue earned by the assessee from software and consultancy services was recognized on delivery of goods/services – the assessee-company was following the AS-9 prescribed by the ICAI which was in conformity with the provisions of s. 145(2) of the Act. The assessee was regularly following the 'project completion method', which is a recognized method - Revenue's Appeal dismissed
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