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2014 (1) TMI 1305 - ITAT DELHIDeletion on account of capitalization of software expenses -Held that:- The decision in ITO, COY WARD 1(2), NEW DELHI Versus ACL WIRELESS LTD. [2012 (12) TMI 732 - ITAT NEW DELHI] followed - CIT(A) has rightly observed that the expenditure in question was incurred as a matter of routine, for the business and commercial expediency of the assessee’s business, i.e., consultancy business - The CIT (A) has also declared that the capitalization of such expenses in preceding years was for the period prior to the commencement of the assessee’s business - Right from the commencement of the business of the assessee, the expenses started being claimed as revenue, every year – Decided against Revenue. Deduction made u/s 40(a)(ia) of the Act – TDS not deducted – Held that:- Merely because the assessee has reversed the entry of the expenditure claimed in one year in the subsequent year would be no ground for allowability of such expenditure in the year in which deduction is claimed - For allowability of the expenditure, the assessee has to establish that the expenditure was incurred during the year under consideration wholly and exclusively for the purpose of business - the assessee has not established how the expenditure is allowable in the year under consideration except arguing that the entry for the claim of expenditure has been reversed in the subsequent year –the order of the CIT(A) reversed - the expenditure was rightly disallowed by the Assessing Officer – Decided against Revenue. Deletion of capitalization of licence fee paid – Held that:- The assessee made the payment of license fee to M/s Nuance Communication, a Belgian company, as per the agreement for procuring license for use of its voice software and the agreement was operative for one year only - The above factual finding recorded by learned CIT(A) has not been controverted by the Revenue - Once the license fee was paid only for one year, by no stretch of imagination, it can be treated as capital expenditure – order of the CIT(A) upheld – Decided against Revenue.
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