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2019 (12) TMI 986 - ITAT BANGALORESoftware expenses for licence up to 2 years - allowable revenue expense - HELD THAT:- Toyota Kirloskar Ltd. [2013 (2) TMI 108 - KARNATAKA HIGH COURT] held that software expenses for licence up to 2 years is revenue in nature and is fully allowable as a deduction. Respectfully following this judgment, the Tribunal held in that year that the AO is directed to allow the deduction in respect of software expenses having licence period up to 2 years after considering and verifying the details furnished by the assessee. In the present year, as per para 27 of his order, it is noted by the learned CIT(A) that the Tribunal in the assessee’s own case for Assessment Years 2004-05 and 2006-07 held that software expenses up to 2 years are allowable as deduction and directed the AO to allow the same. Learned CIT(A) has followed this Tribunal’s order and decided the issue in favour of the assessee. Deduction u/s 10A - interest on loans to subsidiary company - deemed income under section 41(1) - HELD THAT:- Regarding the first aspect of interest amounting to ₹ 27.80 lakhs, we restore the matter back to the file of the AO for fresh decision, after examining the factual aspect as to whether the loan given to subsidiary is a loan given in ordinary course of business or not. We do so by following the judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs. Hewlette Packard Global Ltd., . [2017 (11) TMI 205 - KARNATAKA HIGH COURT] with observation that incidental activity of parking of surplus funds with the banks or advancing of staff loans by such special category of assessee covered under sections 10A or 10B of the IT Act is integral part of their export business activity but the factual aspect noted by Hon’ble Karnataka High Court was this that parking of surplus funds with the bank or advancing of staff loans was in ordinary course of business of the assessee in that case. On this aspect, there is no finding of any of the authorities below in the present case as to whether the loan given to subsidiary company and staff advances were given by the assessee in ordinary course of business or not and hence, the AO has to examine this factual aspect and if it is found that such loan and staff advances are given by the assessee in ordinary course of business, then on resultant interest income earned by the assessee, deduction should be allowed under section 10A. Regarding the second aspect in respect of deemed income under section 41(1) of the IT Act, 1961, amounting to ₹ 107,62,841/-, we allow the claim of the assessee by following the judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs. Wipro Ltd. [2012 (2) TMI 535 - KARNATAKA HIGH COURT] We find that this is true that note was there in the audited accounts for the year ended 31.03.2004 and present year both. In this note, only it was stated that one of the customers have agreed to settle consideration in respect of services rendered by assessee by transferring certain software programs along with annual maintenance services which amounted to ₹ 157.14 lakhs. Similar note is there in the audited account for the present year also and hence, the confusion has arisen as to whether this sale transaction of ₹ 157.14 lakhs is pertaining to Assessment Year 2004-05 or the present year or similar transaction is there in both years. Hence, we feel it proper to restore this matter to the file of the CIT(A) for fresh decision after examining the facts in this regard carefully and after providing reasonable opportunity of being heard to both sides and he should decide this issue by way of a speaking and reasoned order Disallowance of brokerage charges - HELD THAT:- We find that in para Nos.29 and 30 of his order, it is noted by the learned CIT(A) that it was explained by the assessee before him that the assessee has incurred this amount as brokerage charges for securing residential accommodation for its employees but no documentary evidence has been furnished by the assessee to support his claim. Before us also, no documentary evidence has been submitted by the learned AR of the assessee and hence, on this issue, we find no reason to interfere in the order of the CIT(A) and accordingly, ground No.7 is rejected. Disallowance on account of debonding charges - HELD THAT:- Disallowance respect of interest on debonding charges was upheld by learned CIT(A) with a categorical finding that the assessee has not furnished any documentary evidence in this regard. Before us also, no documentary evidence has been brought on record and hence, on this issue also, we find no reason to interfere in the order of the CIT(A).
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