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2023 (2) TMI 150 - ITAT CHENNAITDS u/s 195 - Royalty - cost incurred in connection with off the shelf software products - HELD THAT:-Assessee stated that this issue is covered in favour of assessee by Tribunal decision in [2022 (8) TMI 1341 - ITAT CHENNAI] wherein the Tribunal considered the decision of Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Ltd., [2021 (3) TMI 138 - SUPREME COURT] and allowed the claim of assessee. We delete the disallowance and allow the appeal of assessee on this issue. Addition made on account of amount pertaining to provision of loss contracts and AO concluding that the provision for anticipated loss is a uncertain liability and not allowable as deduction u/s.37 - HELD THAT:- We noted that this issue needs verification at the level of AO, who will verify whether the assessee has declared this income and are accepted by Revenue in assessment year 2015-16 & 2016-17 by reversing the entry of provision for loss contract created by assessee - But in any eventuality, the issue on principle is covered by the decision of Hon’ble Supreme Court in the case of Excel Industries Ltd. [2013 (10) TMI 324 - SUPREME COURT] and hence respectfully following the same, we accept the arguments of the ld.AR on principle but remit the matter back to the file of the AO for verification purposes. This issue of assessee’s appeal is allowed for statistical purposes. Disallowing charges paid in respect of Employees Stock Option Plan (ESOP) - HELD THAT:- We noted that the expenses incurred by assessee by way of payment to its parent company, which has in turn issued shares to the employees of the assessee, the expenditure seems towards disbursing compensation to the employees for their services and hence, the same is to be treated as revenue in nature as held by the Tribunal in the case of Caterpillar India Pvt. Ltd. [2017 (4) TMI 1138 - ITAT CHENNAI] as well as TE Connectivity Services India Pvt. Ltd. [2022 (9) TMI 1413 - ITAT BANGALORE] - Respectfully following the decision of Co-ordinate Bench of Chennai and Bangalore, we allow the claim of assessee.
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