Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2011 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (1) TMI 161 - AT - Income TaxReimbursement of Incentive paid to employees - Arm’s length price – Addition of income of - Assessee in this case is engaged in the business of designing packaged software and also provides software consultancy services - While making adjustment, the TPO has observed that the assessee has received payment towards technical services rendered to its AE - Held that: the sum of ₹ 10,66,08,194 received from the associated enterprise/parent company was merely in the nature of reimbursement towards incentive paid to the employees and does not have any element of income. The matter has been duly disclosed in the financial statement of accounts. Moreover, the amount received from the associated enterprises was in fact reimbursement of such payment of incentive and was inextricably linked with corresponding expenses. If the working is re-worked, taking the amount received as assessee’s receipt and payment as assessee’s expenses still the PLI would be favourable as comparable to the average comparables. - Decided in favor of assesee Deduction u/s 10B - As per AO the deduction u/s 10B is not allowable once the deduction is claimed u/s 80HHE of the IT Act in view of provisions of sub-section 5 of section 80HHE. - Issue remitted back to AO - If assessee satisfies the pre-requisites stipulated for the purpose of getting benefit under s. 10A is a matter left to be determined by the AO. So also the entitlement of the assessee to seek deduction under s. 80HHE having been left to be determined by the AO, subject to assessee’s satisfying the pre-requisites stipulated for the grant of such a benefit under the said provision. Project expenses - assessee has claimed expenditure of ₹ 1,93,12,834 on account of project expenses. Assessing Officer asked the Assessee to explain as to why the same should not be capitalized. Assessee submitted that company has incurred the expenses in respect of various software development projects. Such expenses were routine business expenses incurred in the course of software business. Such expenses were not incurred for acquisition of any capital asset nor resulted in enduring benefit of capital field to be recorded as capital expenditure - Held that: - It is undisputed that the aforesaid amount was spent for training of the personnel. By any stretch of imagination, these expenses cannot be said to have resulted in enduring benefit to be classified as capital expenditure. - Decision of apex court in Empire Jute Mills [1980 (5) TMI 1 - SUPREME Court] followed.
|