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2010 (1) TMI 624 - AT - Income TaxDTAA - the assessee made SAP maintenance expenses of Rs. 1,82,48,673/- to the parent company M/s SMA Demag AG Germany without deducting tax in India during the financial year 1999-2000 relevant to Assessment Year 2000-01 - The assessee filed the copy of audited accounts showing the additions to the computer amounting to Rs.4,32,23,878/-which included the amount of Rs. 1,82,48,673 - Since the amount was not charged to profit and loss account, the provisions of sec. 40(a)(i) have no applicability - Id. Sr. D.R. submitted that maintenance charges for software SAP are in the nature of royalty and, therefore, for deduction u/s 40(a)(i)) the tax at source has to be made - the payment made for acquisition of an asset whether it is a revenue expenditure or capital, provisions of section 40(a)(i) of the Act will not be applicable in case of resident assessee for assessment year 2000-01 - Accordingly, this ground of appeal is decided in favour of the assessee Disallowance of depreciation - depreciation cannot be disallowed on the ground that at the time of remittance no tax was deducted at source - Provisions of section 40(a)(i) are not applicable for claim for deduction u/s 32 of the Act - the appeal filed by the assessee is partly allowed
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