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2013 (2) TMI 127 - AT - Income TaxPurchase of computer software - Capital v/s Revenue - CIT(A) treated the expenses as revenue expenditure - Held that:- As decided in CIT and Another v Toyota Kirloskar Motors Pvt. Ltd. [2013 (2) TMI 108 - KARNATAKA HIGH COURT] when the life of a computer software is less than two years and the right to use it is for a limited period, the fee paid for the acquisition of the right is allowable as revenue expenditure and if the software is licensed for a particular period, fresh license fee is to be paid for utilizing it for subsequent years. Therefore, without renewing the license or without paying the fee for such renewal, it is not possible to use the software. In such circumstances, the fee paid for obtaining the software and the licence for renewing it was revenue expenditure. Thus in the instant case, the license fees paid was for renewal of the usage of software and for a limited period for less than two years thus held to be in nature of revenue - In favour of assessee. Computation of deduction u/s 10B - Exclusion of telecommunication expenses from the total turnover - Held that:- As decided in CIT and another v Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] there should be uniformity in the ingredients of both the numerator and the denominator of the formula. It is intended to provide incentives to promote exports. If the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover - in favour of assessee. Disallowance of set off of carried forward losses and unabsorbed Depreciation prior to allowing deduction under section 10B - Held that:- As decided in Yokogowa India Ltd. [2011 (8) TMI 845 - KARNATAKA HIGH COURT] deduction under section 10B is to be granted prior to setting off of brought forward business loss and unabsorbed depreciation. No brought forward depreciation - Held that:- As the assessee has vouched a sum available as brought forward depreciation for the relevant assessment year & had filed a comprehensive statement of available unabsorbed depreciation AO is therefore, directed to verify the correctness and the authenticity of the claim of the assessee of availability of brought forward depreciation and to take appropriate decision in accordance with law - in favour of assessee for statistical purposes.
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