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2013 (9) TMI 1 - AT - Income TaxCapital expenditure or Revenue expenditure - Disallowance of software expenses - Whether The expenditure incurred by the assessee on account of software and professional expenses was a revenue expenditure or not - CIT held it as capital expenditure - Held that:- The treatment of a particular expense or a provision in the books of accounts can never be conclusively determinative of the nature of the expense. An assessee cannot be denied a claim for deduction which is otherwise tenable in law on the ground that the assessee had treated it differently in its books - Following decision of COMMISSIONER OF INCOME TAX Versus M/S ASAHI INDIA SAFETY GLASS LTD. [2011 (11) TMI 2 - DELHI HIGH COURT] - Decided in favour of Assessee. Disallowance of royalty expenses - CIT confirmed disallowance - Held that:- Assessee claimed expenditure on acquisition of such rights from producers as revenue expenditure. Assessing Officer held that audio rights could not be equated to raw material/stock material but were right in perpetuity on global right basis and that master plate did not become useless after recording of series of cassette. He held that acquiring of audio right was of enduring nature and therefore expenditure incurred thereon by assessee had to be treated as capital in nature applying provision of section 35A. Whether since revenue had treated-in-house expenses of production of similar item as revenue in nature, assessee was correct in claiming expenses for acquiring ‘audio rights’ as revenue expenditure - Royalty paid for obtaining copyright by the assessee who was in the business of manufacturing pre-recorded cassettes was held to be revenue expenditure - Following decision of Tips Cassettes & Records Co. vs. ACIT [2000 (7) TMI 210 - ITAT BOMBAY-E] and Commissioner of Income-Tax Versus M. Subramaniam [2003 (12) TMI 9 - MADRAS High Court] - Decided in favour of assessee. Disallowance of Distributor’s Settlement expenditure - Held that:- nature of payment is not clear and what is coming out of the finding of the Assessing Officer is that there was some kind of criminal suit filed by the Distributors against the Employees and Director of the companies for which out of Court settlement was done and sum of Rs. 10,00,000/- was paid. It has not been brought on the record as how such an expenses was incurred for business purposes or for smooth functioning of the business. The onus is upon the assessee, which has not been discharged - Decided against assessee.
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