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2013 (11) TMI 169 - AT - Income TaxDisallowance of Expenditure on Software for Own Use - Whether the CIT(A) erred in deleting the addition made by the assessing officer towards expenditure on software for own use, relying upon CIT v. Southern Roadways Ltd. [2006 (10) TMI 82 - MADRAS HIGH COURT ] - Held that:- It would be in the interest of justice that the case the issue was restored back to the file of the Assessing Officer, who shall redecide it in accordance with law after affording adequate opportunity of hearing to the assessee - An expenditure can neither be held as revenue nor capital in nature - What was required was a pragmatic approach considering the nature, purpose of expenses incurred along with other relevant factors, which were to be subjectively considered - then only the endless issue can be adjudicated upon in the correct perspective - When we proceed to deal with the findings of the Assessing Officer as well as CIT(A) in the instant case, it was found that the Assessing Officer had not recorded any finding, qua the usage and utility of the software in question and he had simply held that the assessee can claim depreciation @ 25%. Disallowance of Unearned Income - Whether the CIT(A) erred in deleting the addition made by the assessing officer towards 'unearned income' – Following CIT vs. Dinesh Kumar Goel [2010 (10) TMI 287 - Delhi High Court] - Mercantile system of accounting – Fees for full course of package received in advance – Service to be rendered in next financial year – income not recognized unless service rendered – Income does not accrue - There was hardly any strife between the parties about the amount received qua ‘unearned income’ and payment made by the assessee without deducting tax at source - Per Revenue, the assessee’s unearned income was liable to be taxed and the payments made was royalty which requires tax deduction at source which was disputed by the assessee - decided in favor of assessee. Applicability of TDS provisions - Payment made by the assessee to foreign entities - Held that:- Following CIT Vs. Smt. Godavari Devi Saraf [1977 (9) TMI 24 - BOMBAY High Court] - After going through the operative portion, there was no iota of doubt that the payments in question made by the assessee cannot be subjected to the applicability of TDS provisions contained in the “Act” -Therefore, in view of the same and in order to maintain consistency - A perusal of the above findings makes it clear that the applicability of section 9 of the “Act” vis-à-vis the concept of royalty was duly considered and decided against the Revenue. In the course of hearing, the Revenue though has disputed the facts of the case, but merely on the basis of bald assertions, we are unable to accept the same.
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