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2014 (5) TMI 346 - AT - Income TaxDeletion of disallowance of deduction - Provision made for after sales services – Held that:- Following M/s. Rotork Controls India (P) Ltd. Versus Commissioner of Income Tax, Chennai [2009 (5) TMI 16 - SUPREME COURT OF INDIA] - the provision is being made by the assessee on the basis of actual expenditure incurred in the subsequent assessment year relating to sales made in the relevant previous year - a provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation – the provision has to be made based on the reliable estimation of the obligations – the matter needs to be remitted back to the CIT(A) for fresh adjudication – Decided in favour of Revenue. Allowability of software expenses – Purchase of operating software – Held that:- The assessee had incurred expenses on software expenses and was claimed as revenue expenses - the incurring of expenses has not been disputed by the Revenue - if the expenses is considered to be capital expenditure, the Assessee will have to be granted depreciation @ 60% on WDV basis in A.Y. 06-07 and also in subsequent years - the total taxable income determined by the AO, the changes that would be required to be made in subsequent assessments orders if the depreciation is to be allowed in all subsequent years, the claim of the assessee is to be allowed - the allowance of the expenditure should not be considered as a precedence for allowance of the expenditure – Decided in favour of Assessee.
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