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2015 (8) TMI 312 - AT - Income TaxDisallowance on account of software expenses - Held that:- Software expenses are generally revenue in nature, because they are used in running of the business in a more efficient manner. It does not result into creation of a fixed capital or giving any enduring benefit for a longtime, as these software licenses and programs keeps on changing and are updated from time to time as per the requirement and the growing needs of the business. In this case though the assessee claimed it as revenue expenditure, but before the AO it has itself accepted that most of the software expenses can be treated as capital expenditure. Such an admission has been retracted by challenging this issue before the Ld.CIT(A) as well as before us. It is a trite law that mere admission or acquiescence by the assessee cannot the foundation of the assessment, if later on the assessee points out that such an admission was against the facts or provision of law. It is not a case here that on account of admission by the assessee during the assessment proceedings, the AO was precluded to make further enquiry or investigation of facts. Here facts and material for deciding the issue is already on record. Thus in our opinion, this matter should be restored back to the file of the AO to deal and decide this issue afresh after examining the details and nature of software expenses and in accordance with the judicial precedence. - Decided in favour of assessee for statistical purpose. Disallowance u/s 145A - AO held that the unutilized portion of CENVAT credit has to be included in the closing stock and cannot be taken to the balance sheet as done by the assessee, thus added the said amount u/s 145A - Held that:- As per the service tax law, the service tax is payable as and when the payment/fees for under lying services provided by the assessee are realized. The CENVAT credit is available only on account of laws laid down under Central Excise Act. Here there is no valuation of stock of goods. Section 145A is a non obstante clause to section 145 and provides that the valuation of purchase and sale of goods and inventory for the purpose of determining the income chargeable under the head profit and gains has to be adjusted so as to include the amount of any tax, duty, cess, or fee paid or incurred by the assessee to bring the goods as on the date of valuation. This section only applies to purchase and sale of goods and inventory for the purpose of valuation of stock on the date of valuation. In the normal circumstances it is at the time of valuation of closing stock and not for the valuation of service contracts. If the provision of section 145A is not applicable on services, then the action of the AO in invoking the provisions of section 145A to make the addition is legally not correct. Accordingly on this reason, the order of the Ld.CIT(A) is set aside and the addition made by the AO is deleted - Decided in favour of assessee. Disallowance of reversal of provisions - Held that:- Erstwhile assessee had made a provision for customer claims of ₹ 71,48,625/- in the A.Y. 2005-06, which was suo motu disallowed in the computation of income of that year. In A.Y. 2006-07 the assessee has included this reversal in its computation of income. Thus the assessee has not claimed any deduction of ₹ 71,48,625/-. The AO has wrongly added back the said provision on some wrong notion that matter was sub-judice in the earlier year. It has been pointed out before us that, this issue was not sub-judice at all. Accordingly, we restore this matter back to the file of the AO to verify the contention of the assessee and decide the issue on facts. Decided partly in favour of assessee for statistical purpose.
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