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2021 (10) TMI 1379 - HC - Income TaxDeduction u/s 35D - share premium collected on the issue of Share Capital - whether to be treated as part of the ‘Capital Employed’ for allowing deduction? - HELD THAT:- The points raised herein are squarely covered by the judgment of Berger Paints India Ltd., [2017 (3) TMI 1531 - SUPREME COURT] Hence, this substantial question of law is answered against the assessee and in favour of the Revenue. Cost of acquisition of companies be treated as asset for allowing deduction u/s 35D - HELD THAT:- This issue is squarely covered by the decision of this Court in the assessee’s own case in [2021 (10) TMI 1209 - KARNATAKA HIGH COURT] wherein as held that going by meaning assigned to the word “extension”, quite apart from the horizontal expansion in the industrial undertaking, vertical expansion also stands included within the meaning of the term “extension” of the industrial undertaking - as further stated that the assessee has incurred expenditure for the purpose of acquisition of Subex Americas Inc., and Subex UK Limited and the same was incurred for the purpose of expansion of the business. There being vast difference between “expansion” and “extension”, the arguments of the learned counsel for the assessee, placing reliance on the consolidation procedures as per the Accounting Standard [AS-21], cannot be countenanced this substantial question of law is answered against the assessee and in favour of the Revenue. Deduction u/s 35D be disturbed in the subsequent years - HELD THAT:- Section 35D has been disturbed in the subsequent years in a manner known to law. Hence, this question is answered in favour of the Revenue and against the assessee. Deduction u/s 10AA - telecommunication expense re to be excluded from export turnover in computing deduction - HELD THAT:- This question is covered by the ruling of Coordinate Bench of this Court in the case of M/s. Mindtree Ltd. [2020 (8) TMI 767 - KARNATAKA HIGH COURT] held that assessee has incurred expenditure in foreign currency from export turnover for software development. Similarly, the telecommunication charges attributable to delivery of computer software outside India could not have been excluded from the export turnover in view of Explanation 1(i) to Section 10AA of the Act. It is also noteworthy that Explanation 2 to Section 10AA provides that profits and gains derived from; on site development of computer software (including services for development of software) outside India shall be deemed to be the profits and gains derived from the export of computer software outside India. - Decided in favour of assessee.
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