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2016 (7) TMI 325 - AT - Income TaxTDS u/s 194C - Addition u/s 40(a)(ia) - expenses incurred on the purchase of software related to computers whereas assessee has claimed the same as computers maintenance expenses - Held that:- We find that AO has made the assessment u/s. 144 of the Act by disallowing the expense claimed by assessee under head “computer and software maintenance” on the ground that no documentary evidence in support of such expenses were furnished. However, Ld. CIT(A) has deleted the addition by holding that provision of TDS are not applicable to this transactions as the expense was incurred for the purchase of software. In remand report AO submitted that payment made to M/s Shilpi Software and M/s Financial Technologies (India) Ltd. were subject to TDS and same has not been complied with. However, the bills submitted on its perusal, we find that these expenses have been incurred towards the purchase of software and as such no service was involved. Therefore, in our considered view, that such transactions were out of purview of TDS provision. The assessee has also submitted the ledger copy of computer and software maintenance which is at page 276 of the assessee’s paper book where the payment details through banking channel has also been placed. Therefore, the genuineness of the expense cannot be doubted. Accordingly, in our considered view, we uphold the order of Ld. CIT(A) and this ground of Revenue’s appeal is dismissed. Capital expenditure incurred for purchase of software expense - CIT(A) has treated the same as revenue in nature and deleted the same - Held that:- We find that expense incurred on account of maintenance of computer and software or update them do not create any asset of enduring benefit but merely assist the assessee to carry out its activities in the manner desired by statutory regulator. As such, we find that no fixed asset is coming into existence out of the expense incurred for the purchase of software. Hence, in our considered view, the issue of capitalizing the same expense does not arise and we uphold the order of Ld. CIT(A). Addition on account of bogus sundry creditors - Held that:- From the facts of the case, we find that once the purchase/ sales claimed by assessee had accepted by AO then corresponding sundry creditors/ debtors claimed by assessee cannot be doubted. In the instant case, AO has not accepted the purchase/sales as claimed by assessee without bringing any relevant fact but the corresponding credit has been disallowed. Therefore, in view of the facts of the present case, the addition made by AO on account of bogus sundry creditor is not sustainable in law. CIT(A) is justified in deleting the additions made by the AO. Therefore, we uphold the order of Ld. CIT(A) as correct and in accordance with the law. It is ordered accordingly. Hence, appeal of the Revenue is dismissed.
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