Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (5) TMI 235 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- Assessee is a company engaged in the business of software development activities relating to electronic integrated circuits and form where development circuits and marketing support services, thus companies functionally dissimilar with that of assessee need to be deselected. Sale of wireless division of assessee as slump sale - treated the gains arising as short term capital gains - grant indexation while computing capital gains - assessee is 100% export oriented unit engaged in business of software research and development services as well as marketing support services - HELD THAT:- Transaction is a slum sale or not is not only based on interpretation of terms and conditions of the entire agreement but it is also based on the manner in which the gains has been accounted by assessee in its books of accounts. From the extracts of the accounts of assessee it is clear that it has not accounted for profits on itemised assets. In the instant case there is a sale of an entire undertaking as a going concern and assessing officer should have computed the capital gains under section 45 to 50 of Income tax Act. Ld.AO has also not identified the items that have been sold independently but has considered the lump sum valuation made by the buyer in the hands of assessee which is not in accordance with the provisions of the act. We therefore direct Ld.AO to compute the quantum of capital gains in accordance with law as a slum sale. Ld.AO is directed to decide the cost of undertaking for purpose of computing capital gains that is arisen on transfer of asset as a going concern and is directed to value it as per section 55 of the act Ld.AO is also directed to grant indexation while computing capital gains. Ld.AO is also directed to decide the depreciation on block of assets and the capital gains has to be computed in accordance with section 45 to 50 of the Act. Accordingly, we allow this ground raised by assessee. Software expenses under section 40(a)(ia) - HELD THAT:- As the issue is against assessee by decision of Hon’ble Karnataka High Court in case of CIT vs Samsung Electronics Ltd [2009 (9) TMI 526 - KARNATAKA HIGH COURT] as held held purchase of software to fall within the ambit of royalty - we do not find any infirmity in the action of Ld.AO.
|