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2020 (12) TMI 556 - AT - Income TaxDisallowance of purchase of software u/s 40(a)(i) for non-deduction of tax at source - A.O. treated the purchases of computer software as payment in the nature of royalty - CIT(A) held that the payment made by the assessee for purchase of software was in respect of copy righted article and accordingly held that disallowance u/s 40(a)(i) of the Act is not called for - HELD THAT:- The instant case relates to the financial year 2009-10 relevant to the assessment year 2010-11 and the payments have been made for purchase of software prior to the date of pronouncement of the decision in the case of Samsung Electronics Company Ltd. [2011 (10) TMI 195 - KARNATAKA HIGH COURT] and also prior to the amendment of Sec. 9(1)(vi) of the Act. Accordingly, following the above said decision rendered by the Tribunal, we hold that the disallowance u/s 40(a)(i) of the Act cannot be made in the facts of the present case. Accordingly, we confirm the decision rendered by Ld. CIT(A) on this issue on the above said reasoning. Disallowance of provision for warranty - HELD THAT:- As decided in own case [2018 (6) TMI 1732 - KARNATAKA HIGH COURT] both the Appellate Authorities below were justified in returning the proper findings of facts on the relevant material before them and have rightly found that the provisions of warranty made by the Respondent-Assessee Company was on the basis of the scientific and consistent method and therefore, the present appeal of the Revenue does not give rise to any substantial question of law and the same deserves to be dismissed and is accordingly dismissed. Disallowance of foreign exchange loss arising on revaluation of foreign exchange exposures as at the year end - AO noticed that the assessee has revalued its assets and liabilities with foreign exchange exposure as at the year end on marked to market basis and declared net gain - A.O. disallowed the loss holding that it is contingent in nature - HELD THAT:- We notice that this issue has been decided in favour of the assessee by coordinate bench of Tribunal in the case of Quality Engineering & Software Technologies Pvt. Ltd.[2015 (1) TMI 869 - ITAT BANGALORE] wherein held forward contracts are in respect of consideration for export proceeds, which are revenue items. There is an actual contract for sale of merchandise. In this factual matrix, it is clear in our view that the transaction in question will not qualify to be called as speculative transaction. In view of the facts and circumstances of the case on hand, as discussed above, we hold that the provision on derivative contracts is allowable as expenditure. - Decided against revenue.
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