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2021 (1) TMI 463 - AT - Income TaxForex Loss on Derivatives - CIT(A) upholding the disallowance made by the AO by holding the same as hypothetical and contingent in nature - as argued these expenses are recognized in accordance with the accounting treatment provided in the Accounting Standard -11 and 30, issued by the Institute of Chartered Accountants of India - HELD THAT:- Forward contracts entered into for the purpose of protecting against loss and which has a nexus to the business of the assessee and which are on revenue account have to be allowed as a deduction. The decision cited on behalf of ld. counsel for the assessee supports the claim made in this regard. We, however, find that the details of forward contracts and nexus with the business of the assessee have not been submitted by assessee before the AO - As upholding the principle that losses on account of exchange fluctuation on forward covered contracts are allowable as a deduction, we hold that the factual details in this regard should be examined by the AO and for the purpose we set aside the order of CIT(Appeals) and remand the issue to the AO for fresh consideration. Addition u/s 40(a)(ia) - Payment for software license fees - AO was of the view that payment in question was in the nature of royalty or fees for technical services and therefore taxable in India - whether payment for software license fee made by the Appellant is the consideration not for Copyright but for Copyrighted Article and hence, would not fall under the definition of the Royalty both under the Act and the respective DTAA between India and USA? - HELD THAT:- As relying on S. ALLEGIS SERVICES INDIA PVT. LTD. [2017 (9) TMI 1799 - ITAT BANGALORE] we hold that disallowance u/s. 40(a)(i) of the Act in the present case cannot be sustained as the obligation to deduct tax at source was in respect of the date and period prior to the decision rendered by the Hon’ble Karnataka High Court in the case of Samsung Electronics Co. Ltd [2011 (10) TMI 195 - KARNATAKA HIGH COURT]. Deduction u/s. 10A computation - communication charges inclusion - HELD THAT:- Taking into consideration the decision rendered by the Hon’ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] we are of the view that communication charges should be excluded both from export turnover and total turnover. Disallowance of contribution to Super Annuation Fund - AO disallowed the said contribution u/s 40A(7) - HELD THAT:- We are of the view that the stand taken by the revenue cannot be sustained. The recognition of superannuation fund granted by the CIT, LTU is a department’s own document and they cannot be allowed to dispute the same. The only ground on which disallowance was made by the AO was that superannuation fund was not approved. Now that the approval is granted by the CIT, LTU, we are of the view that there is no merit in ground raised by the revenue
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