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2021 (7) TMI 106 - AT - Income TaxDisallowance u/s 14A - assessee is contending that it is having own funds and interest free funds exceeding the value of investments and hence the decision rendered in the case of Micro Labs Ltd.[2016 (4) TMI 219 - KARNATAKA HIGH COURT] and Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] is applicable - HELD THAT:- The above said contentions urged before us require verification of facts prevailing in this case. Accordingly, we are of the view that this issue requires fresh examination at the end of the A.O. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and restore the same to the file of the A.O. for examining it afresh by following the decision rendered in the case of Micro Labs Ltd. (supra) and Vireet Investments Pvt. Ltd. (supra). Disallowance made u/s 40(a)(ia) - payments for purchase of software without deducting tax at source - HELD THAT:- Since the transactions of purchase of software has been completed prior to rendering of decision SAMSUNG ELECTRONICS CO. LTD. [2009 (9) TMI 526 - KARNATAKA HIGH COURT] which have held that TDS is not required to be made out of payment made for software purchasesby Hon’ble Karnatak, following the above said decision we hold that the TDS liability cannot be fastened upon the assessee retrospectively and accordingly disallowance u/s 40(a)(i) is not called for even if the software purchases is treated as revenue expenditure. Accordingly, we are of the view that there is no reason to treat the cost of software capitalized by the assessee as revenue expenditure. Accordingly we set aside the order passed by Ld. CIT(A) and direct the AO to treat the cost of software as capital expenditure and delete the disallowance made on this issue. Addition of rental income due to the difference found out in form no.26-AS - difference in the income reported by the assessee under form No.26AS - DR submitted that the claim of the assessee requires examination at the end of the A.O - HELD THAT:- We find merit in the submission made by Ld. D.R. Accordingly, we restore this issue to the file of the AO for examining the explanations furnished by the assessee. After affording adequate opportunity of being heard to the assessee, the A.O. may take appropriate decision in accordance with law.
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