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2021 (10) TMI 1108 - AT - Income TaxAddition of deferred revenue income - HELD THAT:- We notice that the coordinate bench has upheld the view taken by Ld. CIT(A) on an identical issue in assessment year 2007-08 [2020 (1) TMI 1011 - ITAT BANGALORE] including the view taken by CIT(A) on alternative contention of the assessee. Following the same, we uphold the view taken by the Ld. CIT(A) on this issue in this year also. The alternative direction given by Ld. CIT(A) to A.O. is also upheld. Disallowance u/s 14A - HELD THAT:- We notice that the A.O. has made disallowance out of administrative expenses under Rule 8D(2)(iii). As per the decision rendered in the case of Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] only those investments which have yielded exempt income should be considered for computing average value of investments for the purpose of Rule 8D of I.T. Rules. Accordingly, we modify the direction given by Ld. CIT(A) and direct the A.O. to exclude all investments which did not yield any exempt income while computing average value of investments for the purpose of Rule 8D of I.T. Rules and compute the disallowance accordingly. Disallowance of software expenses - AO took the view that software purchases are in the nature of capital expenditure - AO disallowed the claim of the assessee and allowed depreciation @ 60%/30% depending upon the date of purchase of software - HELD THAT:- We direct the A.O. to examine the issue afresh as per the directions given by the Tribunal in assessment year 2011-12 [2020 (12) TMI 470 - ITAT BANGALORE] with regard to treating of software purchases as capital in nature. The AO should also examine the issue with regard to other directions issued by Ld CIT(A). Disallowance of brand building expenses - Revenue or capital expenditure - HELD THAT:- We hold that the brand building expenditure is allowable as revenue expenditure. We notice that the Ld. CIT(A) has observed that some of the invoices produced by the assessee do not relate to the year under consideration and further some of the expenditure is liable for tax deduction at source. Accordingly, we restore this issue to the file of the A.O. for examining the above said two observations made by CIT(A) and to take appropriate decision in accordance with law. Computation of deduction u/s 10A and 10AA - Reduction of expenses incurred in foreign currency from the export turnover while computing deduction u/s 10A - whether the expenditure incurred by the assessee in foreign currency is towards providing technical service outside India or not? - contention of Ld A.R is that assessee is providing BPO services and not any technical service as contemplated in the definition of “export turnover” given in sec.10A/10AA - HELD THAT:- As relying on M/S MPHASIS LTD [2014 (8) TMI 690 - KARNATAKA HIGH COURT] we direct the AO not exclude the expenditure incurred in foreign currency from export turnover.
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