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2021 (3) TMI 1403 - AT - Income TaxTP Adjustment - Comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected. Deduction u/s 10AA - reducing the communication expenses and insurance charges from the export turnover while determining the adjusted export turnover for computing the eligible deduction u/s 10AA - HELD THAT:- DRP following the jurisdictional High Court judgment in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] directed the AO to reduce the impugned expenses both from the export turnover as well as the total turnover. Further, the judgment of the Hon’ble Karnataka High Court has been upheld by the Hon’ble Supreme Court in the case of CIT v. HCL Technologies Ltd.[2018 (5) TMI 357 - SUPREME COURT]. TDS u/s 195 - disallowance by invoking the provisions of section 40(a)(i) on import of software taxes were deductible at source u/s. 195 - whether the software was purchased for use, the transaction was in the nature of purchase of product and there were no taxes deductible at source - HELD THAT:- This issue is covered by the latest judgment of the Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P.) Ltd. [2021 (3) TMI 138 - SUPREME COURT] wherein it was held that transaction relating to software are in the nature of sale and not license, no copyright or part of any copyright is licensed to the assessee. The non-resident owner continues to have proprietary rights in the software and use of software by the Indian company is limited to making back-up copy and redistribution. So payment received for sale of computer software is business income. As such, software purchased is in the nature of purchase and sale of product and no TDS is deductible. Accordingly, we allow this ground of appeal by the assessee. Nature of expenditure - expenditure on purchase of software - HELD THAT:- As software expenditure has to be treated as revenue expenditure. Accordingly there is no question of granting any depreciation and purchase of software has to be allowed as a deduction, though there was no TDS made by the assessee.
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