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2019 (7) TMI 799 - ITAT BANGALORECapitalization of software expenses and allowing of depreciation - HELD THAT:- As decided in assessee's own case for the assessment year 2008-09 [2014 (11) TMI 1202 - ITAT BANGALORE] we deem it proper to restore this issue back to the file of the AO to examine and reappraise the additional evidence filed by the assessee in respect of expenditure incurred on purchase of software of ₹ 10 lakhs and above and decide the issue in accordance with the decisions in the case of Toyota Kirloskar Motors P. Ltd. [2013 (2) TMI 108 - KARNATAKA HIGH COURT] and Amway India Enterprises [2011 (11) TMI 4 - DELHI HIGH COURT]. Disallowance u/s 40(a)(ia) - AMC expenses - assessee contended that it has purchased software, hence TDS provision not applicable - HELD THAT:- AR filed material and explained that the company has not been granted any Rights in the software purchase and only obtained limited Rights for usage. We found that these aspects and information were not dealt in the assessment proceedings. Therefore, we remit this issue to the file of the AO to verify and examine the applicability of TDS provisions with material evidence filed and judicial decisions and the ground of appeal is allowed for statistical purposes. Marked to Market ("M2M") loss - disallowance on the basis that the said loss is notional and contingent in nature - HELD THAT:- As contention of the AR is that this is allowable whereas we are of the opinion that hedging should not be more than the receivables. Whereas the AR submitted that it is within limits of exports and substantiated with material in the paper book - DR submitted that these facts are to be verified and the matter has to be examined whether export proceeds have been received within time allowed for filing of return by the Income-tax Act. Accordingly, we are of the substantive opinion that the matter has to be restored back to the file of the AO for verification of facts and receipt of export proceeds as envisaged in the course of hearing. Accordingly, this ground of appeal is allowed for statistical purposes. Charging of interest u/s 234B and 234C are consequential and direct the AO accordingly. Deduction u/s 10A on the capitalization of software expenses - HELD THAT:- As perused the order of the CIT(A), dealt where the CIT(A) has considered the alternative submission of the assessee that in case disallowance in regard to capitalization of software expenditure, the same has to be considered for deduction u/s 10A and the AO was directed to re-work. Whereas the learned DR supported the order of the AO and no new material was filed to controvert the observations of the CIT(A). Accordingly, we uphold the order of the CIT(A) on this issue and dismiss the ground of appeal of the revenue. Deduction u/s 80JJA in respect of additional wages paid to software engineer - HELD THAT:- We are of the opinion, that the matter requires a fresh look by AO. The CIT(A) had given relief to the assessee, despite the remand report of the AO in which he had mentioned the non-eligibility of the assessee in view of the notification issued by Government of Karnataka under Industrial Employment Act. We therefore, set aside the order of the authorities below and remit this issue to the file of the AO for fresh consideration afresh in accordance with law. Deduction u/s 10A - directing the AO to exclude data link charges and other expenditure both from export turnover as well as total turnover - HELD THAT:- We found that the CIT(A) has considered the decision of the Hon’ble Karnataka High Court in the case of Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT] and passed a reasoned order which cannot be interfered and uphold the same and dismiss the ground of appeal.
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