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2020 (4) TMI 747 - AT - Income TaxTDS u/s 195 - software expenses u/s 40(a) (i) for non-deduction of TDS - payments towards purchase of 'off-the-shelf shrink-wrapped software' as 'Royalty' under the Act as well as under the India-Malaysia tax treaty - HELD THAT:- The issue is against assessee vide decision in CIT v Samsung Electronics Co. Ltd. [2011 (10) TMI 195 - KARNATAKA HIGH COURT] wherein it is held that payments towards purchase of software are in the nature of 'royalty' and liable for TDS. - Decided against assessee. Sales promotion and advertisement expenses u/s 37 (1) - HELD THAT:- In the present facts of the case the expenditure towards advertisement has been incurred by assessee for promoting sales and therefore, ratio laid down in the decisions relied upon by Ld. AR is squarely applicable i.e. SPICE DISTRIBUTION LTD. [2014 (9) TMI 732 - DELHI HIGH COURT], M/S. ASIAN PAINTS (INDIA) LTD. [2016 (11) TMI 258 - BOMBAY HIGH COURT] and INDO NISSIN FOODS LTD. [2012 (11) TMI 1246 - KARNATAKA HIGH COURT] - Accordingly, we direct Ld. AO/TPO to delete addition made on account of advertisement expenses under section 37 (1). Disallowance of warranty expenses - HELD THAT:- Assessee's case dearly fans in line with the legal ratio set out by the various appellate decisions cited at Bar in so far as the provision for warranty stood crystallized as soon as the sate was made which a customer would like to be fulfilled within the warranty period and is at the cost of an assessee's goodwill. Therefore, the residual amount purported to have been held by the Assessing Officer as an excess provision cannot be considered as a contingent provision and not an ascertained liability. The warranty period continues beyond an year which fact was rightly considered by the Id. CIT(A). - Decided against revenue. Disallowance of foreign exchange loss - DR submitted that foreign exchange loss cannot be allowed, as the transactions are speculative in nature and contingent in character - HELD THAT:- Accounting treatment is to recognise exchange fluctuation gain or loss in the profit and loss account as on the valuation date. Hon’ble Supreme Court in case of CIT vs Woodward Governor India (P) Ltd [2009 (4) TMI 4 - SUPREME COURT] held that, a transaction in which a legal liability has been incurred before it is actually disbursed would be regarded as revenue in nature. In the facts of present case assessee incurred foreign exchange loss far year under consideration towards trading activities, and therefore it is directly attributable to business of assessee, which is an allowable expenditure. TPA - AMP expenses addition - HELD THAT:- No adjustment needs to be done in respect of AMP expenses as relying on assessee's own case [2019 (5) TMI 1541 - ITAT BANGALORE]
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