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2020 (5) TMI 14 - AT - Income TaxDeduction u/s 80-IC - disallowance of deduction profits derived from manufacture or production of any article or thing - profits and gains derived by the business of the undertaking that was set up in the State of Himachal Pradesh - assessee is a company engaged in telecommunication software development and trading in telecommunication hardware required mainly to run their software that are being supplied to the prospective consumers - HELD THAT:- No conclusive to hold that there were two segments or verticals and is contrary to the Agreements under which the Assessee had to perform certain obligations to BSNL in the form of supply of software, hardware, installation and maintenance thereof. As we have already seen, the agreement with ZTE is very clear that the supply of software and hardware necessary to support the software supply, installation & commissioning as well as rendering support services were to be done on a turnkey basis. Though the services agreement is separately entered into by the assessee, it has a direct nexus and connection with the agreement for supply of software. In these circumstances, the decisions cited by the ld. counsel for assessee, clearly supports the case of the assessee. We are therefore of the view that the claim made by the assessee for deduction u/s. 80IC of the Act ought to have been allowed by the AO/CIT(A) and they fell into an error in not allowing the said claim u/s. 80IC of the Act on service charges.- Decided in favour of assessee. Deduction on account of bad debts written off - HELD THAT:- AO never doubted that the sum written off as bad debts was already included as income of assessee in the earlier previous years. There is no condition laid down in section 36(1)(vii) that the sum which is written off as bad debts should have suffered tax and if that income is claimed as exempt or deduction is claimed, then deduction on account of bad debts written off should not be allowed. We are also satisfied that the assessee has established that the sum written off as bad debts was in fact offered to tax in the earlier previous years as income and included while computing total income. The requirement of establishing that the debt has become bad and irrecoverable is no longer necessary after the decision of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] - We are therefore of the view that none of the reasons assigned by the revenue authorities to deny the benefit of deduction on account of bad debts written off are sustainable. - Decided in favour of assessee.
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