TMI Blog2011 (6) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... ning & DePenning are available at pages 32 to 34 of the paper book from which it can be seen that the payment was made by the assessee towards filing patent application including translation fee/amendment fee in Canada, Russia and Taiwan - It is noticed that firstly there is nothing like legal charges involved in such payments - Secondly, this payment has been made for obtaining trademark - As trademark have been included u/s 32(1)(ii) in the category of 'Intangible asset' after 1-4-1998, the costs incurred by the assessee in the instant case are nothing but cost of trademarks - Such amount would be capitalized and qualify for depreciation as per law - Hence, the assessee accepted the addition made in assessment year 2005-2006 and did not agitate it further - Decided against of assessee. - 3355 (MUM.) OF 2009 - - - Dated:- 10-6-2011 - R.S. SYAL, VIJAY PAL RAO, JJ. For the Appellant: Yogesh Thar and Ketan Panchmia For the Respondent: Devi Singh ORDER R.S. Syal, Accountant Member. This appeal by the assessee arises out of the order passed by the learned Commissioner of Income-tax on 17-3-2009 in relation to the assessment year 2006-2007. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99 onwards up to assessment year 2005-2006 there was profit ranging between ₹ 11,48,000 to ₹ 23.84 lakhs. In the assessment year under consideration there was profit of ₹ 18.34 lakhs for which the assessee is claiming deduction under section80-IA. It is an admitted position that the assessee had not claimed any deduction in the earlier years due to the sub-section (5) of section 80-IA. It is noticed that even after reducing the amount of profits for the intervening years the amount of loss of ₹ 3.56 crores which resulted in assessment year 1997-98 when commercial production was started, still there is a cumulative loss of ₹ 2.14 crores. Coming to the second Unit at Sangli Satara, whose commercial production started in financial year 2000-2001 and there was a loss of ₹ 16,73,40,000 in that year. This loss was set off from business income of other non-eligible units as has been mentioned in the Remarks column of the chart produced by the ld. AR before us. Starting from the second year of the year of commencement of commercial production, there was a profit up to assessment year 2005-2006. In assessment year 2006-2007, there was profit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionally carried forward to the subsequent years and considered as such in the subsequent years until it is wiped out with the profits of the eligible unit for the succeeding years. This position stands despite the fact that such loss may have been actually set off against the income of non-eligible units in an earlier year or even the very year in which commercial production started. The Special Bench of the Tribunal in Goldmine Shares and Finance (P.) Ltd. case (supra) has held to this extent by laying down that : in view of the specific provisions of section 80-IA(5), the profit from the eligible business for the purpose of determination of the quantum of deduction under section 80-IA has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years . 5. The learned Counsel for the assessee has relied on the judgment of the Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P.) Ltd. v. ACIT [2010] 38 DTR (Mad.) 57] in support of the contention that : the initial assessment year should not be considered as the year i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Special Bench order. Again we are not convinced with the argument advanced on behalf of the assessee for the reason that the Hon'ble High court was considering a case in which the eligible business was the only source of income. It can be noticed from page 70 of the report. The discussion starts from para 13, whereby the Hon'ble High Court has reproduced the provision of section 80-IA. Thereafter certain important factors have been noted on page 69 and then at page 70 it has been observed that : From reading of the above, it is clear that the eligible business were the only source of income, during the previous year relevant to initial assessment year and every subsequent assessment years . From here it transpires that this judgment has been rendered in the context of a business which had income only from the eligible business and there was no income from any non-eligible unit. It is in this backdrop of the fact that the Hon'ble High Court held that if the brought forward loss of the eligible unit has been set off against the income then for the purpose of sub-section (5), it should be construed that there is no brought forward loss for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s against the treatment of software expenses of ₹ 19,12,451 as capital expenditure. The assessee made payment of ₹ 19,12,451 to three parties and claimed it as business expenses. The Assessing Officer disallowed the claim of the assessee by holding it as capital expenditure. No relief was allowed in the first appeal. 8. After considering the rival submissions and perusing the relevant material on record it is noticed that the Special Bench of the Tribunal in the case of Amway India Enterprises v. Dy. CIT [2008] 111 ITD 112 (Delhi). has decided similar issue restoring the matter to the file of Assessing Officer with the direction to decide about the deductibility or otherwise of software expenses on certain parameters laid down in that case. Both the sides are in agreement that the facts and circumstances of the present ground be also decided accordingly. We, therefore, set aside the impugned order on this issue and restore the matter to the file of Assessing Officer for taking a fresh decision on this issue after considering the mandate of the Special Bench order in the case of Amway India Enterprises (supra) after allowing a reasonable opportunity of being h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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