9911796707
TMI Blog2015 (4) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... ant in recognizing the revenue from maintenance, enhancement and support services provided by the appellant to its customers. 3. That on facts and circumstances of the case the Ld A.O./DRP is grossly erred in disallowing the sum of Rs. 1,08,33,210 on account of Foreign Exchange Loss incurred on account of restatement of trading liability on the alleged ground that such loss might be incurred on purchase of capital asset (computer software). The above grounds are without prejudice to each other. The appellant craves leave to alter, amend or withdraw all or any grounds herein or add any further grounds as may be considered necessary either before or during the hearing." 2. Right at the outset the Ld.A.R. submitted that the points at issue are fully covered in assessee's favour by virtue of the orders of the Tribunal rendered in the earlier A.Ys and the issue addressed in ground no.2 has been further agitated by the Revenue before the Hon'ble High Court and the Revenue's appeal, thereon was dismissed. In the said background Ld.A.R. inviting attention to the assessment order submitted that the assessee as per para 2 has been taken to be engaged in the business of sale and service of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e user documentation and / or software codes. The assessee will distribute to the Customer enhancements to the Licensed Program(s) released without restriction by Siemens PLMS to other licenses. Enhancement includes updates of Licensed Program(s), updates of user documentation and Systems updates. Also the assessee would provide support services which include telephone support in answering customer's queries. For such extended services, customer pays an additional amount to the assessee which is included in the total invoice price and not shown separately in the invoice. Revenue for extended maintenance, enhancement and support services is recognized over the period on a monthly basis. At the time of sale of computer software and maintenance services to customers, the assessee raises an invoice for the entire value i.e. value of the computer software and charges towards maintenance, enhancements and support services. However in accordance with the accounting principles and standards, the assessee recognizes a portion of the revenue towards the value of the computer software as sales in its books of accounts and the other portion of revenue viz. Charges towards maintenance, enh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for MES services, the revenue in this regard can be recognized only after such services are rendered or the period of contract is over. Hon'ble Delhi High Court in the case of Uttam Singh Duggal & Co. Vs CIT, 127 ITR 21 recognized this principle of matching revenue with cost. On general principle, it was held that if no work is done in the year of receipt of sum, it has to be treated as kind of a advance payment and when the work was done taxable in the subsequent year. Even if the amount is not separately shown in invoice the effect remain that addition sum was charged for ME&S services. The amount is not uncertain not to be calculated. The amount can very well be arrived at best on the sale price of software sold with or without ME&S services. The sales-tax return cannot be a criteria to determine what is the income accruing or arising to the assessee. Even if the payer do not deduct tax at source, it will not determine the taxability or otherwise of the sum chargeable to tax. Thus, there is nothing like device to defer payment of taxes due but as per the recognized method of accounting of matching revenue with cost, the income accrues only in the subsequent year when such servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier years, proceedings against which are still pending before the appellate authorities, therefore, an addition of Rs.l,08,33,210/- is made on account of foreign exchange loss treating the same as capital expenditure. The draft order u/s 144C was passed and served upon the assessee, against which the assessee went in DRP. The Hon'ble DRP, vide its order dated 25.08.2011 has upheld the addition made on account of Foreign Exchange Loss. (Addition of Rs. 1,08,33,210/-) 6. The Ld.A.R. addressing this issue placed reliance on the consolidated order of the Tribunal (cited supra) in the A.Y. 2001-02 to 2003-04 A.Ys (placed at pages 8 to 26) wherein the said issue is discussed at specific pages 12 and 13 of the paper book. The said view it was submitted was followed by the ITAT in A.Y. 2004-05 wherein relying upon CIT vs. Woodward Governor reported in 312 ITR 254 dismissed the department's appeal vide order dt. 20th November,2009. He further invited our attention to pages 2 to 4 of the paper book wherein copy of the order of the Jurisdictional High Court dt. 9th September, 2010 is placed at pages 1 to 7 and the Hon'ble High Court taking cognizance of the finding of the Tribunal in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
