TMI Blog2015 (4) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... gn Exchange loss - Held that:- since the amount payable is in foreign currency and not in India rupees, therefore, loss occasioned due to upward revision in the rate of exchange was to be borne by the assessee was allowable. On the reading of the agreement, we find that it is rightly interpreted by the Tribunal and, therefore, no questions of law arises. - Decided in favour of assessee. - ITA no.5148/Del/2011 - - - Dated:- 13-3-2015 - Shri G.D.Agrawal And Smt. Diva Singh JJ. For the Appellant : Sh. Ravi Sharma, Adv. For the Respondent :- Sh. Ramesh Chandra, CIT, D.R. ORDER Per Diva Singh, JUDICIAL MEMBER The present appeal has been filed by the Assessee against the final assessment order dt. 16.9.2011 passed by the A.O. in pursuance to the directions of the DRP pertaining to the Assessment Year 2007-08. The grounds raised by the assessee read as under. 1. That the Ld. DRP erred in confirming an ad-hoc addition of ₹ 4,08,32,659 on account of income from maintenance enhancement and support services(Advance Billing I Deferred Revenue) by the Ld. AO without appreciating that no income has accrued to the assessee for the year under considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the standard period of warranty is included in the cost of the software license sold. Full invoice amount is recognized as revenue at the time of such sale. The terms of the warranty are as under:- Warranty: SDRC (now Siemens PLMS) warrants that for a period of 90 days after delivery of Licensed Program(s) to Customer, the Licensed Programs will perform substantially in accordance with the SDRC user documentation. In the event the Licensed Program(s) do not perform in accordance with the user documentation, then during the 90 day warranty period, SDRC shall at its option (i) correct any material variance between the performance of the Licensed Program(s) and the specifications for the Licensed Programs(s) contained in the applicable user documentation; or (ii) replace the Licensed Program(s) Media. The foregoing shall be customer's sole and exclusive remedy for error or defect in the Licensed Program(s). (ii) Sale of software with free warranty and extended period paid maintenance, enhancement and support services. In addition to the warranty for 3 months, in case a customer desires, he can agree with the assessee for extended maintenance, enhancement and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of the assessee for the A.Ys 2001-02 to 2003-04 a copy of which is placed at pages 8 to 26 of the paper book. Referring to the same it was submitted that the assessee s name in the said order is recorded as M/s UGS India Pvt.Ltd. and a perusal of the assessment order under consideration would show that it is in the case of M/s Siemens Products Life Cycle Management Software India Pvt.Ltd. (formerly known as M/s U.G.S. India Ltd.). Referring to internal page 13 of the consolidated order it was submitted that the Tribunal after reproducing the identical ground arising in the A.Y. 2001-02 vide ground no.1 took cognizance of the fact that this ground was similar to ground no.4 in the A.Y. 2002-03 and ground no.2 in the A.Y. 2003-04 and in the said background common finding on facts were recorded thereby deciding the issue in assessee s favour vide para 6 in the following manner. 6. We have considered rival submissions. On the basis of submissions made before AO and before us, it can be held that where the assessee sells the software/license with free warranty, full invoice amount is recognized as revenue. However, where the sale of software license is with extended period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee has offered the income when the services have been rendered and following the precedent the addition sustained deserves to be deleted. 3. The Ld.CIT, D.R. places reliance upon the assessment order. However in the face of the consistent orders of the Tribunal on the said issue no submissions were advanced canvassing a contrary view. 4. In the light of the above facts and circumstances we find no good reason to deviate from the view taken as facts remain the same. Accordingly following the precedent, we hold that the amount treated as deferred revenue is not to be brought to tax in the year under consideration and is to be taxed in the year when such services are rendered or recognised as income by the assessee. Ground no.1 accordingly is allowed. 5. The second issue agitated by the assessee in the present appeal also has been a subject matter of consideration in the earlier orders. The relevant facts extracted from the assessment order read as under:- 7.1. During the course of assessment proceedings it has been observed the assessee company has debited an amount of ₹ 1,08,33,210/- on account of foreign exchange loss to its P L account. From the deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for computer software were to be paid in foreign currency which was equivalent to 50% of the revenue generated in Indian currency from sales of such software. The assessing officer had relied upon Clause 6 of the Agreement, on the basis of which he got the impression that the purchase price for the computer software were to be paid in Indian currency and because of this he disallowed the purported loss due to foreign exchange rate fluctuation. However, on the reading of the entire agreement particularly the Schedule C thereof, which clearly specified that the amount is to be paid in foreign currency although it would be equivalent to 50% of the revenue generated in Indian currency, the ITAT has come to the conclusion that since the amount payable is in foreign currency and not in India rupees, therefore, loss occasioned due to upward revision in the rate of exchange was to be borne by the assessee was allowable. On the reading of the agreement, we find that it is rightly interpreted by the Tribunal and, therefore, no questions of law arises. 8.1 In the light of the afore mentioned peculiar facts and circumstances, respectfully following the order of the Tribunal wherein in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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