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2016 (5) TMI 100 - ITAT DELHI

2016 (5) TMI 100 - ITAT DELHI - [2016] 46 ITR (Trib) 546 - Addition on account of software purchase - CIT(A) deleted the addition - Held that:- As find from the findings of the learned Commissioner of Income-tax (Appeals) that from the details and copies of purchase invoices and sales of software invoices it was evident that software was purchased and subsequently sold to customer and was not used by the assessee, have not been controverted by the Department. We, accordingly, confirm the order o .....

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onsistently been followed by the assessee. We, therefore, do not find any reason to interfere with the order of the learned Commissioner of Income-tax (Appeals). Ground fails against revenue - I. T. A. No. 2359/Del/2011 - Dated:- 18-1-2016 - S. V. Mehrotra (Accountant Member) And Suchitra Kamble (Judicial Member) For the Petitioner : Amrit Lal For the Respondent : Himanshu Sinha, Satyam Rastogi ORDER S. V. Mehrotra (Accountant Member) 1. This appeal, by the Revenue, is directed against the Commi .....

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disallowances : (Rs.) (i) Capital expenses 3,30,195 (ii) Provision for sale and maintenance of software 33,61,059 3. The learned Commissioner of Income-tax (Appeals) allowed the assessee's appeal and deleted both these additions. Being aggrieved, the Department is in appeal before us and has taken the following two grounds of appeal : "1. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) has erred in deleting the addition of ₹ .....

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as capital expenses. The assessee pointed out that this sum represented the amount of software purchases, annual maintenance contract (AMC) for hardware and software and the expenses towards consultancy. As regards the software purchases, the assessee submitted that they were to the extent of ₹ 8,25,488. The assessee further submitted that the software so purchased had been sold out and it was only the trading activity of the assessee. The assessee also submitted that the software purchas .....

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nd allowed depreciation at 60 per cent. Thus, made a disallowance of ₹ 3,30,195. 5. Before the learned Commissioner of Income-tax (Appeals) it was submitted that the assessee was the implementation partner of "hyperion software", which was installed to evaluate performance of the employees. It was submitted that the assessee undertook to devise systems for performance evaluation in organisations. In the performance of these services, "hyperion software", which it purcha .....

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purchase invoices and sales of software invoices it was evident that software was purchased and subsequently sold to customer and was not used by the assessee, have not been controverted by the Department. We, accordingly, confirm the order of the Commissioner of Income-tax (Appeals) on this issue. 7. The brief facts apropos ground No. 2 are that the assessee had debited a sum of ₹ 33,61,059 as provision for sale and maintenance of software. The Assessing Officer required the assessee to e .....

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t was not to be paid back or accrued to the assessee from day-to-day. He, therefore, denied the claim of ₹ 33,61,059. 8. Before the learned Commissioner of Income-tax (Appeals), the assessee reiterated his submissions and pointed out that the total annual maintenance contract in the year was bifurcated into amount for the year and the amount received for services to be provided in the next year. This bifurcation was made on time basis and, accordingly, the provision for sale and maintenanc .....

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per the accounting standard "AS-9" on revenue recognition as prescribed by the Institute of Chartered Accountants of India. The assessee further pointed out that it was consistently following this accounting policy. The assessee relied on the decision of the hon'ble Allahabad High Court in the case of CIT v. Hindustan Computers Ltd. [1998] 233 ITR 366 (All), wherein under similar facts the assessee's claim was upheld. 9. The learned Commissioner of Income-tax (Appeals) allowed .....

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