TMI Blog2016 (11) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 1 lac paid on 25.07.2002 are for the FY 2001- 02. These were pending and not expended in earlier years as there was some dispute between assessee & STPI, which was resolved in current year and payment and expenses booked. Since it was settled in current year and crystallized in current year, it is expended in current year by the assessee. The said payments are in cheque and there is no necessity for further verification of the same. The service charges charged by STPI are routine in nature & every software exporter has to pay to STPI. It does not attract provisions of Section 35D of the Act. Bogus purchase of certain software - Held that:- The purchase of the software from the Gigaware Software Solutions for ₹ 3,35,625/-, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... STPI for their charges. The denial is unjust, arbitrary, illegal, and against facts. c). That the CIT(A) erred on facts and in law in confirming disallowance of ₹ 3,35,625/- in the absence of confirmation from the party M/s Gigaware Software Solutions. The amount was paid for purchase of certain software. The denial is unjust, illegal and against facts. 3. The assessee company was incorporated on February, 1986. During the year the assessee was engaged in the activity of the trading of generic software and providing computerized software development services for the domestic as well as for foreign market. The Assessing Officer observed that during the year assessee company has claimed to have incurred expenses of ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowed ₹ 5,60,000/-. As relates to the purchases of software from M/s. Gigaware Software Solutions, the Assessing Officer observed that the Assessee has not furnished any document that exhibits the credit balance. In absence of any detail/confirmation from the said party, the outstanding balance shown to ₹ 3,35,625/- was treated as a deemed income of the assessee under Section 41 (1) of the Income Tax Act, 1961. 4. Aggrieved by the order of the Assessing Officer, the Assessee filed appeal before the CIT(A). As regards to registration charges for getting registration with Software Technology Park, Noida for availing service of STPI for ₹ 7,00,000/-, the CIT(A) held that the assessee failed to produce any evidence in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the A.O has allowed 1/5th deduction u/s 35D, the same requires to be withdrawn and disallowance is required to be made for entire amount by ₹ 7,00,000/-. Thus, denied the deduction of ₹ 1,40,000/- allowed by the Assessing Officer paid to STPI for their charges. 5. On the issue of disallowance of ₹ 3,35,625/- in the absence of confirmation from the party M/s. Gigaware Software Solutions, the CIT(A) held that the assessee has only submitted the copy of the account of the party as appearing in its books of accounts. However, no confirmation from M/s. Gigaware Software Solutions has been submitted. Even the copy of the bank account from which payment was made to M/s. Gigaware Software Solutions in next year as claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was resolved in current year and accordingly expensed. The Ld. AR further submitted that under the scheme of STPI, IT industries are provided certain concession in duties, levies and taxes. The Scheme is single point contact service to the STP unit which provides approval as a STP unit, approval for enhancement of capital goods, Issuance of green card, guidance for custom bonding, certification of imports and exports, permission for excise exemption and DTA sales as well as re-export, No objection certificate for change of name and location, CST reimbursement. Thus the Ld. AR submitted that these are not registration charges as understood by AO for starting some new business nor it falls u/s 35D as contemplated. Assessee had been in Soft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses. ₹ 1 lac paid on 15.04.2002, ₹ 1 lac on 15.05.2002 and ₹ 1 lac paid on 25.07.2002 are for the FY 2001- 02. These were pending and not expensed in earlier years as there was some dispute between assessee STPI, which was resolved in current year and payment and expenses booked. Since it was settled in current year and crystallized in current year, it is expensed in current year by the assessee. The said payments are in cheque and there is no necessity for further verification of the same. The service charges charged by STPI are routine in nature every software exporter has to pay to STPI. It does not attract provisions of Section 35D of the Act. Thus the CIT (A) and the Assessing Officer failed to take cognizan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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