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2016 (11) TMI 254 - ITAT DELHI

2016 (11) TMI 254 - ITAT DELHI - TMI - Allowability of charges paid to Software Technology Park of India, Noida - prior period expenditure - applicability of sec 35D - Held that:- The annual charges of STPI were ₹ 4 lacs which were claimed in four equal quarterly installments. There was some dispute of ₹ 3 Lacs charges of earlier year which were also settled/paid in current year. ₹ 1 lac paid on 13.07.2002, paid on 14.08.2002 and payable as on 31.03.2003 is the charges for the .....

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ded 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 Ld. AR submitted its bank statements to that extent bef .....

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Sh. Sanjay Kalra, CA Respondent by Sh. S. K. Jain, Sr. DR ORDER Per Suchitra Kamble, JM This appeal is filed by the assessee against the order dated 1/7/2013 passed by CIT(A)-IV, New Delhi. 2. The grounds of appeal are as follows : - 1. That on facts and in law the orders passed by the A.O and partly confirmed by the Commissioner of Income tax (Appeals) (hereinafter referred to as CIT(A) ) are bad in law and void ab-initio 2. That the Learned Commissioner of Income tax (Appeals) has erred both .....

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d 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 foreig .....

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the same. The assessee replied the same vide letter dated 2/12/2005. The Assessing Officer observed that the assessee had debited ₹ 7 lacs as service charges in profit and loss account. Detail furnished in this regard shows that ₹ 7 lacs relates to registration charge for getting registration with software Technology park Noida for availing service of STPI. The assessee was going to start new business activity during the year under consideration and incurred ₹ 7 lacs on the sa .....

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expenses of pre-operative expenses. However, as per Section 35D 1/5 of ₹ 7 lacs is allowable. Thus the Assessing Officer disallowed ₹ 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 .....

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d not give any satisfactory reply to the A.O s remand report that the details pertain to the Assessment Year 2002-03 and not to the assessment year under consideration. The CIT(A) further held that the bill submitted by the assessee are pertaining to the Financial Year 2001-02 which is relating to the Assessment Year 2002-03 and in the ledger account, there was credit of ₹ 1,00,000/- as opening balance on 1/4/2002. None of the bills are relating to the Assessment Year 2003-04. The bill giv .....

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le Supreme Court) and in the case of CIT(A) V R. Venkataswamy Naidu 29 ITR 529 (Hon'ble Supreme Court) had held that to claim an exemption, it is the duty of the assessee to substantiate it with records and evidences. Thus, the CIT(A) upheld the order of the Assessing Officer in making the disallowance of entire amount of ₹ 7,00,000/-. Further the CIT(A) held that since the A.O has allowed 1/5th deduction u/s 35D, the same requires to be withdrawn and disallowance is required to be mad .....

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d. Even the copy of the bank account from which payment was made to M/s. Gigaware Software Solutions in next year as claimed by the assessee was not produced either before the AO or before the CIT(A) during the appellate proceedings. The CIT(A) further held that the assessee failed to discharge the onus to prove the genuiness of the transaction despite specific opportunities given by the Assessing Officer. Thus the CIT(A) confirmed the order of the Assessing Officer on this issue. 6. The Ld. AR .....

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tration or prior period 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 to be expensed in current year only. The services utilized against the same were booked a .....

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m 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 Software Development & export for years. The service charges charged by STPI are routine in nature & every software export .....

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n 18.08.2003 for which bank statement was produced before the authorities and ₹ 1,80,327/- on 08.09.2003. Thus it is not a case of cessation or omission of liability Bank statement copy of account for evidence of payment was produced before the authorities. 7. The Ld. DR relied on the orders of the Assessing Officer and the CIT(A). 8. We have perused all the records and heard both the parties. On the first issue it is observed that the annual charges of STPI were ₹ 4 lacs which were .....

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