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M/s ILink Multitech Solutions Pvt. Ltd. C/o M/s Ramesh And Ramachandran Chartered Accountants Versus The Deputy Commissioner of Income Tax, Corporate Circle 2 (2) , Chennai

2018 (1) TMI 511 - ITAT CHENNAI

Nature of expenditure - expenditure incurred by the assessee towards licence fee paid for using MS Office software - revenue or capital - Held that:- It is not in dispute that the assessee purchased MS Office software and used the same in its business. By purchasing MS Office software, the assessee has not become owner of the software. The ownership of MS Office software remained with Microsoft company. The assessee has to necessarily renew the licence periodically for using the same in the busi .....

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ership of MS Office software remains with Microsoft company. This Tribunal is of the considered opinion that the expenditure cannot be construed to be capital expenditure. See CIT Versus SOUTHERN ROADWAYS LTD.[2007 (6) TMI 193 - MADRAS HIGH COURT] - Assessing Officer is directed to allow the expenditure incurred by the assessee in acquiring licence of MS Office software as revenue expenditure - Decided in favour of assessee - Diminution in value of investment - assessee admittedly invested i .....

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dia was also not considered. Therefore, the matter needs to be re-examined by the Assessing Officer. Accordingly, the orders of both the authorities below are set aside and the issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall reconsider the issue afresh after considering the control and management of the UK subsidiary company and Double Taxation Avoidance Agreement between UK and India. Thereafter, the Assessing Officer shall decide the issue in accordance .....

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hether it is a loss during the course of business or not also needs to be examined. Since these facts are not examined by both the authorities below, this Tribunal is of the considered opinion that the matter needs to be reconsidered. Accordingly, the orders of both the authorities below are set aside and the issue of addition made on account of bad debt is remitted back to the file of the Assessing Officer who shall reconsider the issue afresh on the basis of material available on record. - ITA .....

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arises for consideration in all these appeals, we heard these appeals together and disposing of the same by this common order. 2. The common issue arises for consideration for all the three assessment years is with regard to expenditure incurred by the assessee towards licence fee paid for using MS Office software. 3. Shri Y. Sridhar, the Ld. representative for the assessee, submitted that the assessee purchased licence for use of MS Office software from M/s Power Centre Pvt. Ltd. The assessee h .....

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submitted that the expenditure incurred by the assessee in computer software package has to be treated as revenue expenditure. The Ld. representative has also placed reliance on the judgment of Karnataka High Court in CIT v. IBM India Ltd. (2013) 357 ITR 88 and judgment of Delhi High Court in CIT v. Asahi India Safety Glass Ltd. (2012) 346 ITR 329. The Ld. representative has also placed his reliance on the judgment of Bombay High Court in CIT v. Kotak Securities Ltd. (2012) 346 ITR 349. 4. On th .....

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d the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee purchased MS Office software and used the same in its business. By purchasing MS Office software, the assessee has not become owner of the software. The ownership of MS Office software remained with Microsoft company. The assessee has to necessarily renew the licence periodically for using the same in the business. Merely because the assessee is using MS Office sof .....

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any. This Tribunal is of the considered opinion that the expenditure cannot be construed to be capital expenditure. The judgment of Madras High Court in Southern Roadways Ltd. (supra) in respect of software package is squarely applicable to the facts of the case. Therefore, the CIT(Appeals) is not justified in distinguishing the judgment of Madras High Court. 6. In view of the above discussion, we are unable to uphold the order of the lower authority. Accordingly, orders of both the authorities .....

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ss continuously, the Board of Directors passed a resolution to wind up the UK subsidiary company and consequently, made a provision for diminution of investment. From the material available on record, according to the Ld. representative, only a resolution was passed, therefore, the diminution in value has to be allowed as revenue expenditure during the year under consideration. The Ld. representative placed his reliance on the judgment of Himachal Pradesh in CIT v. H.P. Mineral And Industrial De .....

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,04,289/-. 10. We have considered the rival submissions on either side and perused the relevant material available on record. The assessee admittedly invested in the subsidiary company, namely, M/s iLink Systems UK. Due to continuous loss suffered by the subsidiary company, the Board of Directors passed a resolution to wind up the subsidiary company. Therefore, they valued the investment and the diminution value was claimed as deduction. Both the authorities below rejected the claim of the asses .....

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both the authorities below are set aside and the issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall reconsider the issue afresh after considering the control and management of the UK subsidiary company and Double Taxation Avoidance Agreement between UK and India. Thereafter, the Assessing Officer shall decide the issue in accordance with law, after giving a reasonable opportunity to the assessee. 11. For the assessment year 2012-13, the assessee has taken o .....

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not be recovered. The Assessing Officer without recording any reason has simply rejected the claim of the assessee. Placing reliance on the judgment of Apex Court in S.A. Builders Ltd. v. CIT (2007) 288 ITR 1, the Ld. representative submitted that the money was advanced to its subsidiary company and the same was used by the subsidiary company for its business, therefore, the same has to be considered as utilization of funds for assessee's own business. Since it cannot be recovered, it has to .....

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