TMI Blog2020 (8) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... e that, assessee was providing miscellaneous services, is like blowing hot and cold at the same time. Revenue has not been able to prove anything contrary by way of documentary evidences on this aspect before us. Therefore, this objection raised by revenue does not hold good in eyes of law and is rejected. No evidence of data transmission and export of software outside India - Coordinate bench of this Tribunal for assessment year 2008-09 [ 2013 (12) TMI 1539 - ITAT BANGLORE] has already taken a view that declaration on STPI forms should be held to be sufficient in this regard. Further, we agree with Ld.Counsel that, for purpose of eligibility of claim under section 10AA of the Act, this objection does not have any relevance. Therefore, respectfully following the same, this objection raised by authorities below is rejected at the threshold. Non submission of accounting invoices to STPI/SEZ authorities, Non approval of units by SEZ authority - In the present facts of the case assessee placed on record approvals obtained by SEZ authorities which has not been rejected. It is noticed that nothing has been brought on record by Ld.Standing Counsel to show that alleged units ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business through SEZ units - Satisfaction of conditions in section 10AA(4) are required to be satisfied in the year of formation, we hold, this objection raised by Ld.AO does not hold good for the year under consideration. Exports proceeds declared by assessee in SOFTEX forms, has not been considered by authorities below - Assessee is directed to file all requsite information, as far as possible, mentioned in paragraph D..6.9.4, hereinabove. Ld.AO is directed to verify these documents and allow deduction to assessee relatable to sale proceeds from export of software development services. Eligibility of assessee to claim deduction under section 10AA - AO did not accept claim of assessee for enhanced deduction on additional income for purposes of computing deduction under section 10AA of the Act, though there was sufficient time to pass respective orders as per section 92CD(5)(b) - HELD THAT:- Assessee is eligible to claim deduction under section 10AA, on incremental income arisen pursuant to APA dated 29/12/2016. We direct DRP to grant deduction under section 10AA of the Act, to the extent of sale proceeds received from export of software services, brought into India in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to file invoices raised in support of payments made by assessee to relevant parties. Assessee is at liberty to file all relevant details/evidences to substantiate its claim. DRP is then directed to verify nature of payment in the light of invoices filed by assessee. DRP is also directed to analyse payment made to non-residents on which tax has not been deducted at source in light of Explanation 2 to section 195. DRP shall grant proper opportunity of being heard to assessee. Disallowance of depreciation on leased assets - HELD THAT:- We note that this being a recurring issue a consistent approach has to be taken in this regard. Admittedly assessee has capitalised these assets. On one hand, Ld.AO accepts lease rentals received by assessee to be business income, and on the other hand disallowed depreciation. In our view, assessee is eligible for depreciation on leased assets, however the same has to be computed in accordance with law having regard to schedule of assets. In the interest of Justice, we remit this issue too Ld.AO for proper verification of all details filed by assessee and to consider claim in accordance with ratio laid down by Hon ble Supreme Court in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the Draft Assessment Order ('DAO') of AY 2009-10 for making adjustments for AY 2013-14 2.1. The learned ACIT and the Hon'ble Dispute Resolution Panel ('DRP') have erred in law and on facts by placing reliance on the DAO of AY 2009-10. Specifically, the learned ACIT and Hon'ble DRP have erred: a) In not following the settled legal principle of res judicata not applying to incometax proceedings; b) In not appreciating the fact that the order on which the learned ACIT had placed reliance was a draft assessment order; C) In not appreciating the fact that the erstwhile DAO passed by the erstwhile Assessing Officer has been quashed by the Hon'ble Karnataka High Court vide its order dated July 18, 2016. ; and d) In placing reliance on the DAO of AY 2009-10 without application of mind and without taking cognizance of the submissions/ arguments put forth during the assessment proceedings of AY 2013-14. 3. Denial of relief under section IOAA of the Act 3.1. The learned ACIT and the Hon'ble DRP have erred in law and on facts in denying the relief claimed by the Appellant under section 10AA of the Act of INR 303, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices with the SOFTEX forms without taking cognizance of the submissions made by the Appellant during the assessment proceedings for the subject AY. 3.10. The Hon'ble DRP has erred in fact by concluding that the Appellant failed to produce invoices for verification without taking cognizance of the submissions made by the Appellant during the assessment proceedings for the subject AY. 4. Disallowance of amounts under section 37(1) which have been disallowed suo moto by the Appellant under section 40(a) of the Act 4.1. The learned ACIT has erred in facts and in law in holding that a sum of INR 3,456,564,364 disallowed by the Appellant under section 40(a) of the Act should be disallowed under section 37(1) of the Act 4.2. The learned ACIT has erred in law and on facts by not appreciating that the basis of year-end provisions, as furnished by the Appellant, demonstrate that the same are for abilities which have arisen/been incurred, and therefore, the same cannot be disallowed by under section 37(1) of the Act. 4.3. The learned ACIT has erred in law and on facts by concluding that based on the documents submitted by the Appellant, it is very clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'royalty' 5.1.2. INR 520,87,66,921 made to other non-residents by concluding that the certificates issued by the Chartered Accountant ('CA') are not reliable 5.2. The learned ACIT has erred in facts in disallowing the foreign payments made during the year on which tax is not deducted by not considering the evidence submitted by the Appellant. 5.3. The learned ACIT has erred in fact and in law in not appreciating that certain sums are mere reimbursements and hence cannot be considered as income . 5.4. The learned ACIT has erred in law and on facts in placing reliance on the sworn statement which does not pertain to the current year, in holding that the certificates issued by the CA are not reliable and disallowing the amount for the current year. 5.5. The learned ACIT and the Hon'ble DRP have erred in law in disallowing the payment made to IBM Singapore Pte Ltd given that the amendment to definition of royalty related provisions under section 9(1)(vi) of the Act is not relevant to determine disallowance for non-deduction of tax at source as the corresponding amendment has not been made under section 40(a)(i) of the Act. 5.6. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore invoking the provisions of Rule 8D read with section 14A of the Act. 8.3. The learned ACIT and the Hon'ble DRP have erred in law and on facts in not considering the evidence on record and by not following the judicial precedents. 9. Restriction of depreciation on computer software from 60 per cent to 25 per cent 9.1. The learned ACIT and the Hon'ble DRP have erred in law and on facts in restricting depreciation claim to a lower rate of 25% as against the Appellant's claim for depreciation on computer software at 60% under section 32 of the Act, resulting in disallowance of INR 24,44,33,932. 9.2. The learned ACIT and the Hon'ble DRP have erred in law in concluding that only software purchased along with the computer is eligible for depreciation at the rate of 60%. 9.3. The learned ACIT and the Hon'ble DRP have erred in facts and in law in not taking into cognizance the submissions including judicial precedents made by the Appellant during the assessment proceedings of the subject AY 10. Initiation of Penalty Proceedings 10.1. The learned ACIT has erred in initiating penalty proceedings under section 271 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that, authorities below failed to appreciate settled legal principles of res judicata, not applying to income tax proceedings, and that claim should be analysed, having regards to evidences filed by assessee for year under consideration. Before DRP, assessee raised preliminary issue in respect of validity of draft assessment order dated 29/12/2016 passed by Ld.AO. 4.1 Before DRP, similar arguments were raised by assessee. It was submitted that, said order was set-aside, since it was passed without application of mind, and without taking cognizance of submissions/arguments put forth during assessment proceedings for year under consideration. 4.2 DRP, while dealing with this issue, observed that, similar objection was raised by assessee before DRP for assessment years 2010-11 2011-12 and 2012-13 which was rejected by observing as under: ..We are of the view that the evidences gathered during the proceedings for earlier assessment years can be used for proceedings for subsequent assessment years, if such evidence is a relevant to the issue in assessment year under consideration. It is also noticed by is that assessing officer before arriving on the conclusions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3 In fact, Ld.CIT.DR submitted that, all issues should be restored to Ld.AO, since details filed by assessee pursuant to show cause notice issued during the year has not been carefully verified. 4.4.4 We note that, this Tribunal considered this preliminary objection while considering similar issue for assessment years 2006-07. This Tribunal set aside claim u/s.10AA to Ld.AO for fresh decision, following its order for AY:2008-09 in IBM India (P) Ltd vs JCIT reported in (2014) 46 Taxmann.com 129. It is noted that, for asst. year 2008-09, this Tribunal dismissed various objections raised by Ld. AO to deny claim u/s.10AA and directed Ld.AO to verify, whether convertible foreign exchange was brought into India and that, they represented consideration received for export of computer software. 4.4.5 We note that, this Tribunal for assessment year 2008- 09(supra), dealt with all objections raised by authorities below, which are common for year under consideration to deny deduction u/s.10AA. Ld.AO for year under consideration, has referred to final assessment order passed for AY:2008-09. Therefore, in our view, it will be a futile exercise to set aside the issue to Ld.AO for fresh de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated companies, which does not reveal any specific details regarding the software development activity carried on by assessee. That, DOU (Document of Understanding) was not registered with SEZ Authority, and hence, it was not verifiable whether the software activity developed was carried out from eligible units. Ld.AO was of the opinion that the MSA and ICA (Inter Company Agreements) revealed fact that undertaking commenced its activity after 2004-05 and were not new undertaking that began to manufacture or produce computer software and rather all such undertakings have continued the business, already in existence, which was in violation of section 10A(2). Ld.AO was also of the opinion that assessee did not submit invoices corresponding to SOFTEX to SEZ authority, and therefore it was impossible to match accounting invoices. Ld.AO also observed that the inter-company agreements were not registered with SEZ authority, and therefore were not reliable. He was of the opinion that, intercompany agreements furnished before Ld.AO, referred to miscellaneous services and not to software development services, against which income was received that was subjected to claim under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st day of April, 2021, the following deduction shall be allowed- (i) hundred per cent of profits and gains derived from the export, of such articles or things or from services for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which the Unit begins to manufacture or produce such articles or things or provide services, as the case may be, and fifty per cent of such profits and gains for further five assessment years and thereafter; (ii) for the next five consecutive assessment years, so much of the amount not exceeding fifty per cent of the profit as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account (to be called the Special Economic Zone Re-investment Reserve Account ) to be created and utilized for the purposes of the business of the assessee in the manner laid down in sub-section (2). 22 [Explanation.-For the removal of doubts, it is hereby declared that the amount of deduction under this section shall be allowed from the total income of the assessee computed in accordance with the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deduction from income as provided in clause (ii) of sub-section (1). Explanation.-For the removal of doubts, it is hereby declared that an undertaking, being the Unit, which had already availed, before the commencement of the Special Economic Zones Act, 2005, the deductions referred to in section 10A for ten consecutive assessment years, such Unit shall not be eligible for deduction from income under this section : Provided further that where a Unit initially located in any free trade zone or export processing zone is subsequently located in a Special Economic Zone by reason of conversion of such free trade zone or export processing zone into a Special Economic Zone, the period of ten consecutive assessment years referred to above shall be reckoned from the assessment year relevant to the previous year in which the Unit began to manufacture, or produce or process such articles or things or services in such free trade zone or export processing zone: Provided also that where a Unit initially located in any free trade zone or export processing zone is subsequently located in a Special Economic Zone by reason of conversion of such free trade zone or export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of articles or things or services (including computer software) shall be the amount which bears to the profits of the business of the undertaking, being the Unit, the same proportion as the export turnover in respect of such articles or things or services bears to the total turnover of the business carried on by the undertaking : Provided that the provisions of this sub-section [as amended by section 6 of the Finance (No. 2) Act, 2009 (33 of 2009)] shall have effect for the assessment year beginning on the 1st day of April, 2006 and subsequent assessment years. (8) The provisions of sub-sections (5) and (6) of section 10A shall apply to the articles or things or services referred to in sub-section (1) as if- (a) for the figures, letters and word 1st April, 2001 , the figures, letters and word 1st April, 2006 had been substituted; (b) for the word undertaking , the words undertaking, being the Unit had been substituted. (9) The provisions of sub-section (8) and sub-section (10) of section 80-IA shall, so far as may be, apply in relation to the undertaking referred to in this section as they apply for the purposes of the undertaking referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tested in the 1st year of claim. In support, he placed reliance upon decision of Hon ble Karnataka High Court in case of CIT vs Nippon Electronics (India) (P) Ltd reported in (1990) 51 Taxman 187, and decision of Hon ble Delhi High Court in case of CIT vs Tata Communications Internet services Ltd., reported in (2012) 17 Taxmann.com 241. 5.3.3 At the outset Ld.Counsel submitted that, authorities below also referred to section 10A of the Act, as the term computer software for purposes of section 10 AA, has been defined in Explanation 2 to Section 10A(8). He submitted that authorities below have looked into deduction claimed by assessee under section 10AA, having regard to various conditions stipulated under section 10A/10AA jointly. At the outset, he submitted that, some of the conditions are not required to be fulfilled by assessee, for eligibility of claim under section 10AA, vis-a-vis section 10A of the Act. 5.3.4 Submissions advanced by both sides regarding objections raised by authorities below for year under consideration to deny claim under section 10AA, are dealt with as under: A. MSA does not reveal any specific details regarding software development acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue submitted that, SOW is not registered with SEZ authority, and therefore, contentions of assessee have been rightly rejected by authorities below. He submitted that MSA dated 01/01/2004 available on record does not reveal any specific detail about nature and scope of work. Ld.Standing Counsel emphasised that, none of the DOU s/ICA s were registered with STPI/SEZ authority admittedly. Referring to Circular No.1 dated 17/01/2013 he submitted that issues relating to export of computer software have been clarified by CBDT in this circular, wherein particular attention was drawn to the requirement of establishing direct nexus with development of software done abroad, with eligible unit, set up in India, pursuant to a contract between AE client and eligible unit of assessee. He submitted that as per Section 2(j) of SEZ Act 2005, assessee has to establish that manufacture/ produce of articles or things or provide any services commenced on or after 1.04.2006. He submitted that assessee has continued the business already in existence without having any new contract/agreement of alleged exports of computer software. A.4. He submitted that in present facts of the case, assessee failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether more than one SOW can be executed under the ambit of a particular MSA and whether SOW should be given preceded and over MSA. The matter has been examined. It is clarified that the tax benefit under section 10 AA, 10 AA and 10 B would not be denied merely on the ground that a separate and specific MSA does not exist for each SOW. The SOW would normally prevail over MSA in determining the eligibility for tax benefits unless the assessing officer is able to establish that there has been splitting up or reconstruction of an existing business or non-fulfilment of any other prescribed condition. From the above, it is clear that, benefit under section 10A,10AA and 10 B cannot be denied as separate and specific MSA does not exist for each SOW. Be that as it may, from SOFTEX forms placed in paper book at page 536 onwards, columns 7 specifically reveals, export contract/purchase order, being filed with SEZ. We also note that, each form consist enclosures, like copies of export contract, royalty agreement, communication from foreign customers. Submissions by Ld.Standing Counsel for revenue is thus found to be contrary to SEZ approvals placed at page 782 onwards of pape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h platform is, world wide IP-based wide area network, referred to as Power 9 , provided by AT T to assessee globally. B.2. He submitted that, strategic network designed by AT T meets assessee s data communication requirement globally. He submitted that, these network are cost-effective architecture and flexible as per assessee s needs, as it is built on a global Multi-Protocol Switched Shared Backbone, that provides foundation for the logical, any to any IP connectivity, among all IBM sites, that are connected to the Mighty Protocol Switched backbone, in the AP region. He further submitted that in terms of global connectivity, each geographical area is a self-contained network with a high-speed backbone and carrier aggregation of individual sites and subnetworks. This enables assessee to transmit data to its group companies across the globe through multiprotocol switched shared backbone. However, Ld.Counsel also emphasized that, this is not a requirement to be satisfied for being eligible to claim deduction under section 10AA of the Act. B.3. On the contrary, Ld.Standing Counsel appearing for revenue submitted that, replies filed by assessee with SEZ Authority regarding d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tfully following the same, this objection raised by authorities below is rejected at the thrushold. C. Non submission of accounting invoices to STPI/SEZ authorities, Non approval of units by SEZ authority: C.1. Ld.Counsel submitted that accounting invoices raised on associated enterprises and SOFTEX invoices are submitted to STPI/SEZ authorities. It has been submitted that the work contract received from group entities, are executed through STPI unit s and finished work are exported there from, as evidenced in SOFTEX Forms. Referring to page 536 of paper book Volume 2, being SOFTES Form Ld.Counsel submitted that in Column-9, under Type of software exported , assessee selected, Software development . Referring to page 539 being part of SOFTEX form. C.2. Ld.Counsel at this juncture, took us through written submission dated 7/12/2016, filed in paper book at page 416 of paper book, to demonstrate that, invoices raised could not be corelated with work carried out for a particular overseas client by assessee. Extract of procedure adopted by assessee as submitted in written submission dated 7/12/2016 are reproduced as under: Ld.Counsel submitted that, IBM group entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any accounting system that generates invoices. C.3. Ld.Counsel submitted that, such common intercompany accounting system/accounting invoices, are for specific country and is composite in nature, which means that it may contain multiple Account IDs and billing referred for multiple STPI/SEZ. He submitted that accounting invoices may contain revenue of different STPI/SEZ locations, and revenues for both offshore and on-site services. It is also submitted that, such invoice would also include reimbursement of project specific cost if any. C.4. Ld.Counsel submitted that, SOFTEX forms are required to be submitted for each STPI/SEZ locations separately, but is not applicable for on-site revenues. In view of composite nature of system generated accounting invoices, a split in composite invoices into offshore/on-site raised on STPI/SEZ location for filing of SOFTEX forms are carried out. Ld.Counsel thus submitted that SOFTEX invoices are separate and derived as a subsection of accounting invoices, but separately maintained for filing with STPI/SEZ authorities, with respect to offshore services only. On the basis of above complex procedure for invoicing, Ld.Counsel submitted that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Counsel for revenue placed reliance upon decision of Hon ble Supreme Court in case of DCIT vs ACE Multi Axis systems Ltd., reported in (2017) 88 Taxmann.com 69. Ld.Standing Counsel by relying on this decision, proposed that, eligibility/satisfaction under the section 10A/10AA has to be established every year by assessee for claiming deduction. On perusal of the decision, it is noted that the ratio laid down by Hon ble Supreme Court is in the context of section 80 IB, which is a separate code in itself. Further Hon ble Supreme Court upheld denial of exemption for the reason that, section 80 IB is available to an undertaking that remains a small scale industry for the period when deduction is claimed and assessee therein ceased to be a small scale industry. It was for this violation that the claim u/s 80IB was denied. C.8.3 In the present facts of the case assessee placed on record approvals obtained by SEZ authorities which has not been rejected. It is noticed that nothing has been brought on record by Ld.Standing Counsel to show that alleged units ceases to be an eligible unit registered with SEZ authority. Further we refer to the decision relied upon by Ld.Counsel in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceeds referred to therein, shall be deemed to have been received to India, where such sale proceeds are credited to a separate account maintained for the purpose, by assessee, with any bank outside India, with approval of RBI. D.3. It has been submitted that, even otherwise, an unapproved bank account maintained by assessee outside India, in which export sale proceeds are deposited, still assessee would be entitled to benefits of section 10A, to the extent that, it is brought into India in convertible foreign exchange as per section 10A(3)(i) of the Act. D.4. However, Ld.Counsel submitted that, vide letters dated 24/08/2012 and 04/01/2013, RBI granted permission to assessee, to hold and maintain foreign currency account outside India, which was placed before authorities below. D.5. It is submitted that assessee received part of export proceeds from sale of computer software into foreign currency account maintained outside India with approval of RBI and accordingly company is eligible to claim tax holiday as per section 10A of the Act. It has been also submitted that amount of export proceeds from sale of computer software received into foreign currency account maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iries conducted by the erstwhile Assessing Officer. 8 May 2013 RBI revoked the approval granted vide letters in August 2012 and January 2013 (copy enclosed as Annexure 13). 23/26 August 2013 Deutsche Bank ('DB) received a letter (copy enclosed as Annexure 14) from RBI instructing it to conduct a transactional audit of export transactions undertaken by IBM India by the DB officers or by an external statutory auditor. Pursuant to this, DB appointed Deloitte Haskins and Sells ('DHS ) as the independent auditor to perform the transactional audit, the scope of which was us follows: a. Transactional audit highlighting transparently the trail of each and every export transaction pertaining to the exporter from 2001 to 2012; b. Contract wise matching of repatriation of 30% onsite revenue for the period till February 2007) / profit (February 2007 onwards); and C. Certify that the actions of the Company are in accordance with FEMA and relevant guidelines issued by Reserve Bank of India. Oct 2013 DB submitted DHS audit report (copy enclosed as Annexure 8) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that this is not a requirement to be fulfilled under section 10AA of the Act. Even otherwise, considering this objection, assessee is anyways not barred from claiming deduction under main provisions of section10A(3) of the Act, whereby, it can satisfy Ld.AO regarding receipt of sale proceeds out of India being brought into India in convertible foreign exchange within the period stipulated in the provisions of the Act. D.9.2. At this juncture, we understand the apprehension of revenue regarding the question as to whether, foreign exchange remittances were in relation to export of computer software outside India. Assessee has placed on record SOFTEX forms at pages 536 of volume 2. Category mentioned in Column 9 in the form indicates that proceeds have been received for software exported under. However, from the reasoning by authorities below, it is noted that it has not verified, as to whether, convertible foreign exchange brought into India, represents consideration received towards export of computer software. D.9.3. We note that, Hon ble Bench of this Tribunal in assessee s own case for AY:2008-09 dealt with this objection in light of identical argument raised by Ld.Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware exported out of India being brought into India in convertible foreign exchange within the period stipulated in the provisions u/s 10A(3) of the Act. As rightly submitted on behalf of the assesses, deduction u/s. 10/10AA of the Act cannot be totally denied. The fact that the assessee has exported computer software out of India and brought convertible foreign exchange into the country is not disputed. The quantum has lo be arrived at on the deduction which the assessee is entitled to has to be allowed. 3.87 We are therefore of the view that it would be just and appropriate to set aside the order of the DRP and remand the issue to the DRP for fresh consideration and direct the DRP to examine the claim of the assessee on the basis of evidence that the assessee may lead to prove the receipt of sale proceeds of computer software exported out of India being brought into India in convertible foreign exchange. The DRP will be at liberty to examine as to whether the convertible foreign exchange was brought Into India and that they represent consideration received for export of computer software. The AO in the set aside proceedings before the DRP will be at liberty to rebut such cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order, Ld.AO projected his grievance that, assessee could not establish any system of allocation of expenses. He thus submitted that unit wise P L account cannot be relied for allowing the claim. E.4. We have perused submissions advanced by both sides and observations of authorities below on record. E.4.1. In this connection, we refer to and rely upon findings of coordinate bench of this (Tribunal) in assessee s own case for assessment year 2008-09 (supra) wherein, Hon ble Bench after analysing various rulings of Hon ble Supreme Court in case of CWT vs Kripashankar Dayashankar Worah reported in (1971) 81 ITR 763, Philip John Plasket Thomas vs CIT reported in (1963) 49 ITR 97 and Smt. Tarulata Shyam vs CIT reported in (1977) 108 ITR 345, Hon ble Karnataka High Court in case of CIT vs Fusion Software Engineering Pvt. Ltd., reported in (2012) 18 Taxmann.com 57 observed as under: 3.77. Apart from the above, we find that that this issue has already been concluded by ITAT Bangalore bench in assessee s own case for assessment year 2000-01 in ITA No. 3464/Bang/2004 by order dated 31/10/2007. One of the issues dealt with by the Tribunal in the aforesaid decision was as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of statutory auditors was relied upon by Krishnaswamy and Co., While certifying form 53F of the act. We have already explained the various documents filed by assessee before the AO on the method of maintaining books of account. There is neither a discussion not errors pointed out by the AO or the DRP on the claim of the assessee that the documents maintained by it sufficiently enables determination of profits of each of the STPI units E.4.3. Admittedly, facts and circumstances for year under consideration is identical and similar to assessment year 2008-09. We refer to page 835 of paper book volume 3, wherein, assessee filed unit wise profit and loss account and cost identification/allocation methodology between exports and domestic operation. It is apparent that Hon ble Bench for asst. year 2008-09 also noted that, view taken by coordinate bench of this Tribunal for assessment year 2000-01 and 2002-03, has not been disputed by revenue. Further, it is also a matter of fact, that, authorities below have not disputed sale proceeds claimed by assessee against each SEZ units, and therefore, we have to proceed on the footing that bifurcations of profits of various SEZ units as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited. 10.41. Therefore, there has been no splitting or reconstruction of the business of IGSI (now IBM India) which continues to render software development services. F.3. Ld.Counsel also submitted that DRP during proceedings for assessment year 2010-11, examined this issue and accepted assessee s view that, issue of splitting and reconstruction of business can be examined only in 1st year of commencement of undertaking. F.4. On the contrary, Ld.Standing Counsel for revenue submitted that, as per section 10AA of the Act, an enterprise, referred in clause (j) of Section 2 of SEZ Act 2005, is, who begins to manufacture or produce articles or things or provide any services during previous year relevant to any assessment year commencing on our after 01/04/2006, shall be entitled for deduction of their profit. He submitted that in the present case, assessee continued the business already in existence, without having any new contract agreement of alleged export of computer software, and hence, claim of assessee under section 10AA of the Act was rightly denied. F.5. We have perused submissions advanced by both sides in light of records before us. F.5.1. It is su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previously used. Certain other qualifications have to continue to exist for claiming the incentive such as employment of particular number of workers as per sub-clause 4(i) of Clause 2 in an assessment year. For industrial undertakings other than small scale industrial undertakings, not manufacturing or producing an article or things specified in 8th Schedule is a requirement of continuing nature. Hon ble Supreme Court, categorically observed in above referred paragraph that, condition regarding formation are required to be established in the initial year alone. On the basis of above discussions, that the satisfaction of conditions in section 10AA(4) are required to be satisfied in the year of formation, we hold, this objection raised by Ld.AO does not hold good for the year under consideration. G. Conclusion: Based upon arguments advanced by both sides and discussions, in respect of each objection raised by authorities below, we observe that exports proceeds declared by assessee in SOFTEX forms, has not been considered by authorities below, though, assessee filed voluminous details. We are of the view that, Ld.AO failed to verify whether, revenue received by ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablish its claim for deduction u/s. 10A/10AA of the Act Thus, ground Nos. 3 1 to 3.4 raised by the assessee are treated as allowed for statistical purposes G.1. Assessee is thus directed to file all relevant documents to substantiate the exports proceeds, brought into India, claimed as deduction under section 10AA. Assessee is directed to file all requsite information, as far as possible, mentioned in paragraph D..6.9.4, hereinabove. Ld.AO is directed to verify these documents and allow deduction to assessee relatable to sale proceeds from export of software development services. Accordingly this ground raised by assessee stands allowed for statistical purposes as indicated hereinabove. 6. Ground no.3.1: Brief facts to be considered for this ground are as under: The case was selected for scrutiny and notice under section 143 (2) was issued to assessee. In response to statutory notices, assessee filed various details. Assessee filed Form 3CEB, which revealed international transaction entered into by assessee with its associated enterprises. Ld.AO accordingly, referred the case to transfer pricing officer on 24/08/2015 to determine arm s length price o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 10AA amounting to ₹ 303,16,58,824, (page 322 of paper book) in respect of profits earned from following SEZ units: SEZ-Bangalore - ₹ 120,13,50,087/- SEZ-Chennai - ₹ 48,55,84,345/- SEZ-Hydrabad - ₹ 31,23,49,065/- SEZ-Pune - ₹ 82,85,97,835/- SEZ-Kolkata - ₹ 12,62,33,445/- SEZ-Gurgaon - ₹ 5,24,69,048/- SEZ-Mumbai - ₹ 2,50,74,999/- 6.5. Subsequently, due to increase of export income in the hands of assessee due to APA dated 29/12/2016, claim under section 10AA was revised by sum of ₹ 459,81,15,229 (page 329 of paper book), details of which are as under: SEZ-Bangalore - ₹ 1,84,27,60,543/- SEZ-Chennai - ₹ 72,97,71,716/- SEZ-Hydrabad - ₹ 46,44,58,385/- SEZ-Pune - ₹ 1,25,36,40,014/- SEZ-Kolkata - ₹ 18,44,50,860/- SEZ-Gurgaon - ₹ 8,22,33,583/- SEZ-Mumbai - ₹ 4,08,00,128/- 6.6. After entering into APA, income of assessee from export of IT services increased by sum of ₹ 7,74,21,28,914/-, thereby, increasing income in the hands of assessee by ₹ 23,73,23,41,974/-(being sum of net profit before taxes as per profit and loss accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2/03/2017. 6.10. It is brought to our notice that, coordinate bench of Pune Tribunal in Dal Al Handasah consultants (Shair partners) India Pvt Ltd vs DCIT in ITA No.1413/Pun/2019 for assessment year 2010-11 by order dated 02/12/2019, addressed identical issue. He placed rrliance on following paragraphs: 4. The foundation of the action of the authorities below for the denial of deduction is premised on the understanding that the modified return cannot breach the mandate of the APA, which, in turn, restricts its scope only to the determination of the ALP and nothing more than that. 5. In order to appreciate the rival contentions, it would be apposite to have a glance at the relevant provisions in this regard. Section 92CC with the caption Advance Pricing Agreement provides through sub-section (1): `The Board, with the approval of the Central Government, may enter into an advance pricing agreement with any person, determining the arm's length price in relation to an international transaction . Sub-section (2) gives the manner of determination of the ALP referred to in sub-section ) by stating that it: `may include the methods referred to in subsection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments. It, therefore, follows that the Act contains a separate designated procedure for dealing with the assessments pursuant to the APA, which also contains distinct time limits in this regard. 7. Having taken an overview of the relevant provisions of the APA, which are germane to the issue under consideration, let us proceed to examine the question as to whether the assessee, in the given facts and circumstances and as per law, is entitled to deduction u/s 10A in assessment u/s 92CD of the Act on the additional income offered in the modified return? The precise answer to the question can be found out by answering the following three sub-questions:- i. Whether proviso to 92C(4) debars deduction u/s 10A on additional income in assessment u/s 92CD? ii. If no, whether assessment u/s 92CD provides for granting deduction u/s 10A? iii. If yes, whether the assessee has satisfied the conditions of deduction u/s 10A? i. Whether proviso to 92C(4) debars deduction u/s10A on additional income in assessment u/s 92CD? 8. The case of the AO is that the assessee cannot be allowed deduction u/s 10A in respect of the incremental income offered in the modi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso. 9. We have noted above the scheme of assessment u/s 92CD pursuant to the APA, under which the assessee is mandated to file modified returns in consonance with the APA. Thereafter, the assessment is made by the AO u/s. 92CD(3)/(4) in accordance with the APA. As the incremental income is offered by the assessee itself in the modified return in accordance with the APA, it cannot be equated with the computation of income u/ss. 92C/92CA of the Act, as the later provisions talks of making some transfer pricing addition by the AO. The suo motu offering of additional income by the assessee pursuant to the APA is of the same nature as the assessee itself offering some transfer pricing adjustment in the original return of income. In that case also, deduction u/s 10A, if otherwise permissible, would be allowed and not curtailed as it will not be a case of transfer pricing addition made by the AO. In the same manner, deduction u/s 10A cannot be disallowed in respect of additional income offered in the modified return as it is not a transfer pricing addition made by the AO but the additional transfer pricing income offered by the assessee in consonance with the APA with the CBDT. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A as well, of course, subject to the fulfillment of others conditions as set out in the section. It, therefore, follows that if an assessee is otherwise entitled to deduction u/s.10A, or for that matter under any other provision of the Act, in respect of the income offered in the modified return, the same cannot be denied. As such, the view of the authorities below that in the absence of any specific provision in section 92CD for granting of deduction u/s.10A, no deduction can be allowed, is sans merit. Such stipulation is contained in subsection (2) of 92CD itself. It is, ergo, held that the assessment u/s 92CD provides for granting deduction u/s 10A of the Act. iii. Whether the assessee has satisfied the conditions of deduction u/s 10A? 14.Now we turn to the view canvassed by the AO that the assessee failed to comply with the mandate of sub-section (3) of section 10A, which provides that: This section applies to the undertaking, if the sale proceeds of articles or things or computer software exported out of India are received in, or brought into India, by the assessee in convertible foreign exchange, within a period of six months from the end of the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Invoicing and Credit terms . The material part of such a clause, which is relevant for the year under consideration, states that: ` the Applicant shall show the difference between the invoiced amount for the previous year/rollback years and the ALP as agreed, as tax adjustment in the modified tax returns for Assessment year 2010-11 to Assessment year 2014-15 and will also raise an invoice (and realise it) for the equivalent amount in the month following the month in which the Agreement is signed . On going through the relevant parts of clause 5 of the Appendix II, it clearly emerges that the CBDT provided for raising the invoice for the additional amount and also realise it in the month following the month in which the APA is signed. To put it simply, the CBDT not only stipulated for raising of the invoice for the additional income but also for the realization of the additional amount within the month following the month in which the Agreement is signed. Thus, it is overt that the APA contains a clause for realizing the amount or bringing into India convertible foreign exchange for the additional amount of invoice within one month s period. There can be no other reason for ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranted. 6.11. As observed in detail by coordinate bench of Pune Tribunal, following ratio laid down therein, we hold that assessee is eligible to claim deduction under section 10AA, on incremental income arisen pursuant to APA dated 29/12/2016. We direct DRP to grant deduction under section 10AA of the Act, to the extent of sale proceeds received from export of software services, brought into India in convertible foreign exchange within stipulated period. Accordingly, this issue is set aside to DRP for verification verify and to allow claim of assessee as directed hereinabove, r.w., our observations in para D.9.4 hereinabove. At the outset, both sides submitted that, issue alleged in Ground 4 6 interlinked with each other. Based on this submission, for sake of convenience, we consider Ground 4 6 together as under. 7. Ground No.4 is in respect of disallowance of sum of ₹ 345,65,64,364/- under section 37 (1) of the Act. 7.1. Ld.AO observed that, assessee debited various expenditure in P L account like rent, professional charges, sub contract charges, interest, commission, advertisement, recruitment expenses, royalty etc., that attracted provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated on 1st April of next year, and that, expenditure disallowed does not pertain to year under consideration, and therefore, does not qualify to be claimed as deduction under Section 37 of the Act. And once expenditure goes out of ambit of Section 37 of the Act, provisions of Section 40(a)(ia) of the Act, would not apply. Ld.AO, thus rejected assessee s contention of reversal of provision, and disallowed sum of ₹ 345,65,64,364/-. 7.6. Aggrieved by proposed addition in draft assessment order, assessee raised objection before DRP. 7.6.1. DRP after considering submissions advanced by assessee and observations by Ld.AO, was of opinion that, Ld.AO did not examine in detail, so as to make disallowance under section 37(1) of the Act. DRP also noted that assessee did not furnish complete details of such expenses. Accordingly, DRP directed assessee to furnish details of expenses with a direction to Ld.AO to verify the claim on basis of details filed by assessee to ascertain, whether expenses were made for purposes of business. DRP also noted that similar direction was given for assessment year 2012-13 by the then DRP. 7.7. Before us, both parties submitted as under: 7.7.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and DRP was yet to give direction in respect of the same. Similarly, Ld.AO was of the view that, as the amount was disallowed under section 37 for assessment year 2012-13, assessee was not eligible to claim the same as deduction under section 40(a) of the Act, for year under consideration. Ld.AO thus disallowed the claim of ₹ 429,89,38,034, made under section 40(a) of the Act. 7.9. Aggrieved by proposed addition in draft assessment order, assessee raised objection before DRP. 7.9.1. DRP directed Ld.AO to examine, whether TDS was effected on these payments, and if so, assessee was to be allowed relief in respect of the amount. 7.10. Before us, Ld.Counsel submitted that assessee filed voluminous details in support of its claim, like copies of invoices, to substantiate the expenses incurred to be genuine, basis of creation of provision of expenses and submission on remand report issued by Ld.AO, vide letters dated 10/11/2016 and 19/12/2016 respectively. Ld.Counsel also submitted that as the disputed amount has been suo moto disallowed by assessee in A.Y:2012-13 under section 40(a), the same amount cannot be again disallowed on reversal in the year under consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Extract of ledgers with summary of TDS compliance (along with sample invoices on which taxes have not been deducted) accompanied with details of tax deducted and deposited at source: Recruitment 23 December 2016 5. Details of mapping to subsequent receipt of invoices and tax deducted and deposited (where applicable) on the amounts disallowed in AY 2013-14 along with sample copies of invoices to substantiate that the expenses incurred are genuine in nature. 26 December 2016 7.11.3. In respect of issue raised in Ground 6, we note that assessee filed following details before authorities below: SI. No Supporting Evidence / Details submitted Date of Filing 6. Reliance was place on the following submissions in support of the claim in the current year's return of income Details of mapping of tax deducted and deposited (where applicable) on the amounts disallowed in AY 2012-13 along with sample copies of invoices to substantiate that the expenses incurred were genuine in nature sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted from the gross receipts in the profit and loss account. The company had worked out on an actuarial valuation its estimated liability and made provision for such liability not all at once but spread over a number of years. The practice followed by the company was that every year the company worked out the additional liability incurred by it on the employees putting in every additional year of service. The gratuity was payable on the termination of an employee's service either due to retirement, death or termination of service - the exact time of occurrence of the latter two events being not determinable with exactitude before hand. Therein, Hon ble Court laid down following principles: (i) For an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice and accountancy. It is not as if such deduction is permissible only in case of amounts actually expended or paid; (ii) Just as receipts, though not actual receipts but accrued due are brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le certainty though the actual quantification may not be possible. If these requirements are satisfied, the liability is not a contingent one. The liability is in presenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. 7.12.3. From the above views expressed by Hon ble Supreme Court, it is clear that, a business liability should be allowed as expenditure, although it may have to be quantified and discharged at a future date. It is also a settled principle that in mercantile system of accounting, as income accrued to assessee is brought to tax, expenditure/liability accrued also has to be considered. 7.13. Assessee follows mercantile system of accounting, and, it is to account for liabilities on accrual basis. It is submitted that since assessee does not know actual liability, it estimates liability accrued, on a scientific basis, depending on instruction received form respective administrative HR head for purpose of creating provisions. 7.13.1. It has been submitted that, at the time of making year-end provisions, the same was being suo moto disallowed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014- 15, vis- -vis, invoices raised by payee during assessment years AY:2013-14 2014-15. 7.14.3. We note that, assessee raised identical issue before this Tribunal in assessment year 2008-09 (supra). Hon ble Bench in paragraph 6.1, set-aside the issue for fresh consideration to DRP, by observing that, DRP does not have power to set aside any proposed variation or issue with a direction under section 144C(5) of the Act, for further enquiry and passing of assessment order. 7.14.4. In the present facts for year under consideration, we note that, DRP while considering disallowance under section 40 (a) of the Act (issue raised in ground 4 6), directed Ld.AO to verify the claim of assessee. 7.14.5. We direct assessee to provide for the following: I. assessee shall provide opening balance of provision accounts, and entries made relating to transactions during the year and closing balances. II. Assessee is directed to submit year wise details of rental charges professional charges contract amount and other payments that has been considered for year-end provisions, disallowed under section 40 (a) of the Act, during AY:2012-13. III. Assessee is directed to provide for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of disallowance under section 40(a) of the Act, in respect of payments made to associated enterprises and non-associated enterprises, without TDS compliance. 8.1. Ld.AO observed that, assessee made payments to associated enterprises and non associated enterprises during the year under consideration. It was submitted that, these payments included, purchase of finished goods, purchase of capital goods payments for availing services etc. Assessee was called upon vide notice dated 21/11/2016 by Ld.AO to furnish details of TDS compliances with respect to various payments to AE non AE. 8.2. Assessee, vide letter dated 07/12/2016 filed various submissions. Ld.AO upon verification, observed that, assessee did not deduct TDS:- on payments made to non-resident 3rd parties being insurance payments amounting to ₹ 155,05,88,065; on payment of ₹ 5,208,766,921 made to other AE s and non- AE s, on the basis of certificate issued by chartered accountants; and on payment of ₹ 4,604,970,453 to IBM Singapore Pte.Ltd., a foreign company, for purchase of software, which was in the nature of distributed software. Ld.AO noted that software purchased from IBM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at some payments were reversal of provisions created in assessment year 2012-13, and hence expenditure claimed to that extent had been reduced, which has been disallowed by Ld.AO and in draft assessment order for assessment year 2012-13. Ld.Counsel submitted that, Ld.AO considered payment made to IBM Singapore under Software Free-market Agreement, constituted royalty, both under section 9(1)(vi) of the Act, and under DTAA between India and Singapore. Ld.Counsel submitted that, identical issue arose for assessment year 2008-09 in assessee s own case (supra), and Hon ble Bench in para 6.12, remanded the issue to DRP, for fresh consideration and decision, after affording due and proper opportunity to assessee. Ld.Counsel also submitted that Ld.AO relying on order passed under section 201(1) and (1A) disallowed the amount paid by assessee to IBM Singapore. 8.6. On the contrary, Ld.Standing Counsel for revenue submitted that, this issue requires detailed verification in regards to nature of payments made by assessee in order to ascertain applicability of TDS provisions. He has requested this issue to be set-aside the entity to Ld.AO. 8.7. We have perused submissions advanced by bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRP. DRP directed Ld.AO to verify payments and to disallow such payment, where assessee fails to furnish information s and details required for verification. 8.7.6. Ld.Counsel, however submitted that voluminous details were submitted by assessee, which has not been considered by Ld.AO, while passing impugned order. We have perused observations of this Tribunal for assessment year 2008-09 wherein, Hon ble Bench remanded the issue to DRP for fresh consideration and decision. Respectfully, following the same, we remand the issue to DRP with similar direction to consider the claim of assessee in light of evidences filed, after affording opportunity of being heard in accordance with law. Assessee is directed to file invoices raised in support of payments made by assessee to relevant parties. Assessee is at liberty to file all relevant details/evidences to substantiate its claim. DRP is then directed to verify nature of payment in the light of invoices filed by assessee. DRP is also directed to analyse payment made to nonresidents on which tax has not been deducted at source in light of Explanation 2 to section 195. DRP shall grant proper opportunity of being heard to assessee. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change in accounting treatment of leased assets, as was in assessment year 2009-10, and therefore, depreciation claimed for year under consideration on leased assets was disallowed. 9.4. Ld.AO, noted that for assessment year 2010-11 assessee raised alternative claim before DRP, according to which difference in lease rentals was reduced from taxable income of assessee, subject to verification. Ld.AO, therefore for year under consideration, restricted addition being difference between depreciation claimed that was disallowed and lease rentals that was allowed, amounting to ₹ 24,60,33,070/- in the hands of assessee. 9.5. Aggrieved by proposed addition in draft assessment order, assessee raised objection before DRP. 9.5.1. DRP, followed its own decision for assessment year 2011-12 and 2012-13, wherein, alternative claim of assessee was directed to be considered by Ld.AO, in the event assessee furnishes details of lease rentals on the assets reflected in depreciation schedule. 9.6. Before us, both sides submitted as under: Ld.Counsel submitted that, Ld.AO disallowed depreciation on leased assets being (net of lease rental and interest) amounting to ₹ 24,60,33, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts, squarely covers assessee s case. 9.7. On the contrary, Ld.Standing Council for revenue, submitted that, ratio by Hon ble Supreme Court in case of ICDS Ltd vs CIT (supra) are not applicable to present facts of the case. Ld.Standing Counsel placed emphasis on ownership being established for claiming depreciation of assets. He placed reliance on observations recorded in draft assessment order for assessment year 2009-10, reproduced at page 57 of impugned assessment order. He submitted that accounting treatment followed by assessee for year under consideration is similar to assessment year 2009-10. He submitted that, Ld.AO, vide notice dated 26/07/2012 called for details and description of assets that was leased out, invoices raised, value of assets leased out, which were not submitted. He submitted that, under such circumstances the claim has been rightly denied by Ld.AO. 9.8. We have perused submissions advanced by both sides in light of records placed before us. 9.8.1. Ld.Counsel submitted that, Ld.AO erred in mentioning that nothing was filed before him, during final stage of assessment order. Ld.Counsel took us through documents placed at page 353 volume 2 of paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Ground No.9 is in respect of depreciation on computer software been restricted from 60% to 25%. 11.1. Ld.AO observed that assessee made addition of ₹ 69,83,82,63 under the head computer software and claimed depreciation at 60% on the same. Ld.AO called upon assessee to submit details of software purchases. 11.1.1. Assessee, wide submission dated 26/12/2012 submitted that appendix 1 to income tax rules states that 60% depreciation is allowable on computers including computer software. It was submitted that the word, including , is to be interpreted as expanding the scope of the word computers , to bring within its ambit computer software. 11.1.2. On verification of the same, Ld.AO observed that software purchased by assessee was licence to use software . Ld.AO, accordingly restricted depreciation at 25% by placing reliance on DRP restricted depreciation claimed to a lower rate of 25% by concluding that only software purchased along with the computer is eligible for depreciation at the rate of 60%. 11.2. Before us both sides submitted as under: 11.2.1. Ld.Counsel submitted that, authorities below have erred in restricting depreciation to lower rate of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the file of the Assessing Officer. If the software expenditure is treated as revenue expenditure, then the quantum of claiming depreciation would not arise. The issue of depreciation remains only if the software expenses are held to be capital expenditure. We find from a perusal of the order of assessment that in para 7.4 thereof that the Assessing Officer himself has noted that depreciation of software expenses is to be allowed at 60%, but ultimately allowed the assessee depreciation at 25%. As per Sec. 32(1)(ii) depreciation @ 25% is applicable in respect of know-how, patents, copy rights, trademarks, licenses, franchises or any other business or commercial right of similar nature, being intangible assets, acquired on or after 1.4.1998. In the case of Amway India Enterprises Vs. DCIT (2008) 111 ITD 112 (SB) (Delhi), it was held that computer software is eligible for depreciation @ 60% This decision of the ITAT, Delhi (SB) in the case of Amway India Enterprises (supra) has been upheld by the Hon'ble High Court of Delhi. In DCIT Vs. Datacraft India Ltd. (2010) 133 TTJ 377 (Mum) (SB) wherein it was held that when a device is used as part of the computer in its functions, like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 234B is a mandatory levy, as the section defines levy of interest on the assessed tax. In the present facts of case, tax is assessed including incremental income due to APA and therefore the consequence should follow. 13.4. We have perused submissions advanced by both sides in light of records placed before us. Relevant provision for consideration is as under: 234B.: Interest for defaults in payment of advance tax. (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of one per cent for every month or part of a month comprised in the period commencing on the day following the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made as is referred to in sub-section (1) following the date of such regular assessment and ending on the date of the reassessment or re-computation under section 147 or section 153A on the amount by which the tax on the total income determined on the basis of the reassessment or re-computation exceeds the tax on the total income determined under sub-section (1) of section 143 or on the basis of the regular assessment aforesaid. (4) Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) or sub-section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and- (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduction or waiver of the interest payable by the assessee under Section 215 of the Act. Therefore, both the above decisions of the Gujarat High Court most respectfully in our view were rendered sub-silentio. It is this sub-section (4) of Section 215 which inter alia takes into account the circumstances beyond the control of the assessee for having paid less advance tax than that finally determined to be payable. The argument of hardship, bona fide conduct etc. would be appropriately considered when applying sub-section (4) of Section 215 of the Act while considering waiver/reduction of interest payable under Section 215 of the Act. These arguments of hardship etc. cannot be subject of consideration while interpreting a fiscal legislation. There is no place for any equity while interpreting a fiscal legislation. The Apex Court in CST v. Modi Sugar Mills, AIR 1961 (SC) 1047 has observed that In interpreting a taxing statute, equitable consideration are entirely out of place. Therefore, the submission of the applicant assessee that non-payment of advance tax was on account of circumstances beyond the control of the assessee and for a reasonable cause, would not warrant deletion o ..... 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