TMI Blog2021 (6) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... hese evidences. The aforesaid documentary evidences stated to have been filed before the departmental authorities needs to be thoroughly examined in the context of assessee s submission regarding development of software for a foreign buyer. As it appears, the departmental authorities have not properly enquired into these aspects by conducting necessary enquiries with the concerned bank or other regulatory authorities, including RBI, since it involves transactions with a foreign party involving repatriation of money from foreign country. One more aspect which has not been examined is, whether the assessee has carried on such software development activity, either with the same client or any other client, in the subsequent assessment years or it is a standalone transaction. If the assessee has continued with such business activity in subsequent years, then assessee s claim can be accepted. However, all these aspects need to be properly enquired into by the departmental authorities, which appear to have not been done. We are inclined to restore the issue to the learned Commissioner of Income Tax (Appeals) for fresh adjudication after due opportunity of being heard to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the facts and circumstances of the case and in law, the Learned CIT (A) has further erred in upholding the amount of ₹ 7,80,1797-received towards Software development Fees (exports), as Unexplained Cash Credits merely on the basis of doubt, surmises and conjectures. 5. On the facts, in the circumstances of the case in law, the Ld. A.O. and Ld. CIT(A) have erred in not allowing the brought forward Business Losses and Unabsorbed Depreciation of earlier years. 3. Grounds 6 and 7 being general grounds are dismissed. 4. In ground 1 assessee has raised the issue of non compliance with the directions of the Tribunal. Whereas, in grounds 2 to 5 assessee has challenged disallowance of depreciation, business expenses, non grant of set off of brought forward business loss and unabsorbed depreciation and treating the income shown from business as unexplained cash credit under section 68 of the Act. Since, all these issues are inter-connected; we proceed to dispose of them together. 5. Briefly the facts are, the assessee is a resident company and is stated to be engaged in the business of software development. For the assessment year under dispute, assessee file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh banking channel with the permission of Reserve Bank of India (RBI). Further, he submitted, the salary paid to technical persons for developing software and payment of electricity bill clearly demonstrates that the assessee was carrying on business activity. He submitted, being completely swayed away by the report submitted by the Ward Inspector of the department and without making proper enquiry, the assessing officer has repeated the same addition. He submitted, since the assessee has furnished all supporting evidence to demonstrate carrying on business activity, the income shown under the head business has to be accepted and the deduction claimed on account of depreciation, the expenses has to be allowed. Further, he submitted, assessee s claim of set off of brought forward business loss and unabsorbed depreciation should also be allowed. 7. The learned departmental representative, strongly relying upon the observations of the assessing officer and learned Commissioner of Income Tax (Appeals) submitted, the assessee having miserably failed to prove with supporting evidence that it has carried out any business activity has claimed, the assessing officer has rightly treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not convince the assessing officer that they are technically qualified to develop the software. Further, he has observed that the assessee did not even have the required computers and internet connection for developing software. 10. On a perusal of the submissions of the assessee before the departmental authorities and other facts and materials on record, we find various inconsistencies. The assessee has stated that the premises from where the assessee was carrying out software development activity earlier, belonged to Crystal Software Solutions Ltd (formerly, Crystal Audio Ltd) engaged in manufacturing black and white television during the period 1993-1999. Assessee has stated that in October, 1999, the assessee purchased the premises along-with various items like electronic component, black and white TV sets, etc. which were stored in the said premises. Whereas, thereafter the assessee has again submitted that a part of the premises was given to, the erstwhile owner for storage of its material. It is not understood, when the assessee has purchased the premises along with all the items like electronic components, TV sets, etc. where is the question of again allowing the erstwhi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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