TMI Blog2023 (2) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was entered into with the licensor for allowing user of the premises for three more months free of rent, but no such agreement has seen the light of the day. This shows that the assessee used the premises for three months in the preceding assessment year without paying rent and the licensor deducted the equivalent amount of such rent from the security deposit at the time of its refund in the year under consideration. Thus, it is not a case of security deposit ceasing to be refundable and becoming loss, rather adjustment of security deposit against the period for which the assessee used the premises without paying any rent. Assessee cannot claim deduction in respect of non-refunded security deposit during the year under consideration as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, which was initially capitalized and now written off because of abandoning the modules, that were no more required in the software development business. In our considered opinion, is eligible for deduction. The ground is allowed. Disallowance on account of interest on late payment of TDS - assessee claimed deduction of this sum on late payment of TDS, which was disallowed by the AO. The same was approved in the first appeal - HELD THAT:- As it is seen that the sum in question is interest paid to the Income-tax Department on late payment of TDS. Obviously, such an amount cannot be considered as allowable in terms of 40(a)(ii) in the hue of the judgment of Hon ble Madras High Court in CIT Vs. Chennai Properties and Investment Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e licensor permitted the assessee-licensee to use this property for 36 months, i.e., till 31-01-2013. However the licensor approached the assessee in April, 2011 for vacating the property. The dispute was ultimately resolved, as per the assessee, by deciding that the assessee will utilize the said premises till July, 2011 and not pay any rent for 3 months, i.e. from May, 2011, as compensation to vacate the property. On receipt of the possession, the licensor refunded security deposit amounting to Rs.5,55,000/- in October, 2011 and January, 2012. The remaining amount of Rs.9,45,000/- was not refunded in lieu of the assessee not paying rent for 3 months. The assessee claimed deduction by writing off the amount of security deposit not refunded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the licensor was in lieu of the rent for three months of the A.Y. 2012-13 for which the assessee used the premises without paying any rent, we direct to grant deduction of Rs.9,45,000/- to the assessee in the assessment for the preceding A.Y. 2012-13. 5. The next ground is against the writing off of Rs.5,76,631/- towards software capital work-in-progress. 6. The facts anent to this issue are that the assessee wrote off Rs.5.76 lakh out of software expenses capitalised earlier as workin- progress. On being called upon to explain the reason for such deduction, the assessee submitted that it was in the business of software development and was in the process of developing inhouse software modules named Axis QA Automation Framework /Ax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue nature, cannot be treated as capital expenditure, incapable of deduction on their write off. It is not a case where the assessee purchased certain plant and machinery or incurred certain capital costs which were capitalised earlier to work-in-progress account, and later on, on abandoning the same, it was claimed as deduction. Rather it is a case of incurring revenue expenditure, which was initially capitalized and now written off because of abandoning the modules, that were no more required in the software development business. In our considered opinion, the amount of Rs.5.33 lakh is eligible for deduction. The ground is allowed. 8. The last ground is against the confirmation of disallowance of Rs.88,200/- on account of interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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