TMI Blog2022 (2) TMI 1354X X X X Extracts X X X X X X X X Extracts X X X X ..... . As admitted assessee owns the development of IP of software product being CRM software. Assessee entered into agreement with its AE for being an exclusive distributor for its software product in North America, for which the AE shall pay to assessee a licence fee equal to 30% of gross revenue. This receipt by assessee has been shown as royalty income by assessee. Apart from this, the assessee sells this software directly to third party customers in Asia-pacific region. It is noted that assessee also provides software support services for the CRM software product sold to both AE as well as non-AE. The segments of income generated by assessee are income from licence fee, payment of licence fee, income from software services. As for A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At the outset, the Ld.AR submitted that the main issue in these two appeals is regarding the characterisation carried out by the Ld.TPO of the assessee s business. The assessee is a manufacturer of software products, it owns and develop IP of the software product by the name CRM software. The assessee also sells this software product in America and in Asiapacific region. The Ld.AR submitted that in the TP study by assessee for the assessment years under consideration, assessee has been characterised as manufacturer of software products, based on the functional analysis. 3. It is submitted that the Ld.TPO for A.Y. 2011-12 accepted the activity of assessee to be a manufacturer of software products, however, characterised the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... novo verification. We have perused the submissions advanced by both sides in the light of records placed before us. 6. Admittedly, for both the years under consideration, assessee has been noted to be manufacturer of software product. It is an admitted fact that assessee owns the development of IP of software product being CRM software. Assessee entered into agreement with its AE for being an exclusive distributor for its software product in North America, for which the AE shall pay to assessee a licence fee equal to 30% of gross revenue. This receipt by assessee has been shown as royalty income by assessee. Apart from this, the assessee sells this software directly to third party customers in Asia-pacific region. It is noted that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case, M/s. Talisma Corporation Private Limited ( the Appellant ), respectfully submits the following additional grounds of appeal for admission before Your Honours: 21. Disallowance of provision for audit fee: a) The Learned Assessing Officer ('Ld. AO') erred in disallowing the provision for audit fees on account of nondeduction of tax at source in AY 2010-11. b) Further, the Ld.AO ought to have observed that liability towards audit fee had not crystalized during AY 2010-11 and hence no taxes was ought to be deducted at source on such provisions. c) Notwithstanding the above, the Ld. AO ought to have allowed the provision as deductible expenditure on reversal of such prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the additional ground raised, submitted that during the year under consideration, the provision made towards Audit fees was reversed in the subsequent year and that the disallowance is uncalled for. The Ld.CIT.DR submitted that this issue needs to be verified in detail. We have perused the submissions advanced by both sides in the light of records placed before us. 10. It is a claim of assessee that assessee was disallowed the provision towards audit fee in A.Y. 2010-11 and the same has been reversed in A.Y. 2011-12 which deserves to be allowed. It is also submitted that disallowance of the provisions would amount to double taxation. In the interest of justice, we direct the Ld.AO to verify the details filed by the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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