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TMI Blog2017 (5) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... efore should not be added to the total income of the assessee. In our opinion, this matter requires fresh verification at the end of the AO and therefore the same is being remanded to the file of the AO - matter on remand. Advances written off under the head computer expenses - disallowance - Held that: - the assessee has given advances for purchase of computer software which was to be used by the assessee for the purpose of carrying is business smoothly and more efficiently. We find that now it is settled legal position of law that any advances or any expenditure incurred on computer software to be used for the purpose of business were to be in the nature of business expenditure and has to be written of in the year of purchases - amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO found during the course of assessment proceedings that the assessee has expended ₹ 45,69,240/- on account of repairs and renovation pertaining to furniture and fixtures and building out of which an amount of ₹ 31,53,404/- have been capitalised spent on furniture and fixtures which were duly capitalised and ₹ 14,15,836/- spent on buildings and other works has been claimed as a revenue expenditure. According to the AO, the said expenses were incurred on the demolition and construction of wall, construction of new plumbing work, construction telephonic operator cabin, construction of new water supply pipes, telephonic networks etc, which was of the capital nature and accordingly he disallowed and added the same to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd direct the AO to delete the addition. Ground no.1 is allowed. 7. In ground no.2, the assessee raised the issue of confirming the addition of ₹ 44,72,579/- on account of unclaimed credit balances by the ld.CIT(A) as made by the AO. 8. A perusal of page 18 of the paper book reveals that the assessee has received unpaid insurance claim, recoveries from surety and excess recovery. The AO disallowed the same and added to the total income of the assessee by holding that the balances appearing in various account as stated below are slow moving accounts : S.No. Account head Amount outstanding 31.3.2006 In Rs. Amount outstanding 31.3.2007 In Rs. Amount pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e result, this ground is allowed for statistical purposes. 10. The issue raised in the third ground of assessee s appeal is against the confirmation of ₹ 23,14,000/- by the ld.CIT(A) as made by the AO in respect of disallowances of claim of advances written off under the head computer expenses, as non recoverable which were given for development for software. The AO disallowed and added the same by observing that the assessee has given advances for development of software which was capital asset and loss on account of advance would be a capital loss and moreover the assessee also did not make any effort to recover the same and hence the same was not allowable. 11. In the appellate proceedings, the ld.CIT(A) also dismissed the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suggests that the appellant has filed arbitration towards the said amount before the arbitrator, which is evident from the Annexure VI of the appellant submission. In these all facts and submission available on record, I consider it proper and appropriate to hold that the A.O. 's action was completely justified and correct, while making the aforesaid addition. Accordingly appellant s this ground of appeal is dismissed 12. We have carefully considered the rival submissions and perused the material placed before us including the impugned orders. We find that the assessee has given advances for purchase of computer software which was to be used by the assessee for the purpose of carrying is business smoothly and more efficiently. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Held, (i) that the Tribunal in the assessee s own case for the assessment year 2001-02 had allowed the software expenditure as revenue expenditure finding that software did not form part of the profit-making apparatus of the assessee. Further, it held that the business of the assessee was that of manufacturing of telecommunication and power cable accessories and trading in oil retracing system and other products and the software was an enterprise resource planning package and, hence, it facilitated the assessee's trading operations or enabled the management to conduct the assessee's business more efficiently or more profitably TAXPUNDIT.ORG 4 ITA No. 3650/Mum/2013 National Securities Clearing Corpn.Ltd. Asst. Year 2007-08 b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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