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TMI Blog2017 (2) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... authority and accordingly the same is confirmed. Disallowance towards software expenses - Held that:- The expenditure was for the purpose of utilising the application service and compensation received from Danfoss A/S, Denmark. The CIT(Appeals) by placing his reliance on the order of this Tribunal in the assessee's own case, for the assessment years 2005-06, 2007-08 and 2008-09, allowed the claim of the assessee. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Payment made to AE for imparting training and marketing skills to the employees of the assessee - Held that:-Since the Ld.counsel for the assessee has very fairly admitted before this Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative, submitted that the first issue arises for consideration for assessment year 2004-05 is with regard to transfer pricing adjustment of ₹ 30,89,628/-. According to the Ld. D.R., the assessee is engaged in the business of purchase and sale of components of refrigeration, industrial controls, frequency converters, etc. In the course of business activity, the assessee has also imported some of the components from Danfoss Associate Enterprises and sells finished products to the industrial customers. According to the Ld. D.R., the Assessing Officer has not made any adjustment to the capacity utilization. The idle capacity of the assembly unit was 7200 units. According to the Ld. D.R., the capacity adjustment has to be made before bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of under utilization of the capacity. According to the Ld. counsel, trading and assembling operations should be aggregated and tested for arm's length price. Therefore, according to the Ld. counsel, the CIT(Appeals) has rightly found that the idle capacity adjustment has to be made. 6. We have considered the rival submissions on either side and perused the relevant material available on record. With regard to adjustment of idle capacity and aggregation of transactions allowed by the CIT(Appeals), it is not disputed that the Transaction Net Margin Method is a most appropriate method for the purpose of making adjustment on the transfer pricing matters. The Transfer Pricing Officer after relying on five comparables, determined the arith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal had an occasion to consider the same. By an order dated 9th May, 2012 and 28th June, 2013, the assessee treated software expenditure as revenue in nature. The CIT(Appeals) by placing his reliance on the assessee's own case, directed the Assessing Officer to delete the addition towards capitalization of software expenses. 10. We have considered the rival submissions on either side and perused the relevant material available on record. The assessee claims ₹ 33,63,810/- towards software expenses. It is not in dispute that MATFLOW software was used by the assessee-company to handle electronic ordering, materials management, logistics, inventory, accounts receivables and payables, etc. MATFLOW software, in fact, is acting as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t justified in allowing the claim of the assessee. Accordingly, the order of the CIT(Appeals) is set aside and that of the Assessing Officer is restored. 14. The next ground of appeal is with regard to software expenses. 15. We have heard the Ld. Departmental Representative and the Ld.counsel for the assessee. The CIT(Appeals), in fact, by placing reliance on the order of this Tribunal in the assessee's own case for assessment years 2005-06, 2007-08 and 2008-09, allowed the claim of the assessee. Since the CIT(Appeals) placed reliance on the order of this Tribunal in the assessee's own case, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. 16. Now ..... X X X X Extracts X X X X X X X X Extracts X X X X
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