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TMI Blog2018 (9) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... taken valid, legal and plausible view that the deduction is to be allowed from the total income of the unit and not from the total income of the assessee under Chapter IV of the Act and not at the stage of total income under Chapter VI of the Act. So, ground no.1 is determined against the Revenue. Depreciation @ 60% on computer software - Held that:- CIT (A) has granted the relief in accordance with the settled principles of law by holding that, “the E-TDS software, E-scan, antivirus attachment control, ME&S Software upgrade are clearly in the nature of routine software for the purpose of antiviral control and for upgrading the existing software” and held the same to be revenue in nature and on the balance amount of ₹ 16,45,000/- directed the AO to allow the depreciation @ 60%. Assessee has not preferred to challenge the findings given by the ld. CIT (A) by filing cross appeal. No illegality or perversity in the findings of CIT (A), ground is determined against the Revenue. - ITA No.2775/Del./2014 - - - Dated:- 10-9-2018 - Shri N.K. Billaiya, Accountant Member And Shri Kuldip Singh, Judicial Member For the Assessee : Shri Salil Kapoor, Advocate And Ms. Ananya Kapo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has been set off against the other units. Assessing Officer, declining the contentions raised by the assessee, disallowed/made addition on account of disallowance of loss of MEPZ unit to the tune of ₹ 3,90,35,968/-; on account of allocation of head office expenses against MEPZ unit of ₹ 25,48,189/-; on account of allocation of bank and loan processing charges against MEPZ unit of ₹ 36,29,525/-; on account of addition of bad debts written off of ₹ 1,05,902/-; addition u/s 80IA(8) for goods transferred to MEPZ Unit of ₹ 70,13,384/-; disallowance of R D expenses of ₹ 18,47,250/-; disallowance of software expenses of ₹ 17,44,330/- and disallowance of amount on reconciliation of ₹ 11,416/-. 3. Assessee carried the matter by way of appeal before the ld. CIT (A) who has given part relief by partly allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 16.07.2013 by framing the following questions :- (i) Whether Section 10A of the Act is beyond the purview of the computation mechanism of total income as defined under the Act. Consequently, is the income of a Section 10A unit required to be excluded before arriving at the gross total income of the assessee? (ii) Whether the phrase total income in Section 10A of the Act is akin and pari materia with the said expression as appearing in Section 2(45) of the Act? (iii) Whether even after the amendment made with effect from 1.04.2001, Section 10A of the Act continues to remain an exemption section and not a deduction section? (iv) Whether losses of other 10A Units or non 10A Units can be set off against the profits of 10A Units before deductions under Section 10A are effected? (v) Whether brought forward business losses and unabsorbed depreciation of 10A Units or non 10A Units can be set off against the profits of another 10A Units of the assessee. 9. Hon ble Apex Court decided the issue in favour of the assessee by returning following findings :- 17. If the specific provisions of the Act provide [first proviso to Sections 10A(1); 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other head in accordance with the provisions of section 71 of the Act. If after giving effect to the provisions of sections 70 and 71 of the Act there is any income (where there is no brought forward loss to be set off in accordance with the provisions of section 72 of the Act) and the same is eligible for deduction in accordance with the provisions of Chapter VI-A or sections 10A, 10B etc. of the Act, the same shall be allowed in computing the total income of the assessee. 11. Furthermore, after the decision of Hon ble Apex Court in CIT vs. Yokogawa India Ltd. (supra), the Explanation has been added to section 10A of the Act which is extracted as under :- 7. In section 10AA of the Income-tax Act, after subsection (1), the following Explanation shall be inserted with effect from the 1st day of April, 2018, namely:- Explanation.-For the removal of doubts, it is hereby declared that the amount of deduction under this section shall be allowed from the total income of the assessee computed in accordance with the provisions of this Act, before giving effect to the provisions of this section and the deduction under this section shall not exceed such total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;additional customization charges' of ₹ 15,62,125/- for ERP implementation, which were paid to M/s Birla Soft India Ltd. Such a software, which has enduring usage in the appellant's business, cannot be held as a routine software used on licensing basis. Further, the appellant has acquired the right to use this software and hence the same was rightly capitalized by the Ld. AO. Similarly, I also hold that the claim of ₹ 82,947/- in respect for oracle DAV module was also correctly held as capital in nature. However, the E-TDS software, Escan, antivirus attachment control, ME S Software upgrade are clearly in the nature of routine software for the purpose of antiviral control and for upgrading the existing software and hence the same are held as revenue in nature. On the balance amount of ₹ 16.45 lakhs, the AO is directed to allow depreciation allowance @ 60%. 17. We are of the considered view that the ld. CIT (A) has granted the relief in accordance with the settled principles of law by holding that, the E-TDS software, E-scan, antivirus attachment control, ME S Software upgrade are clearly in the nature of routine software for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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