9911796707
TMI Blog2024 (8) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The brief facts of the case, as emanating from the record, are that the assessee is a private limited company engaged in the business of employment background screening services. For the year under consideration, the assessee filed its return of income on 29/11/2017 declaring a total income of Rs. 25,01,35,460 under the normal provisions and book profit under section 115JB of the Act at Rs. 8,10,93,284. The return filed by the assessee was selected for complete scrutiny and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. The Assessing Officer ("AO") vide order dated 27/12/2019 passed under section 143(3) of the Act assessed the total income of the assessee at Rs. 36,72 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be updated with new versions in view of the technological advancements that keep coming and have to be uninstall/upgraded within a very short period of time. Therefore, the software payment towards license fees is charged by the service provider on periodical basis. Accordingly, as per the assessee, it has not obtained any enduring benefit from the use of the aforementioned software, and expenditure incurred is recurring in nature. The AO, vide assessment order, did not agree with the submissions of the assessee, and held that the expenses claimed by the assessee are capital expenditure, as it is an "intangible asset". Accordingly, the AO disallowed the claim of software license fees and added the same to the total income of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining any right qua the transfer of the software. Then, obsolescence also does not prove any enduring benefit to the assessee. It is not the case of the Department that the longevity of the software is any more than two years. Rather, it has not been disputed that all but one of the items of expenditure have a life much less than two years. Apropos the functionality test, the Department again does not refute the fact that the software license was acquired by the assessee to carry out its routine operations in a more efficient manner. Further, the fixed capital of the assessee has not been shown to have undergone any change as a consequence of the acquisition of the license. In fact, it was either an antivirus software, or a software for f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid decision rendered in assessee's own case and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the order passed by the coordinate bench of the Tribunal in assessee's own case cited supra, we find no infirmity in the impugned order in treating the software license expenditure as revenue in nature. As a result, ground no. 1 raised in Revenue's appeal is dismissed. 8. The issue arising in ground no. 2, raised in Revenue's appeal, pertains to deletion of disallowance under section 40(a)(ia) of the Act. 9. Having considered the submissions of both sides and perused the material available on record, we find that during the assessment proceedings vide notice dated 23/12/2019 issued under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade under Section 40(a)(ia) of the Act since TDS has been duly deducted and deposited into the Government treasury by the Appellant as per the applicable provisions of the Act. 6.2 It is submitted that during the year under consideration, the Appellant had made payments of Rs. 3,08,24,877 under Section 1940 of the Act and Rs. 27,27,23,542 under Section 194J of the Act aggregating to Rs. 30,35,48,419, which are liable to tax deduction at source under the said respective sections. The Appellant had duly complied with the provisions of Section 194C and 194J of the Act on the above expenditure; consequently, deducted and deposited the applicable TDS to the government treasury, except to the short deduction as mentioned in the below paragraph. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Appellant in the return of income in relation to the said short-deduction of TDS." 11. The learned CIT(A), vide impugned order, after considering the aforesaid submissions of the assessee directed the AO to delete the addition of Rs. 9,10,64,526. 12. In the present case, it is undisputed that the assessee made a payment of Rs. 3,08,24,877 and Rs. 27,27,23,542 to the contractors and fee for professional or technical service, which were subject to TDS under section 194C and 194J, respectively. The assessee admitted that out of the aforesaid amount, on an amount of Rs. 98,363 the tax was deducted at a lesser rate than what was prescribed in the statute, by an amount of Rs. 629 and Rs. 6,591 under section 194C and 194J, respectively. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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