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The Tax Publishers ACIT v Maersk India (P) Ltd. [ITA No. 3072/Mum/2013, dt. 30-3-2016] : 2016 TaxPub(DT) 2290 (Mum-Trib) Business expenditure allowability of software used for operations Addition of service tax CENVAT credit unavailed under section 145A. *Facts:* Assessee group companies had to pay software charges to its parent which was disallowed by the assessing officer. Such software was used in the day to day operations. On appeal Commissioner (Appeals) allowed the same. On further appeal: Since service tax CENVAT credit can be offset only upon payment of the invoices it was retained in the balance sheet. This was added back under section 145A by assessing officer/Commissioner (Appeals). On further appeal: Held in favour of the assessee: Based on assessees own case on software expense allowability it was held that software expenses were an allowable deduction. Service Tax CENVAT credit cannot be added back under section 145A as there is no inventory valuation applicable in service contracts also the scope of section 145A does not cover services.

The Tax Publishers

ACIT v Maersk India (P) Ltd. [ITA No. 3072/Mum/2013, dt. 30-3-2016] : 2016 TaxPub(DT) 2290 (Mum-Trib)

Business expenditure allowability of software used for operations

Addition of service tax CENVAT credit unavailed under section 145A.

Facts:

Assessee group companies had to pay software charges to its parent which was disallowed by the assessing officer. Such software was used in the day to day operations. On appeal Commissioner (Appeals) allowed the same. On further appeal:

Since service tax CENVAT credit can be offset only upon payment of the invoices it was retained in the balance sheet. This was added back under section 145A by assessing officer/Commissioner (Appeals). On further appeal:

Held in favour of the assessee:

Based on assessees own case on software expense allowability it was held that software expenses were an allowable deduction. Service Tax CENVAT credit cannot be added back under section 145A as there is no inventory valuation applicable in service contracts also the scope of section 145A does not cover services.