Texas Instruments (India) Pvt. Ltd. Vs ACIT (ITAT Bangalore)
Background and Assessment
Texas Instruments (India) Pvt. Ltd., a wholly owned subsidiary of Texas Instruments Incorporated, USA, is engaged in software development for creating semiconductor devices. For AY 2009-10, it claimed a deduction of Rs.77,851,741 under section 80JJAA of the Income-tax Act, 1961. The Assessing Officer made several corporate-tax disallowances and a transfer-pricing adjustment of Rs.1,209,859,772. The assessee subsequently withdrew its grounds concerning the TP adjustment after accepting the final resolution under the MAP proceedings between its parent company and the US Competent Authority.
The CIT(A) allowed the data automation expenses of Rs.27,98,37,005 and the section 40(a)(i) claim of Rs.5,77,61,289 subject to verification, while sustaining the remaining disallowances. The Revenue appealed against the deletion of the data automation disallowance, while the assessee challenged the disallowances sustained by the CIT(A).
Data Automation Expenses
The assessee incurred data automation expenses towards EDA software used for product design and verification. The software was licensed by the US parent and made available to the assessee, with charges allocated based on actual usage. The Tribunal followed its earlier decision in the assessee’s own case, holding that the assessee acquired only the right to use the software and no right or interest in the EDA tools.
