Deduction allowable on provision for software expenses

Infosys BPM Ltd. Vs DCIT (ITAT Bangalore)

Conclusion: Provision for software expenses could not be disallowed by considering it as contingent liability as assessee was required to make provision for all known liabilities and losses as per accounting standards prescribed by ICAI and also by the Central Government under the Income Tax Act even though the amount could not be determined with certainty.

Held: Assessee had claimed deduction of Rs.24.97 crores as expenses incurred towards software purchases which included provision

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