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2.2 During assessment proceedings, it transpired that the assessee purchased certain software from a related entity within the meaning of Section 40A(2)(b) namely Verixo Technologies Pvt. Ltd. The assessee, while furnishing purchases invoices, submitted that it had purchased software from the said entity for resale in the normal course of business. These software was in the nature of Linux Version-1, VMS Ent./Std.

M/s. Priya Limited Assessment Year :2014-15 Addition, Re purposing software etc. which was stated to be purchased at rates ranging from Rs.1000/- to Rs.1600/-. However, finding the rates to be excessive and unreasonable and observing that Linux was free and open-source software, Ld. AO disallowed the same.

3. The assessee agitated the same with detailed submissions before Ld. first appellate authority vide impugned order dated 03/10/2017 wherein it was observed that the assessee had not claimed the expenditure since there was debit of Rs.86.49 Lacs by way of purchase of software and corresponding credit of by way of sale of software for Rs.1.16 Lacs and closing stock for Rs.84.04 Lacs and therefore, the stated disallowance was not justified. Aggrieved, the revenue is in further appeal before us.

4. The Ld. Departmental Representative [DR], supported the stand taken by Ld. AO whereas Ld. Authorized Representative for Assessee, Shri J.P.Bairagra, on the strength of documents placed in the paper- book, submitted that software formed part of closing stock which has been sold in subsequent years as evident from stock records.

5. We have carefully heard the rival submissions and perused relevant material on record including documents placed in the paper- book. Upon perusal, the undisputed position that emerges is the fact that the assessee has purchased the stated software under 6 bills for resale. The part of these software has been sold by the assessee during impugned AY and the balance software have been reflected as Closing Stock under the head electronics which is evident from closing stock details as placed on page no. 100 of the paper-book. The perusal of quantitative details reveals that the assessee is having closing stock of M/s. Priya Limited Assessment Year :2014-15 these items for Rs.84.02 Lacs. Further, the assessee has sold the software in subsequent years which is evident from sales invoices placed on record. So far as the observations that the Linux was free open source software, is concerned, it has been submitted that the said software has been tailor made by the assessee as per the user's requirement and the said fact remain uncontroverted. Another noteworthy point is that fact that nothing has been placed on record by Ld. AO to support the finding that the price paid by the assessee was excessive or unreasonable, in any manner, having regards to the market price of these goods. Under these circumstances, no infirmity could be found in the impugned order.