NAVNEET PUBLICATION (INDIA) LTD, MUMBAI V. ADDL CIT RG 7(1), MUMBAI

ITA 1137/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8933 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 17-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 11-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P N DEVDASAN
• Assessee Lawyers: TORAL JITESH SHAH
• Keywords: Depreciation
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI R.V. EASWAR, PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 1137/MUM/2010 (ASSESSMENT YEAR: 2005-06) M/S. NAVNEET PUBLICATIONS (I) LTD. ADDL. CIT, RANGE 7(1) NAVNEET BHAVAN, OFF BHAVANI AAYAKAR BHAVAN, M.K. RO AD SHANKAR ROAD, DADAR (W) VS. MUMBAI 400020 MUMBAI 400028 PAN - AAACN 1243 K APPELLANT RESPONDENT APPELLANT BY: MS. TORAL JITESH SHAH RESPONDENT BY: SHRI P.N. DEVDASAN O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-XIII, MUMBAI DATED 23.10.2009. 2. ASSESSEE HAS RAISED THE FOLLOWING TWO GROUNDS: - 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE DE PRECIATION ON COMPUTER SOFTWARE IS ALLOWABLE @25%, BEING INTANGIB LE ASSETS AND NOT @ 60% AS CLAIMED. YOUR APPELLANT PRAYS THAT THE LEARNED CIT(A) ERRE D IN CONCLUDING THAT ONLY SOFTWARE PURCHASED ALONG WITH COMPUTERS IS ELIGIBLE FOR DEPRECIATION @60%. YOUR APPELLANT PRAYS BEFORE YOUR HONOUR THAT DEPR ECIATION ON COMPUTER SOFTWARE BE ALLOWED AT THE RATE OF 60%. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE EXCLU SION OF EXPORT INCENTIVES FROM THE ELIGIBLE PROFITS FOR COMPUTING DEDUCTION U/S. 80IB. YOUR APPELLANT PRAYS THAT THE EXPORT INCENTIVES A RE DERIVED FROM THE INDUSTRIAL UNDERTAKING AND HENCE SHOULD NO T BE EXCLUDED FRO THE PURPOSE OF COMPUTATION OF DEDUCTIO N U/S 80IB. 3. WITH REFERENCE TO GROUND NO. 1, THE A.O. NOTICED TH AT THE ASSESSEE HAS PURCHASED THE COMPUTER SOFTWARE DURING THE YEAR TO AN EXTENT OF ` 17,82,248/- AND CLAIMED DEPRECIATION AT 60%. FOR TH E REASONS STATED IN ITA NO. 1137/MUM/2010 M/S. NAVNEET PUBLICATIONS (I) LTD. 2 A.Y. 2004-05 IN WHICH THE PURCHASES OF SOFTWARE WAS ALLOWED DEPRECIATION AT 25% AS AGAINST 60% CLAIMED, THE A.O. REWORKED OU T THE DEPRECIATION CLAIM BOTH ON WDV AND THE NEW ADDITIONS DURING THE YEAR AND ALLOWEED DEPRECIATION AT 25% ON THE SOFTWARE THEREBY DISALLO WING THE DEPRECIATION OF ` 11,67,646/-. THE CIT(A) CONFIRMED THE SAME FOLLOWIN G HIS ORDER FOR A.Y. 2004-05. 4. AT THE OUTSET IT WAS SUBMITTED THAT THIS ISSUE WAS CONSIDERED BY THE ITAT IN ITA NO. 1205/MUM/2009 FOR AY 2004-05 WHEREI N THE CLAIM OF DEPRECIATION ON SOFTWARE WAS CONSIDERED AND ASSESSE ES CLAIM WAS ALLOWED. THE RELEVANT PARA OF THE ITAT ORDER IS AS UNDER: - 5. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT ADMITTEDLY THE ASSESSEE WAS HOLDING LIC ENSE TO USE THE SOFTWARE FROM SAP, HENCE, IN FACT THE PAYMENT WAS M ADE NOT FOR THE LICENSE RIGHT BUT ACTUAL USE OF THE SOFTWARE. THE L D. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE HON'BLE SPEC IAL BENCH IN THE CASE OF AMWAY INDIA ENTERPRISES VS. DY. COMMISSIONE R OF INCOME TAX, 111 ITD 112 (DEL.) (SB). PER CONTRA THE LD. DE PARTMENTAL REPRESENTATIVE ARGUED THAT IT WAS NOT A LOADED SOFT WARE IN THE COMPUTER/HARDWARE AND IT WAS IN THE FORM OF A LICEN SE ONLY. AFTER HEARING THE RIVAL SUBMISSIONS WE ARE OF THE OPINION THAT THE ASSESSEE SHOULD SUCCEEDED ON THIS ISSUE FOR THE REASON THAT THE ASSESSEE WAS USING THE SOFTWARE FOR ITS BUSINESS AND THE SOFTWAR E IS AN INTANGIBLE ASSET. IN OUR OPINION THE ASSESSEES CASE IS COVERE D BY THE DECISION OF THE HON'BLE SPECIAL BENCH IN THE CASE OF AMWAY INDI A ENTERPRISE (SUPRA), WE THEREFORE, DIRECT THE ASSESSING OFFICER TO ALLOW DEPRECIATION @60% ON THE AMOUNT OF RS.54,89,280/- W HICH WAS PAID FOR GETTING SAP SOFTWARE. IN THE RESULT, GROUND NO. 1 IS ALLOWED. 5. SINCE THE PRESENT DISALLOWANCE IS ALSO ON SIMILAR F ACTS AND FINDINGS IN AY 2004-05, RESPECTFULLY FOLLOWING THE SAME WE DIRE CT THE A.O. TO ALLOW DEPRECIATION AT 60% AS CLAIMED. GROUND NO. 1 IS CON SIDERED ALLOWED. 6. GROUND NO. 2 IS WITH REFERENCE TO THE CLAIM OF 80IB ON EXPORT INCENTIVES LIKE DEPB. 7. THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY SUBMITS THAT THIS ISSUE STANDS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF IN LIBERTY INDIA VS. CIT (2009 ) 317 ITR 218. AS THE ISSUE STANDS COVERED AGAINST THE ASSESSEE BY THE DECISION CITED SUPRA, GROUND NO. 2 IS DISMISSED. ITA NO. 1137/MUM/2010 M/S. NAVNEET PUBLICATIONS (I) LTD. 3 8. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON AT THE TIME O F HEARING ON 17 TH JANUARY 2011. SD/- SD/- (R.V. EASWAR) (B. RAMAKOTAIAH) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 17 TH JANUARY 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XIII, MUMBAI 4. THE CIT VII, MUMBAI CITY 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.