The ACIT,(OSD),Range-1, Ahmedabad V. Bosch Rexroth (India) Ltd., Ahmedabad

ITA 1310/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5943 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 02-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: YOGESH C SHAH
• Assessee Lawyers: P L KUREEL
• Keywords: Capital asset; Depreciation; Revenue expenditure; Capital expenditure
• Section: 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NOS. 1328 & 1310/AHD/2011 (ASSESSMENT YEAR: 2006-07) BOSH REXROTH (INDIA) LIMITED NR. VATVA RAILWAY STATION, VATVA, AHMEDABAD V/S ADDL. COMMISSIONER OF INCOME TAX RANGE-1, AHMEDABAD (APPELLANT) (RESPONDENT) ADDL. COMMISSIONER OF INCOME TAX RANGE-1, AHMEDABAD V/S BOSH REXROTH (INDIA) LIMITED NR. VATVA RAILWAY STATION, VATVA, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACM 9898F APPELLANT BY : SHRI YOGESH C. SHAH RESPONDENT BY : SHRI P.L. KUREEL, SR. D.R. ( )/ ORDER DATE OF HEARING : 31-03-201 4 DATE OF PRONOUNCEMENT : 29 -04-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE TWO APPEALS, ONE FILED BY THE REVENUE AND THE OTHER FILED BY THE ASSESSEE, ARE AGAINST THE ORDER OF CIT(A)-VI, AHMED ABAD DATED 17.02.2011 FOR A.Y. 2006-07. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. ITA NOS. 1328 & 131 0/AHD/201 1 . A.Y. 2006- 07 2 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE B USINESS OF HYDRAULIC EQUIPMENTS & PARTS. IT ELECTRONICALLY FILED ITS RET URN OF INCOME FOR AY 2006-07 ON 21.11.2006 DECLARING TOTAL INCOME OF RS 35,65,68,020/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE A SSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 11.12.2009 AND THE TOTA L INCOME WAS DETERMINED AT RS 37,49,31,655/-. AGGRIEVED BY THE O RDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) V IDE ORDER DATED 17.2.2011 GRANTED PARTIAL RELIEF TO THE ASSESSEE. A GGRIEVED BY THE ORDER OF CIT(A), ASSESSEE & REVENUE ARE NOW IN APPEAL BEFORE US, THE GROUNDS RAISED BY THE REVENUE READS AS UNDER:- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION ON ACCOUNT OF DISALLOWANCE OF DEDUCTION OF PROVISION MADE FOR AFTER SALES SERVICE S AMOUNTING TO RS. 39,75,783/-. 4. ON THE OTHER HAND THE EFFECTIVE GROUNDS RAISED BY T HE ASSESSEE READS AS UNDER;- 2. THE LEARNED COMMISSIONER HAS ERRED IN NOT ALLOW ING DEDUCTION IN RESPECT OF SOFTWARE EXPENSES OF RS.8,73,485 PAID IN RESPECT OF PURCHASE OF OPERATIN G SOFTWARE ALLOWABLE AS REVENUE EXPENDITURE U/S 37 OF THE ACT. IT IS SUBMITTED THAT IT BE SO HELD NOW. 2.1 LEARNED COMMISSIONER HAS ERRED IN NOT ALLOWING THE SAID EXPENSES U/S 37 OF THE ACT BASED ON WRONG INTERPRETATION OF FACTS THAT THESE SOFTWARE A RE PURCHASED AS PART OF COMPUTERS AND THEREFORE REQUIRES CAPITALIZATION AND HENCE ELIGIBLE FOR DEPR ECIATION. LEARNED COMMISSIONER HAS ERRED IN NOT APPRECIATING THE FACT THAT THE SOFTWARE ARE APPLICA TION SOFTWARE AND NOT SYSTEMS SOFTWARE. IT IS SUBMITTED IT BE SO HELD NOW. WE FIRST TAKE UP REVENUES APPEAL (ITA NO. 1310/AHD /2011) 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOT ICED THAT ASSESSEE HAS CLAIMED RS 39,75,783 AS AFTER SALES SERVICES. AO WAS OF THE VIEW THAT IT WAS IN THE NATURE OF PROVISION MADE FOR POS SIBLE FUTURE EXPENSES ON THE SALES MADE DURING THE YEAR AND WERE OF CONTI NGENT IN NATURE AS IT WOULD BE INCURRED ON BREAKDOWN OF MACHINERY IN FUTU RE. HE THEREFORE ITA NOS. 1328 & 131 0/AHD/201 1 . A.Y. 2006- 07 3 HELD THE EXPENSES CLAIMED BY ASSESSEE TO OF CONTING ENT IN NATURE AND ACCORDINGLY DISALLOWED THE SAME. AGGRIEVED BY THE O RDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) D ELETED THE ADDITION BY HOLDING AS UNDER:- 4.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESS MENT ORDER AND APPELLANTS SUBMISSION. THIS ISSUE IS COVERED BY MY OWN ORDER D ATED 13.09.2010 IN APPELLANTS OWN CASE FOR ASSESSMENT YEAR 2004-05. THE RELEVANT PART OF THE DECISION ITS QUOTED BELOW- THE SIMILAR ISSUE IN EARLIER YEARS HAS BEEN DECIDE D IN FAVOUR OF APPELLANT BY CIT APPEAL AS WELL AS ITAT IN THE APPELLANTS OWN CASE. THE CLAIMS HAVE BEEN MADE ON THE BASIS OF PENDING WARRANTY CLAIMS RECEIVED FROM BRANCHES AT THE CLOSE OF THE YEAR. IT IS ALSO SEEN THAT IN EARLIER YEARS, THE C.I.T AP PEALS HAVE DELETED SUCH ADDITION ON THE BASIS OF THE ORDER OF ITAT IN THE APPELLANTS O WN CASE THEREFORE FOLLOWING THE ORDERS OF ITAT AND MY PREDECESSORS, THE ADDITION MA DE BY THE ASSESSING OFFICER IS DELETED SINCE FACTS ARE IDENTICAL IN THIS YEAR ALSO, FOLLOW ING THE AFORESAID DECISION AND ALSO DECISION OF ITAT REFERRED ABOVE, ADDITION MADE BY T HE ASSESSING OFFICER IS DELETED. 6. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, ID D.R. RELIED ON THE ORDER OF AO. ON TH E OTHER HAND, THE LD AR SUBMITTED THAT THE FACTS OF THE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF EARLIER YEARS AND IN A.Y. 02-0 3, ON IDENTICAL ISSUE, THE MATTER HAS BEEN RESTORED TO THE FILE OF CIT(A) BY H ONBLE ITAT (ITA NO. 30/AHD/2003) ORDER DATED 15.05.2009. TO RE-EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF THE DECISION OF TRIBUNAL ( ITA NO. 4158/AHD/1995) IN AY 1992-93. HE ALSO PLACED ON REC ORD THE COPY OF THE AFORESAID DECISION. HE THEREFORE SUBMITTED THAT SINCE THE FACTS OF THE CASE UNDER YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF EARLIER YEARS, FOLLOWING THE DECISION OF TRIBUNAL IN EARLIER YEARS THE MATTER MAY BE REMITTED TO CIT(A). ITA NOS. 1328 & 131 0/AHD/201 1 . A.Y. 2006- 07 4 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL ON RECORD, BEFORE US, LD. A.R. SUBMITTED THAT THE FACTS OF THE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF A.Y. 03-04 AND WHIC H LD. D.R. COULD NOT CONTROVERT BY BRINGING ANY CONTRARY MATERIAL ON REC ORD WE FIND THAT IN ASSESSEES OWN CASE FOR AY 2003-04 IN ITA NO 30/AHD /2007 ORDER DATED 15.5.2009, THE ISSUE OF AFTER SALES SERVICE WAS DECIDED THE CO- ORDINATE BENCH OF TRIBUNAL BY HOLDING AS UNDER:- 4 GROUND NO.2 IN REVENUE'S APPEAL RELATES TO DELETI ON OF THE ADDITION OF RS.83,677/- FOR PROVISION FOR AFTER SALES SERVICE. THE LEARNED AR VEHEMENTLY CONT ENDED THAT THIS ISSUE IS DULY COVERED BY THE DECISION OF THIS TRIBUNAL DATED 29-08-2008 IN ITA N O.2670/AHD/2004. THE LEARNED DR WAS FAIR ENOUGH TO CONCEDE THE POSITION. WE HAVE CAREFULLY CONSIDER ED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THIS TRIBUNAL AS RELIED ON BEFORE US. WE NOTED THAT THIS TRIBUNAL WHILE DISPOSING OF SIMILAR ISSUE IN ITA NO.2670/AHD /2004 HAS HELD AS UNDE R: '2. ADVERTING FIRST TO THE GROUND : NO. L IN THE APPEAL AO DISALLOWED AN AMOUNT OF RS 5,33,700/- ON ACCOUNT OF PROVISION FOR AFTER SALES SERVICE, RELYI NG UPON HIS OWN ORDER FOR EARLIER ASSESSMENT YEARS 1994-95 TO 1998-99. ON APPEAL, THE ID. CIT(A) UPHEL D THE DISALLOWANCE ON THE .GROUND THAT THE TAXPAYER .FAILED TO FURNISH THE BREAK-UP OF THE AMO UNT AND THE VOUCHERS OF 7 THE CLAIM AS ALSO EVIDENC E IN THE FORM OF CORRESPONDENCE IN RESPECT OF THE CLA IM MADE BY THE PARTIES. THE TAXPAYER STATED BEFORE THE ID. CIT(A) THAT IT WAS NOT POSSIBLE TO PRODUCE SUCH EVIDENCE FOR THE YEAR UNDER CONSIDERATION. SINCE THE TAXPAYER FAILED TO SUBSTANTIATE THEIR CLA IM, THE ID. CIT(A) UPHELD ME DISALLOWANCE. 2.1. BEFORE US, THE ID. AR RELIED UPON THE ORDER OF THE ITAT IN EARLIER YEARS AND SUBMITTED THAT THE ISSUE RAISED IN GROUND NO. L RELATING TO DISALLOWAN CE OF RS.5,33,700/- 0N ACCOUNT OF PROVISION FOR AFT ER SALES SERVICE IS COVERED BY THE DECISION DATED 31,0 8.2007 OF THE ITAT IN TAXPAYER'S OWN CASE : FOR THE ASSESSMENT YEAR 1995-96 IN ITA NO. 28201AHDL2002 WH ILE THE ID. DR RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 2.2 WE FIND THAT IN THE AFORESAID ORDER DATED 31.08 .2007, THE ITAT IN TAXPAYERS OWN CASE HELD AS UNDER: '4. THE NEXT GROUND RELATES TO THE DISALLOWANCE OF PROVISION MADE FOR AFTER SALES SERVICE AMOUNTING T O RS,8,44,526/- . IN THIS REGARD THE TRIBUNAL IN AY 1992-93 ITA NO.41 58/AHD/95 VIDE ORDER DATED 18-09- 2001 UNDER PA RA-17 HAS HELD AS UNDER: '17. THE LAST GROUND OF APPEAL IS RELATING TO THE D EDUCTION ON ACCOUNT OF PROVISION FOR AFTER SALES SERVICE. THE AO DISALLOWED THE CLAIM ON THE GROUND THAT THE ACTUAL EXPENDITURE HAS BEEN INCURRED IN THE SUBSEQUENT ASSESSMENT YEAR AND THE DEDUCTION WO ULD BE PERMISSIBLE IN THE YEAR OF CRYSTALLIZATION O F THE LIABILITY ON ACCOUNT OF WARRANTY OBLIGATION. TH E LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NO.2010/AHD/1994 FOR ASSESSMENT YEAR 1991-92 PARA 7 OF THE ORDER. IT HAS FURTHER BEEN CLARIFIED BEFORE US THAT THE PROVISION IS BEING MADE BY THE ASSESSEE ON THE BASIS OF ACTUAL EXPENDITURE INCURRE D IN THE SUBSEQUENT ASSESSMENT YEAR RELATING TO SALES MADE IN THE RELEVANT PREVIOUS YEAR. RESPECTFU LLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA), WE DISMISS THIS GROUND OF APPEAL RAISED BY THE REVENUE. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH E TRIBUNAL WE DO NOT FIND ANY ILLEGALITY OR INFIRMI TY IN THE ORDER OF THE CIT(A) ON THIS ISSUE AND ACCORD INGLY DISMISS THIS GROUND. 2.21 HOWEVER, IN THE CASE UNDER CONSIDERATION, THE TAXPAYER FAILED TO SUBSTANTIATE THEIR CLAIM BEFORE THE LD. CIT(A) DESPITE SUFFICIENT OPPORTUNITY ALLOW ED AND INSTEAD STATED BEFORE HIM THAT IT WAS NOT POSSIBLE TO PRODUCE EVIDENCE IN SUPPORT OF THE CLAI M. BEFORE US, THERE IS NOTHING TO SUGGEST THAT THE PROVISION IS BEING MADE BY THE TAXPAYER ON THE BASI S OF ACTUAL EXPENDITURE INCURRED IN THE SUBSEQUENT ASSESSMENT YEAR RELATING TO THE SALES MADE IN THE R ELEVANT PREVIOUS YEAR, AS WAS THE CASE IN A.Y 1992- 93, MENTIONED BY THE ITAT IN THEIR AFORESAID DECISI ON WHILE THE REVENUE HAVE NOT BROUGHT TO OUR NOTICE ANY CONTRARY DECISION. ACCORDINGLY, IN THE INTERES T OF JUSTICE, WE RESTORE THE MATTER TO THE FILE OF THE LD. ITA NOS. 1328 & 131 0/AHD/201 1 . A.Y. 2006- 07 5 CIT(A) WITH THE DIRECTIONS TO REEXAMINE THE CLAIM I N THE LIGHT OF AFORESAID DECISION OF THE ITAT AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE TAXPAYER TO ESTABLISH THEIR CLAIM AND THEREAFTER ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. THUS, GROUND NO. 1 I N THE APPEAL OF THE TAXPAYER IS DISPOSED OF AS INDICATED HEREINABOVE. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH IS TRIBUNAL, WE RESTORE THE MATTER TO THE FILE OF T HE CIT(A) WITH THE DIRECTION TO RE-EXAMINE THE CLAIM I N THE LIGHT OF THE DECISION OF THIS TRIBUNAL FOR AY 1992-93 IN ITA NB,415&/AHD/1995 AFTER ALLOWING SUFF ICIENT OPPORTUNITY TO THE TAXPAYER TO ESTABLISH THEIR CLAIM AND THEREAFTER ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. THUS, THIS GROUND STANDS ALLOWED FOR STATISTICAL PURPOSES. 9. WE FURTHER FIND THAT THE HON'BLE APEX COURT IN THE CASE OF ROTORK CONTROLS INDIA P LTD VS CIT (2009) 314 ITR 62 (SC) HAS HELD THAT A PROVISION IS RECOGNIZED WHEN (A) AN ENTERPRISE HAS A PRESENT OBLIGATION AS A RESULT OF PAST EVENT (B) IT IS PROBABLE THAT AN O UTFLOW OF RESOURCES WILL BE REQUIRED TO SETTLE THE OBLIGATION; AND (C) A REL IABLE ESTIMATE CAN BE MADE OF THE AMOUNT OF THE OBLIGATION. IF THESE COND ITIONS ARE NOT MET, NO PROVISION CAN BE RECOGNIZED. THUS THE APEX COURT HE LD THAT THE PROVISION HAS TO BE MADE BASED ON THE RELIABLE ESTIMATION OF THE OBLIGATIONS. UNLESS THE THREE CONDITIONS RECOGNISING THE LIABILITY ARE SATISFIED, THE CLAIM COULD NOT BE AUTOMATICALLY ALLOWED AS A PROVISION MADE ON A HISTORICAL TREND. 10. IN THE PRESENT CASE, WE FIND THAT THERE IS NO FINDI NG BY THE LOWER AUTHORITIES ABOUT THE COMPLIANCE BY THE ASSESSEE OF THE CONDITIONS LAID DOWN IN THE AFORESAID DECISION OF APEX COURT. WE TH EREFORE ARE OF THE VIEW THAT IN THE LIGHT OF THE AFORESAID DECISION OF CO-ORDINATE BENCH AND THE DECISION OF APEX COURT IN THE CASE OF ROTORK CO NTROLS (SUPRA) , THE MATTER NEEDS RE-EXAMINATION AT THE END OF CIT(A). W E ACCORDINGLY REMIT THE ISSUE TO THE FILE OF CIT(A) TO RE-EXAMINE THE I SSUE IN THE LIGHT OF THE DECISION OF APEX COURT IN THE CASE OF ROTORK CONTRO LS (SUPRA) AND THE DECISION OF CO-ORDINATE BENCH FOR A.Y. 03-04 AND TH EREAFTER DECIDE THE ISSUE. NEEDLESS TO STATE THAT CIT(A) SHALL GRANT AD EQUATE OPPORTUNITY OF ITA NOS. 1328 & 131 0/AHD/201 1 . A.Y. 2006- 07 6 HEARING TO BOTH THE PARTIES. THUS THIS GROUND OF RE VENUE IS ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . NOW WE TAKE UP ASSESSEES APPEAL (ITA NO.1328/AHD/2 011) 1 ST GROUND IS WITH RESPECT TO NON ALLOWING OF SOFTWARE EXPENSES AS REVENUE EXPENDITURE: 12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO NOTI CED THAT ASSESSEE HAS INCURRED SOFTWARE EXPENSES AMOUNTING TO RS 8,73 ,485/-. AO WAS OF THE VIEW THAT THE EXPENSES WERE OF CAPITAL IN NATUR E AND THEREFORE CANNOT BE ALLOWED AS REVENUE EXPENSES AND ACCORDINGLY DISA LLOWED THE SAME BUT HOWEVER GRANTED DEPRECIATION @ 60% AMOUNTING TO RS 5,24,091/- AND ACCORDINGLY DISALLOWED RS 3,49,384/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE C1T(A). CIT(A) C ONFIRMED THE ORDER OF AO BY HOLDING AS UNDER:- 5.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESS MENT ORDER AND APPELLANT'S SUBMISSION. APPELLANT PURCHASED COMPUTER SOFTWARES FOR THE PURPOSE OF ITS BUSINESS HOWEVER COMPUTER SOFTWARE IS PART OF ASSET USED FOR THE PURPOSE OF BUSINESS. IT HAS BEEN HELD IN SEVERAL DECISIONS THAT COMPUTER SOFTWARE I S A CAPITAL ASSET AND PART OF COMPUTERS FOR THE PURPOSE OF CLAIM OF DEPRECIATION. AS PER DEPRECIATION SCHEDULE, ITEM NUMBER 5 OF MACHINERY AND PLANT SECT ION IS COMPUTERS INCLUDING COMPUTER SOFTWARE ON WHICH 60% DEPRECIATION IS ALLOWABLE. SINCE COMPUTER SOFTWARE IS CLEARLY INCLUDED AS AN ITEM OF ASSET ELIGIBLE FOR DEPRECIATION, CLAIMING THE SAME @ 100 PERCENT IS NOT CORRECT. IN VIEW OF THIS, THE ADDITI ON MADE BY THE ASSESSING OFFICER IS CONFIRMED. 13. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS N OW IN APPEAL BEFORE US. BEFORE US, LD AR REITERATED THE SUBMISSIONS MAD E BEFORE CIT(A) AND ITA NOS. 1328 & 131 0/AHD/201 1 . A.Y. 2006- 07 7 FURTHER SUBMITTED THAT THE SOFTWARE HAVE SHORT LIFE SPAN. HE FURTHER SUBMITTED THAT AGAINST THE TOTAL REVENUE OF MORE TH AN RS 35.65 CRORE, THE EXPENDITURE IS QUITE LOW AND THEREFORE IT CANNOT BE SAID THAT THE MOTIVE OF THE ASSESSEE TO TREAT THE EXPENSES AS REVENUE EXPEN SES WAS TO SAVE THE TAXES. HE FURTHER SUBMITTED THAT THE PRESENT APPEAL BEFORE THE TRIBUNAL PERTAINS TO AY 2006-07 AND IF THE EXPENDITURE IS HE LD TO BE CAPITAL EXPENDITURE, THE RESULTS OF VARIOUS SUBSEQUENT YEAR S WILL HAVE TO BE DISTURBED FOR GIVING THE EFFECT OF DEPRECIATION AND WHICH WOULD NOT HAVE ANY SIGNIFICANT TAX IMPACT. HE THEREFORE SUBMITTED THAT THE EXPENSES BE ALLOWED AS REVENUE EXPENSES. ON THE OTHER HAND THE ID D.R. SUPPORTED THE ORDER OF LOWER AUTHORITIES. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN ADMITTED FACT THAT ASSESSEE HAD INCURRED R S 8,73,485/- ON SOFTWARE EXPENSES AND WAS CLAIMED AS REVENUE EXPENS ES. IT IS THE SUBMISSION OF THE ASSESSEE THAT THE EXPENSES WERE F OR THE PURCHASE OF SOFTWARE APPLICATION HAVING A SHORT LIFE SPAN. AO H AS CONSIDERED THE EXPENSES AS CAPITAL EXPENDITURE AND ELIGIBLE FOR DE PRECIATION @60% AND GRANTED DEPRECIATION OF RS 5,24,091/- AND THEREBY M ADE A DISALLOWANCE OF RS 3,49,384/-. IN THE PRESENT CASE, THE INCURRING O F EXPENSES HAS NOT BEEN DISPUTED BY THE REVENUE. IT IS ALSO A FACT THAT THE MATTER PERTAINS TO AY 2006-07 AND IF THE IMPUGNED EXPENSES IS CONSIDERED TO BE CAPITAL EXPENDITURE, THE ASSESSEE WILL HAVE TO BE GRANTED D EPRECIATION @ 60% ON WDV BASIS IN A.Y. 06-07 AND ALSO IN SUBSEQUENT YEAR S. THE DEPRECIATION OF WDV FOR SUBSEQUENT YEARS WILL WORK OUT TO RS. 2, 09,630/- (FOR A.Y. 07-08), RS. 83,854 (FOR A.Y. 08-09), RS. 33,542(FOR A.Y. 09-10) AND SO ON. CONSIDERING THE TOTALITY OF THE FACTS, THE TOTA L TAXABLE INCOME OF RS ITA NOS. 1328 & 131 0/AHD/201 1 . A.Y. 2006- 07 8 35.85 CRORE AS DETERMINED BY THE AO, THE CHANGES TH AT WOULD BE REQUIRED TO BE MADE IN SUBSEQUENT ASSESSMENTS ORDERS IF THE DEPRECIATION IS TO BE ALLOWED IN ALL SUBSEQUENT YEARS AND THE PECULIAR FA CTS OF THE CASE, WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE BE ALLOW ED IN THE PRESENT CASE. WE MAY HOWEVER ADD THAT THE ALLOWANCE OF THE EXPEND ITURE IN THE PRESENT CASE SHOULD NOT BE CONSIDERED AS A PRECEDENCE FOR A LLOWANCE OF THE EXPENDITURE. THUS THESE GROUNDS OF THE ASSESSEE ARE ALLOWED. 15. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 29 - 04 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD