Toshniwal Instruments (Madras) Pvt Ltd., CHENNAI V. ACIT Corporate Circle 3(1), CHENNAI

ITA 679/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4981 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 26-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO.679/CHNY/2018 / ASSESSMENT YEAR : 2010-2011. M/S. TOSHNIWAL INSTRUMENTS (MADRAS) PVT. LTD, NO.267, KILPAUK GARDEN ROAD, KILPAUK, CHENNAI 600 010. [PAN AAACT 2305A ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(1) CHENNAI 600 034. ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI. R. VIJAYARAGHAVAN, ADV. /RESPONDENT BY : SHRI. CLEMENT RAMESH KUMAR, JCIT. /DATE OF HEARING : 25-07-2018 ! /DATE OF PRONOUNCEMENT : 01-08-2018 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY THE ASSESSEE, WHICH IS DIRECTED AGAINST AN ORDER DATED 01.12.2017 OF LD. COMMISSION ER OF INCOME TAX ITA NO.679/CHNY/2018 :- 2 -: (APPEALS)-11, CHENNAI, IT IS AGGRIEVED THAT LD. CO MMISSIONER OF INCOME TAX (APPEALS) CONFIRMED DISALLOWANCE OF CLAI M OF DEPRECIATION @60% ON COMPUTER SOFTWARE WORTH F13,71,600/- ACQUIR ED BY THE ASSESSEE. 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESS EE HAD PURCHASED A LICENSE TO USE SOFTWARE CALLED MICROSO FT DYNAMICS- AX 2009. AS PER THE LD. AUTHORISED REPRESENTATIVE, AS SESSEE WAS MANUFACTURER OF VACUUM PUMPS AND GAS FLOW METERS AN D SUCH SOFTWARE FOR THE PURPOSE OF ITS BUSINESS. CONTENTI ON OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT ASSESSEE HAD ACQ UIRED ONLY A LICENSE FROM MICROSOFT FOR USING SUCH SOFTWARE. A S PER THE LD. AUTHORISED REPRESENTATIVE, ASSESSEE THOUGH IT WAS ELIGIBLE TO CLAIM EXPENDITURE OF F13,71,600/- INCURRED FOR ACQUIRING THE LICENSE AS A REVENUE OUTGO, HAD TREATED IT AS COMPUTER AND CLA IMED DEPRECIATION @60%. SUBMISSION WAS THAT LOWER AUTHORITIES FELL I N ERROR IN RESTRICTING DEPRECIATION TO 25% DEEMING THE LICENS E TO BE ONLY AN INTANGIBLE ASSET. ITA NO.679/CHNY/2018 :- 3 -: 3. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. ACCO RDING TO HIM, A LICENSE TO USE A SOFTWARE COULD NOT BE BRACKETED ALONGWITH COMPUTER FOR CLAIMING DEPRECIATION AT THE RATE OF 60%. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. RATES ON WHICH DE PRECIATION IS ADMISSIBLE ON DIFFERENT ASSETS IS GIVEN IN NEW APP ENDIX I OF THE INCOME TAX RULES, 1962. ITEM NO. (5) OF THIS TABLE GIVES THE ELIGIBLE RATE OF DEPRECIATION FOR COMPUTER INCLUDING COMP UTER SOFTWARE AT 60%. NOTE 7 GIVEN UNDER THE SAID APPENDIX DEFINES COMPUTER SOFTWARE AS A COMPUTER PROGRAM RECORDED ON ANY DIS C, TAPE, PERFORATED MEDIA OR OTHER INFORMATION STORAGE DEVIC E. ASSESSEE HERE HAD CLAIMED DEPRECIATION ON THE LICENSE TO USE THE MICROSOFT SOFTWARE CALLED MICROSOFT DYNAMICS- AX 2009 CONSIDERING IT A S A COMPUTER SOFTWARE, COMING WITHIN THE ABOVE DEFINITION. THERE CAN BE NO DISPUTE THAT EVEN IF IT WAS ONLY A LICENSE IT STILL WAS CO MPUTER PROGRAM RECORDED ON AN INFORMATION STORAGE DEVICE. IN OUR OPINION, ASSESSEE WAS ELIGIBLE FOR DEPRECIATION @60%. WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DIRECT THE LD. ASSESSING OFF ICER TO ALLOW ITA NO.679/CHNY/2018 :- 4 -: DEPRECIATION @60% ON 13,71,600/-, BEING THE COST INCURRED FOR PURCHASING MICROSOFT DYNAMICS- AX 2009. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS A LLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 1 ST DAY OF AUGUST, 2018, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED: 01 AUGUST, 2018 KV %& '()( / COPY TO: 1 . / APPELLANT 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF