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6 From the Schedule of fixed asset it was observed by the AO that the assessee has shown "Computer software" under the head "Intangible assets". However the assessee had claimed depreciation on same @60%.

Hence, assessee was requested to explain as to why the higher rate of depreciation on computer software should not be disallowed. In response to the same assessee submitted as under:

"The computer software has been classified as intangible assets in the books of account as per the requirement of AS-26 on intangible assets. The computer software is included in the entry of computers at entry no.5 of para III of Part A of the depreciation appendix in the income tax rules. The software has also been defined in note no.7 to the said appendix. The depredation appendix specifically includes computer software as part of computers eligible for depreciation at 60% and the same is not a part on intangible assets in the depreciation appendix. Therefore, the company has rightly claimed depreciation on software at the rate of 60%. The CIT appeals has deleted the addition. The addition of Rs 352764/- during the year is of application software."