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 ITA Nos. 813 & 987/Ahd/2017          A.Y. 2013-14



16. Ground                   No.2 relates to disallowance of depreciation of

Rs.4,58,137/- on Computer software. The AO disallowed the claim stating that the assessee has only purchased license to use the software and therefore not entitled to claim depreciation at 60%.

16.1 Ld. Counsel submitted that after 1st April, 2003, "computer software" is entitled to depreciation at 60% as per amended provisions of Appendix I of IT Rules, 1962. The rate of 60% applicable in respect of 'computers including computer software' introduced for and from asst. year: 2003-04. It has been classified as a tangible asset w.e.f. 1st April, 2003, under the heading "Plant" in Appendix I to the IT Rules and entitled to depreciation at 60%. Further the expression "computer" has not been defined in the Act. However, it has been defined by under section 2(1)(i) of the Information Technology Act, 2000. As per the said Act, "computer" means any electronics, magnet, optical or other high speed data processing device or system which performs logical, arithmetic and memory functions by manipulation of electronics or magnetic or optical impulses and includes all "input-output processing", "storage", "computer software" or "communication facilities" which are "connected or related to the computer" in a "computer system" or "computer network". It may be mentioned that there is no inbuilt system of power supply in the computer.