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33 ITA Nos. 302 & 615/Del/2015

Exl Service.Com (India) Pvt. Ltd.

23. Next issue vide Ground No. 11 relates to the disallowance of differential depreciation of Voice Recording Software License.

24. The fact related to this issue in brief are that the AO in the draft assessment order observed that the assessee had claimed depreciation @ 60% on Voice Recording Software License. The AO was of the view that the admissible depreciation on licenses was @ 25% instead of 60% claimed by the assessee. Thereafter, the assessee raised objection before the ld. DRP and stated that nomenclature "license" in respect of computer software acquired during the year indicates that the software has been acquired for a specified period of time. Therefore, the depreciation ought to have been allowed @ 60% under the head computer including computer software, as per the provisions contained in Rule 5 of the Income Tax Rules, 1962 effective from 01.04.2003. The reliance was placed on the following case laws:

Ø Amway Enterprises Vs DCIT (2008) 111 ITD 112 Ø ACIT Vs Globe Capital Market Ltd. in ITA No. 2926/Del/2012
25. The ld. DRP after considering the submissions of the assessee observed that the rate of depreciation of computer including computer software is 60% but the rate of depreciation on intangible assets covering the license is 25%. It has further been observed that the assessee had acquired license on Voice Recording Software.

Therefore, the allowable rate of depreciation is 25% only.