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20. Ground no. 27 - The Ld.AR submitted that assessee capitalised the cost of the software amounting to Rs. 27,32,162/- against which depreciation at 60% was claimed.

20.1 The Ld.AO restricted it to 25%. It is a submission of assessee that the software is eligible for depreciation at 60% as it is embedded in the computer. The Ld.AR submitted that in the schedule to Appendix 1 in Part A, plant and machinery includes computers and computer software that is eligible for a 60% depreciation. The Ld.AR in support relied on decision of Hon'ble Bombay High Court in case of CIT vs. I-Flex Solutions Ltd. reported in (2014) 46 taxmann.com 88 and decisions of Hon'ble Delhi Tribunal in case of ACIT vs. Indiabulls Ventures Ltd. by order dated 02/07/2020 in ITA No. 1475/Del/2017 and decision of Hon'ble Mumbai Tribunal in case of Arkema Chemicals India Pvt. Ltd. vs. ACIT reported in (2022) 139 taxmann.com 540.

IT(TP)A No. 3355/Bang/2018 20.2 We have perused the submissions advanced by both sides in the light of records placed before us.

20.3 We note that the recent decision in case of Arkema Chemicals India Pvt. Ltd. vs. ACIT (supra) has considered this issue by observing as under:

"8. We have carefully considered the rival contentions and judicial precedents cited before us. We have also considered the decision of the lower authorities. The issue involved in this appeal is where the assessee has purchased license of ERP SAP, assessee is entitled to the deprecation at the rate of 60 % as covered in New Appendix I of Rule 5 of ITAT Rules in heading of machinery and plant in part A of tangible assets at serial number 5 "computers including computer software (see note 7 below this table ) entitled to depreciation at the rate of 60% or in Para B being licenses, intangible assets entitled to deprecation at the rate of 25%. We find that entry number 5 under Part A allows depreciation at the rate of 60% on computers including computer software. Note-7 states that computer software means any computer programme recorded on any disk, tape, perforated media or other information storage device. Apparently, it does not make any difference between application system software or application software. Further, part B of appendix-1 prescribed deprecation at the rate of 25% on certain intangible assets such as knowhow, patents, copy rights trademarks, license fee, franchise or any other business or commercial right of similar nature. Therefore, the question that arises is the license obtained by the assessee would fall in the definition of computer software so as to make it eligible as tangible asset and then depreciation rate at the rate of 60% will apply. If it is a license only then naturally it would be intangible assets eligible for depreciation at the rate of 25%. We now find that the issue is squarely covered in favour of the assessee by the decision of Hon'ble Madras High Court in the case of Computer Age Management Services (P.) Ltd. (supra) wherein depreciation held that software lincense acquired by the assessee was in nature of application software and is eligible for deprecation at the rate of 60%. The honourable court held as under :--

8. The question would be as to whether the software application, which was acquired by the assessee would fall under Entry 5 of Part A of New Appendix I, which states that computers including computer software are entitled to depreciation at 60%. Note 7 of the Appendix defines the expression 'computer software' to mean any programs recorded on CD or disc, tape, perforated media or other information storage devices.

9. The case of the Revenue is that software are licences and that they are intangible assets and would fall under Part B of New Appendix I, which deals with knowhow, patents, copyrights, trademarks, licenses, francises or any other business or commercial rights of similar nature.

established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, IT(TP)A No. 3355/Bang/2018 though it must give way where the language of the statute is plain and unambiguous.

11. By applying the rule of interpretation, we find that the relevant entry under old appendix I clause III (5) states computers including computer software and the Notes under the Appendix defines 'computer software' in clause 7 to mean any computer program recorded on disc, tape, perforated media or other information storage device. Noteworthy to mention that the notes contained in the appendix, the term 'computer' has not been defined. Therefore, as pointed out by the Division Bench in Bimetal Bearings Ltd. (supra), if a particular article would fall within the description by the force of words used, it is impermissible to ignore the word description. Thus, going by the usage of the equipment purchased by the petitioner, we have to take a decision."