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40. Corporate tax issues arising in the appeal: Ground No. 11 re. restriction of depreciation claimed on computer software: In this ground, the assessee is challenging the action of the Revenue in restricting the depreciation claimed on computer software at 25% instead of 60%, by holding that 'computer software' is license eligible for depreciation at the rate of 25%. The Respondent arrived at this conclusion by holding that under Appendix-1 to the Income-tax Rules, 1962 ("the Rules"), what is eligible for depreciation at the rate of 60% is 'computer including computer software' indicating that the computer software which is eligible for depreciation at 60% is the software which is embedded in the computer. The DRP upheld the action of the AO.

- ACIT v. Zydus Infrastructure (P.) Ltd. ([2016] 72 taxmann.com 199 (Ahmedabad - Trib.)).

42. We have considered the submission and we find that the ITAT, Chennai, in the case of Computer Age Management Services (supra) dealt with identical issue and has held as follows:

"18. Arguing on fourth common ground, which is on restriction of the claim of depreciation on software, ld. Authorised Representative submitted that ld. Assessing Officer had restricted the depreciation to 25% against 60% available for computer systems. According to ld. Authorised Representative, what was acquired were only software license which enabled the assessee to use the applications. According to him, by virtue of definition of software given in New Appendix I of Income Tax Rules, computers including computer software were eligible for 60% depreciation.
What we find from the above description is that all these were nothing but items in the nature software or software applications. Entry No.5 coming in III of Part A in New Appendix I clearly says that computer included computer software. Note 7 of the Appendix, defines computer software as any computer programme recorded in any information storage device. We are therefore of the opinion that assessee was eligible to claim depreciation at the rate of 60% on the above items.
Orders of the lower authorities on this issue are set aside and the claim is allowed. Ground No.4 of the assessee stands allowed."