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depreciation at the rate of 25% for a year. However, since the assessee had used the software for less than 180 days, he therefore allowed depreciation at the rate of 12.5% only at Rs.54,808/- and disallowed the remaining claim of depreciation.

12. In first appeal before the Ld. CIT(A), the assessee claimed that it was entitled to 60% depreciation on the cost of software. However, the Ld. CIT(A) observed that as per Rule 5 of the Income Tax Rules "Computers including software" are eligible for depreciation at the rate of 60%. He interpreted the said Rule as that if the software is purchased along with computer then the depreciation will be allowable at the rate of 60%. However, if only software is purchased separately and independent from computers, then it would fall in the definition of intangible assets being a license to use the said software, hence would be eligible for depreciation at the rate of 25%. He therefore upheld the finding of the AO in this respect.

13. Before us, the Ld. A.R. of the assessee has submitted that the assessee during the year had purchased antivirus software which remains valid for a limited period, hence the assessee as per rules was entitled to claim depreciation at the rate of 60%.

On the other hand, the Ld. D.R. has relied upon the lower authorities.

14. We have considered the rival submissions and have also gone through the records. It may be noted that Rule 5 of the Income Tax Rules, 1962 provides that the depreciation on certain assets is to be calculated as provided in the Appendix-I to the said Rules. A perusal of Appendix-I reveals that "computers including computer software" have been mentioned under the heading "machinery and plant" and the rate of depreciation has been provided under the said rules at the rate of 60%. In note 7 to Appendix-I, 'Computer 10 M/s. Netscribes (India) Pvt. Ltd.