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9. Now we move to the other grounds of appeal raised by the assessee in its appeal filed with tribunal in ITA no. 7196/Mum/2013 for AY 2007-08.

10. Vide ground no. 2. , the assessee has challenged disallowance of expenditure to the tune of Rs. 8,65,032/- on account of expenditure incurred on purchase of application software. These expenses incurred by the assessee towards acquisition of application software were claimed by the assessee as Revenue expenses and cost thereof were charged to Profit and Loss Account . The assessee had claimed before the AO that these application software are used for the purposes of operating computers and were purchased separately and were not supplied by manufacturer alongwith computers. Without prejudice, It was also claimed that the new version of these application software is launched every year in the market and the application software purchased in one year become outdated in the next year. However, these expenses incurred by the assessee towards purchase of application software were disallowed by the AO by treating the same as capital expenditure but the AO allowed depreciation to the tune of 60% for full year while 30% rate of depreciation was allowed for half year, as was prescribed in Appendix-I of the Income-tax Rules, 1962- Computer including Computer Software . The assessee carried the matter in appeal before the Ld. CIT(A) but without success who was pleased to dismiss the appeal of the assessee vide appellate order dated 24.09.2013 passed by learned CIT(A), by holding as under:

It is claimed that Minitabl Software helps in increasing the manufacturing efficiency. It helps extract date from SAP system and compile them in a suitable and presentable manner so as to give meaningful analysis to the management and other personnel, which increases efficient use of resources. It is claimed with respect to second application software namely Iquinox Ver. 6 that all the mails received by an employee on official email ID is first received by server at its head office and it is scanned for viruses and then sent to respective recipient. Thus , it was claimed that it did not give any benefit of enduring nature. With respect to Internet proxy server, it is claimed that it helps to grant/restrict access to various web sites and other online material to different employees of the assessee . It is claimed that this software restricts access to web and it did not create any benefit of enduring nature. It is also claimed that these application software are upgraded in a year time as the old version gets outdated and upgraded versions are required to be purchased again to keep up pace with technological advancement. The details and invoices for these application software are placed in paper book/page 7-12. The AO treated these application software as capital assets and allowed depreciation on rates as prescribed for Computer including Computer Software as prescribed in Appendix-I of the Income-tax Rules, 1962 which was later confirmed by learned CIT(A). We have observed that the tribunal in assessee‟s own case for AY 2004-05 in ITA no. 212/Mum/2008 for AY 2004-05 vide appellate order dated 19.03.2018 has granted relief to the assessee by holding that the expenditure incurred by the assessee toward purchase of application software is revenue in nature and has allowed relief to the assessee by following the decision of Hon‟ble Delhi High Court in the case of CIT v. Amway India Enterprises (2012) 346 ITR 341(Delhi) and CIT v. Asahi India Safety Glass Ltd. (2012) 346 ITR 329 (Del) , by holding as under: