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2017 (5) TMI 1717 - ITAT MUMBAIAssessment of assessee insurance company - allowability of prior period expenditure - Whether only an expenditure inadmissible under Sections 30 to 43B of the Act, can be adjusted to the balance of the profits disclosed in the Account? - HELD THAT:- It is evident, assessee has not claimed any deduction of prior period expenditure as inferred by the AO. On the contrary, the assessee has voluntarily added back part of the expenditure to the total income, following the consistent accounting method adopted by it. It is also evident that assessee is following similar method of accounting from earlier assessment years and offered similar income on account of adjustment of prior period income and expenditure and the AO in assessments completed u/s. 143(3) has accepted non only such accounting treatment given by the assessee but also the income offered. Therefore, when the assessee has not claimed any deduction on account of prior period expenditure by debiting it to the profit & loss account, the disallowance made by the AO is totally unjustified. Therefore, we direct deletion of the amount from the income of the assessee. The ground raised by the assessee is allowed and that of the department is dismissed. Disallowance made u/s. 14A - HELD THAT:- As relying on case of ICICI Prudential Insurance Company Ltd. [2012 (11) TMI 13 - ITAT MUMBAI] held when the income of the assessee as well as the expenditure are governed by specific provision which have an overriding effect then it is not open for the AO to invoke the other provisions of the Act for carrying out the disallowance of adjustment in the income. Thus, we hold that no disallowance u/s 14A can be made in the case of the assessee and hence grounds raised by assessee allowed. Depreciation on computer software - HELD THAT:- There is no dispute to the fact that the assessee has acquired software and installed them in its computer. The AO has denied assessee’s claim of depreciation only for the reason that the payment to be made for the software has been deferred to subsequent assessment year as per license agreement. In our considered opinion, that cannot be a valid reason to disallow assessee’s claim of depreciation, once the assessee has acquired the asset and used it for the purpose of its business. The factual finding of the learned CIT(A) that, assessee has in fact acquired the software and installed in its computers has not been controverted by the learned DR. No infirmity in the order of the learned CIT(A) in allowing assessee’s claim of depreciation, since, the assessee is otherwise eligible to claim depreciation on computer software under the provisions of the Act. - Assessee appeal allowed.
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