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2020 (5) TMI 310 - ITAT CHENNAIDepreciation on Digital Content/Animation Software developed - held by assessee as an ‘asset’ which is used in various films by assessee - Eligible to depreciation @ 60% or 25% - definition of computer software - HELD THAT:- The scope of ‘Information Technology Software’ as is referred to in Hon’ble Supreme Court judgment in assessee’s own case [2006 (5) TMI 90 - SUPREME COURT] was in context of Customs Laws which was very vide definition and hence we cannot draw analogy in the 1961 Act read with 1962 Rules. Digital contend developed by assessee can be equated with computer program is far fetched but rather it is a copyrighted material developed by assessee which is stored in computer. This digital content was manipulated by assessee to be used in different films but still it cannot be categorized at higher pedestal of being termed as ‘computer program’ rather it still retains the character of copyrighted material being intangible asset and in our considered view, the assessee is eligible for depreciation @ 25% as these copyrighted material developed by assessee being ‘Digital Content’ which is used by the assessee in various films etc. - Decided against assessee. Disallowance u/s14A r.w.r. 8D(2)(iii) - expenses incurred by assessee in relation to earning of an exempt income - AO disallowed the expenses by invoking Rule 8D(2)(iii) by applying 0.5% of the average investments - HELD THAT:- We find merit in contentions of the assessee that the investments in Indian companies which did not yielded exempt income during the year cannot be included for computing disallowance of expenditure u/s 14A read with Rule 8D of the 1962 Rules and we are restoring the matter back to the file of the AO for verification of the contentions of the assessee and to re-adjudicate the matter on merits in accordance with law. Thus, all those investments in indian companies which did not yielded exempt dividend income during the year shall be excluded while computing disallowance of expenditure u/s 14A read with rule 8D(2)(iii) of the 1962 Rules. Case of ACIT v. Vireet Investment Private Limited [2017 (6) TMI 1124 - ITAT DELHI] is relevant. This ground partly allowed for statistical purposes
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