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2018 (12) TMI 1720 - AT - Income TaxDisallowance on account of depreciation on Computer Software by treating the same as 'intangible assets' - HELD THAT:- It is noticed that as per rule 5 of income tax rules 1962 depreciation allowance u/s. 32 of the income tax act shall be calculated at the percentage specified in the second column of the table in Appendix 1 effective from assessment year 2006- 07 on wards depreciation is to be calculated @ prescribed in new appendix-1 entry at serial no. 5 of part-III (which deals with rate depreciation on machinery and plant) of the said table referred to computer, including computer software and the rate of depreciation prescribed in the said table against this entry is 60% . As per note 7 below the said table “ computer software” means any computer program recorded in any disc, tape, perforated media other information storage device. In the light of the above provision of income tax, we observed that income tax act does not make any difference between the system software and application software, therefore, we justify the decision of ld. CIT(A) in allowing the claim of the assessee of depreciation @ 60% on the computer software. Accordingly this ground of revenue is dismissed. Addition u/s. 145A - AO noticed that assessee has shown amount receivable on account of un-utilized/closing balance on account of MODVAT/CENVAT credit under loan and advances and the same was not included in the value of closing stock - HELD THAT:- Assessee was following similar method in the preceding years and there were notes in the audit report that if the adjustment on account of section 145A was made, there would be no effect on the income. It is noticed that the assessee is following exclusive method of accounting for last many years and all purchases and sales of goods are accounted net of MODVAT including inventory i.e. opening stock and closing stock. On this issue the Hon'ble ITAT Bench of Ahmedabad in the case of Alpanil Industries V. ACIT [2009 (9) TMI 1008 - ITAT AHMEDABAD] for A.Y. 1999-2000 & 2000-2001 has discussed the principle related to valuation of closing stock u/s 145A - As perused the material on record carefully. After considering the finding of the ld. CIT(A) along with judicial finding, we consider that there will be no effect in the taxable profit of the assessee by including the amount of excise duty paid on purchase in the valuation of closing stock of raw material since the assessee was following excusive method of accounting as elaborated in the findings of the Ld.CIT(A), therefore, we do not find any reason to interfere in the decision of ld. CIT(A). Accordingly the appeal of the revenue is dismissed. Addition on account of under valuation of stock - HELD THAT:- Assessee has filed stock statement to the bank reflecting the position of closing stock as on 24th March, 2009. However, in the balance sheet of the assessee, the position of stock was shown as on 31st March, 2009. The assessing officer has not disproved these material facts that the difference in the valuation of closing stock was arisen because of difference in the dates as per which closing stock was reflected in the bank statement and in the books of account of the assessee. Addition on account of foreign travelling expenses - HELD THAT:- As observed that complete details of employees who traveled abroad, countries visited, nature and amount of expenses and purpose of travel but provided to the assessing officer therefore the assessing officer was not justified in disallowing the expenses merely on the suspicion without considering the evidences placed on record and without disproving the details and evidences submitted by the assessee. In the light of the above facts and circumstances, we are inclined with the finding of learned CIT appeal. therefore, we do not find any merit in the appeal of the revenue and the same is dismissed. Addition on account of commission expenses - HELD THAT:- It is noticed that assessee has submitted details of commission paid to various dealers as overriding commission in accordance with the sales promotion. It is also noticed that assessee has paid commission to various dealers for extra efforts in procuring orders from customers after verification and approved by the Marketing Manager of the assessee company. It is noticed the assessing officer has not made any inquiries u/s 133(6)/ 131 of the act to disprove the genuineness of the expenditure claimed by the assessee in the form of overriding commission paid to the various dealers for the extra efforts made in procuring the orders from the customers. Therefore we don't find error in the decision of learned CIT(A), therefore the ground of appeal of the revenue is dismissed Addition on account of expenditure on purchase of computer software - allowable revenue expenses - HELD THAT:- We have noticed that depreciation on the computer software is allowable @ 60% as adjudicated supra in this order, therefore, we are inclined with the ld. CIT(A) for allowing the depreciation @ 60%. Therefore, appeal of the revenue is dismissed on this issue. Addition on account of foreign exchange fluctuation - HELD THAT:- Assessee has submitted the corresponding detail demonstrating that the amount computed by way of difference between rate at which the contract was entered into and the rate on the last day of the previous year has been debited in respect of forward contract entered into by the assessee for underlying export transaction which was outstanding as on 31st March, 2009. Similarly, the amount in respect of reinstatement of export receivable and creditors for import as on 31st March, 2009 were reinstated at the foreign exchange rate prevailing on 31st March, 2009. It is also noticed that the foreign exchange rate differences had been incurred in the ordinary course of business in accordance with the consistent accounting policy followed by the company which was in compliance to the accounting standard 11 issued by the ICAI. It is also noticed rule 115 of the income tax rule provides that all the assessee should convert their foreign exchange assets into Indian rupees on the last day of previous year TDS u/s 195 - Disallowance u/s. 40(a)(ia) - payments were made for repairing charges/scraping of goods which was sold to the said non-residents - HELD THAT:- The assessee has made payment to non-resident for two purposes towards charges for repairs carried out by such companies outside India and towards claim for goods rejected and scrapped by such companies due to inferior quality/manufacturing defects. It is observed that assessee has actually exported goods but there were certain manufacturing defect in such goods , therefore, these goods were required to be repaired in some cases and in some cases the same were to be scrapped. In the light of the above facts and circumstances it clearly demonstrated that the assessee has made payment as reimbursement to its concerned customer, therefore, we consider that no part of amount paid to such parties was chargeable to tax in India in their hand, therefore, we are inclined with the findings of ld. CIT(A) of deleting the impugned additions. Accordingly, the appeal of the revenue is dismissed.
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