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2016 (9) TMI 1617 - AT - Income TaxDepreciation on computer softwares - forming part of the block of assets of computers at the rate of 25% OR rate of 60% claimed by the appellant - restricting the claim of depreciation on computer softwares forming part of the block of assets - HELD THAT:- ‘Software’ consists of the programs and application that run on computers, and computer including computer software on which rate of depreciation has been prescribed as 60%. And the said rates are effective from Assessment Year 2003-04 wherein the “Computer Software” has already been included in the category of “Computer” for the purpose of allowing depreciation at the higher rate of 60%. As per the provisions of Income Tax Act are considering up to Assessment Year 2002-03 “ computers” were eligible for depreciation @ 60% from Assessment Year 2003-04, benefit of such enhanced depreciation rate has been extended also to “Computer Software”. In this respect our attention was drawn to note no. 7 to Appendix I as applicable from Assessment Year 2003-04 which defines “Computer Software to mean any computer programme recorded on any disc, type, perforated media or other information storage device. Thus for Income Tax purposes “software” has to be shown under the block of assets ‘computers including computer software’. We are also of the view that “Computer Software” cannot work in isolation and also working on computer system, without a software would be futile and even computer software which is installed on computer system separates the computer hardware and being on integral part is eligible for depreciation. Amway India [2008 (2) TMI 454 - ITAT DELHI-C] wherein it has observed that ‘computer’ and ‘computer software’ are two different item of assets. With effect from 1st April, 2003. ‘computer software’ has been classified as a tangible asset under the heading “Plant” in Appendix I to the IT Rules entitled to depreciation at 60% from 1st April 2003. Thus we allow this ground raised by the assessee, and AO is directed to re-compute assessment by giving depreciation @ 60% to the assessee. - Decided in favour of assessee.
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