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2019 (2) TMI 37 - AT - Income TaxDisallowance u/s 14A read with Rule 8D - Held that:- Except for investment made in a trading field, there is no question of any exclusion while calculating the disallowance u/s.14A of the Act. It is not disputed that none of the investments of the assessee were held as stock in trade. Accordingly, we are of the opinion that lower authorities were justified in making a disallowance u/s.14A of the Act read with rule 8D(2) (iii) of the Rules. Especially so, since ld. Assessing Officer had clearly stated the reasons why he was not satisfied with the suo-motu disallowance made by the assessee. Claim of depreciation on temporary sheds which was restricted to 10% - Held that:- It is not disputed that the sheds were made by using steel pipes and iron meshes. Such structures which are built in open space are susceptible to very fast corrosion. Especially so, in a sea side area like Chennai. We cannot say that such structure is having an enduring nature. We are of the opinion that assessee was eligible to claim 100% depreciation on such structures. We set aside the orders of the lower authorities and allow the claim of the assessee for 100% depreciation on such temporary sheds built by using steel pipes and iron meshes. Ground No.2 of the assessee for all the years stands allowed. Restriction of depreciation claimed on electrical fittings - eligible for 15% depreciation or 10% - Held that:- It is not disputed that electrical fittings if considered as part of building is eligible for only 10% depreciation. Claim of the assessee is that these fittings were to be considered as part of plant and machinery. However nothing has been brought on record to show that electrical wiring, switches, sockets, other fittings were part of any plant and machinery. Accordingly, we are of the opinion that lower authorities were justified in restricting the depreciation to 10%. Restriction of the claim of depreciation on software - @25% or 60% - Held that:- What we find from the above description is that all these were nothing but items in the nature software or software applications. Entry No.5 coming in III of Part A in New Appendix I clearly says that computer included computer software. Note 7 of the Appendix, defines computer software as any computer programme recorded in any information storage device. We are therefore of the opinion that assessee was eligible to claim depreciation at the rate of 60% on the above items. Orders of the lower authorities on this issue are set aside and the claim is allowed. Ground No.4 of the assessee stands allowed. Disallowance of payment of non-compete fees - Held that:- We cannot say that assessee derived any enduring benefit due to the above payment effected by it for obtaining certain commitments from Shri V. Shankar and restricting himself from indulging in any competition with the business of the assessee or from weaning way the employees. We are of the opinion that non compete fee was a revenue expenditure, and had to be allowed in one go, irrespective of the method of accounting adopted by the assessee. Accordingly, we set aside the orders of the lower authorities and allow the claim of the assessee.
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