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2021 (7) TMI 39 - AT - Income TaxTreatment of royalty payment as capital expenditure - disallowance made on license fee by holding it to be capital expenditure - HELD THAT:- Before us, Revenue has not placed any material on record to demonstrate that the orders of Tribunal in assessee's own case in earlier years in A.Y. 2001-02 & 2002-03 has been set aside/overruled or stayed by higher judicial forum. In such a situation, we are of the view that the AO was not justified in disallowing the payment of license fees on ad hoc basis by holding it to be capital expenditure. We therefore direct the deletion of the addition made by AO. Thus the ground No. 1 of the assessee are allowed. Disallowance u/s. 14A r.w.r.8D - HELD THAT:- It is an undisputed fact that year under consideration is 2006-07 and the AO has proceeded to disallow the expenses by following the methodology prescribed under Rule 8D of the I.T. Rules. We find that provision of Rule 8D for invoking the disallowance under Rule 14A could not be applied to the year under consideration in view of the decision in the case of Godrej & Boyce Mfg Co. Ltd.[2010 (8) TMI 77 - BOMBAY HIGH COURT] wherein has held that since Rule 8D were notified on 24th March 2008, it would apply from A.Y. 2008-09. Following the aforesaid decision of Hon'ble Bombay High Court, we are of the view that no addition is called for in the present case. We therefore set aside the addition made by the AO thus the ground of the assessee is allowed. Disallowance of transportation is made for the reason that the transpiration was for the transportation of machinery and therefore required capitalization - HELD THAT:- We find that the disallowance has been made by AO on ad hoc basis without bringing any material on record to support his views. In such a situation, we are of the view that the addition made by AO was not justified. We therefore direct its deletion. Thus the ground of assessee is allowed. Depreciation of printers @ 60% - depreciation on computer accessories and peripherals - HELD THAT:- It is the claim of assessee that it being an integral part of computer system, depreciation @60% is allowable. On the other hand, it is the case of Revenue that it is eligible for depreciation @ 15% being the rate applicable to general plant and machinery. In the case of CIT vs. BSES Yamuna Powers Ltd.[2010 (8) TMI 58 - DELHI HIGH COURT] has held that computer accessories and peripherals such as printers, scanners and servers form an integral part of the computer system and they cannot be used without the computer and therefore they are part of computer system and therefore eligible for depreciation @ 60%. Revenue has not placed any contrary binding decision in its support. We therefore following the aforesaid decision rendered by Hon'ble Delhi High Court in the case of BSES Yamuna (supra) hold that AO was not justified in restricting the depreciation @ 15%. We therefore set aside the order of AO on this issue. Thus the ground of assessee is allowed.
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