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2022 (1) TMI 732 - ITAT AHMEDABADDepreciation 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 - AO was of the view that software license is not the computer - whether the software purchased by the assessee is part of computer for the purpose of depreciation or the same can be treated as intangible asset? - HELD THAT:- Software is part of computer. Hence, the depreciation on the same is allowable at the rate applicable for computer. In this regard we also find support and guidance from the judgment in case of CIT vs. Computer Age Management Services (P.) Ltd.[2019 (7) TMI 1153 - MADRAS HIGH COURT] as held software application, which was acquired by the assessee would fall under Entry 5 of Part A of New Appendix I, which states that computers including computer software are entitled to depreciation at 60% - Decided against revenue. Addition under the provisions of section 35D OR 37(1) - nature of expenses incurred were travelling expenses, legal and professional expenses, salary expenses for employees appointed especially for the project, insurance, electricity charges, and security charges - As per assessee expenses were incurred after the commencement of business but before the commencement of the commercial production. - HELD THAT:- We note that the provisions of section 35D are applicable for the expenditures incurred before the commencement of the business or after the commencement of the business in connection with the extension of the undertaking/setting up of new unit. There is no allegation of the AO whether the expenditure were incurred by the assessee were before the commencement of the business or after the commencement of the business in connection with the extension of undertaking/setting up of a new unit. Thus in the absence of such finding of the AO, we are of the view that the provisions of section 35D cannot be invoked in the given facts and circumstances. As there are certain categories of expenses for which the provisions of section 35D of the Act can be applied. These expenses have been specified under subsection 2 of section 35D of the Act. But in the present case, we note that none of the expenses claimed by the assessee was in the category of such expenses. Likewise, the AO has also not brought anything on record suggesting that the nature of the expenses claimed by the assessee are those expenses mention under section 35D(2) of the Act. On this count only, the order of the AO is not sustainable. CIT (A) has given very clear finding that the expenses were incurred by the assessee to increase the capacity of the plant. The learned DR at the time of hearing has not controverted the finding of the learned CIT (A). Assessee has also claimed identical expenses in the return of income in the immediate preceding assessment year i.e. assessment year 2012-13 which seems to have been allowed by the revenue. Our view is based on the fact that the learned DR at the time of hearing has not brought anything on record suggesting that the impugned expenses were disallowed by the revenue in the earlier year as well.- Decided against revenue.
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