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2022 (7) TMI 258 - AT - Income TaxDepreciation on intangible assets @ 25% - AO rejected the submissions of the assessee on the ground that the expenses are incurred by the assessee in obtaining support mostly by way of payment towards legal, technical and management fees for availing services, which cannot be termed as incurred for acquiring business or commercial rights falling under the definition of intangible assets - HELD THAT:- This issue in the instant case is similar to the facts and circumstances in AY 2010-11 [2016 (9) TMI 1435 - ITAT BANGALORE]. Therefore, respectfully following the aforesaid decision of the Tribunal for AY 2010-11, we uphold the disallowance of depreciation on intangible assets. This ground is held against the assessee. Disallowance of software expenses - AO rejected the submissions of the assessee on the ground that the software acquired provides firstly, the right, and secondly, enduring benefit to the assessee and is of the view that the assessee has the right to exploit the software as per the requirement which is the commercial right in the nature of intangible asset - additional evidence is admitted taken on record for adjudication - HELD THAT:- The description of the list of items submitted in the additional evidence shows that expenditure is incurred towards ‘windows’, ‘Core call’, and ‘Auto cad’ which according to the ld AR have a very short span of life and requires periodic renewal and upgradation by payment of license fee. We notice that the jurisdictional High Court decision in the case of IBM India Ltd [2013 (10) TMI 1225 - KARNATAKA HIGH COURT] as held that even if the application has an enduring benefit, it does not result in acquisition of capital asset. The decision cannot be applied generally to state that any software having a shelf life of more than two years is capital in nature since the decision in Toyota Kirloskar Motor (P) Ltd. (2013 (2) TMI 108 - KARNATAKA HIGH COURT) was with respect to a particular software and that the nature of software whether it is a system software or application software needs to be analysed to decide the treatment under the Act. We remit the issue back to the AO to verify the facts afresh after considering the breakup of the software expenses submitted as additional evidence filed by the assessee and decide the issue after taking into consideration the ratio laid down by the jurisdictional High Court in the case of IBM India Ltd. (supra). Needless to say that assessee shall be given reasonable opportunity of being heard. This ground of the assessee is allowed for statistical purposes.
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