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2022 (11) TMI 319 - HC - Income TaxDepreciation on software - AO has disallowed depreciation on the ground that the supplier of software had informed that the balance payment was not received by them for the reason of non replacement of software version with the latest version - HELD THAT:- It is not in dispute that the software was acquired on 23.3.2012 and the period before the expiry of the financial year namely, 31.3.2012 was less than 180 days. It is not in dispute that the assessee is a consulting engineer and has acquired the software for his use. The letter written by the supplier that the payment was withheld for not updating the software, in our view is not sufficient cause to disallow the depreciation because an engineer who purchases a software can continue to use the existing version till its updation. Sri Dilip is right in his submission that since the period of use is less than 180 days, the assessee shall be entitled for only 30% depreciation. This position of fact and law is not disputed by Sri Annamalai. So far as the expenditure is concerned, AO has rejected the same by merely recording that the assessee had not satisfactorily explained the business expediency. It is trite that the AO cannot sit in the arm chair of a businessman and decide what expenditure is expedient. The genuineness of the vouchers is not in dispute. It is for an assessee to decide from time to time the expenditure that he finds it expedient to make in order to promote his business. Therefore, in our view, on both aspects, the assessee’s case merits consideration. Appeal is allowed.
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