9911796707
TMI Blog2014 (5) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the order of CIT(A), Assessee & Revenue are now in appeal before us, The grounds raised by the Revenue reads as under:- 1. The ld. CIT(A) erred in law and on facts in deleting the addition on account of disallowance of deduction of provision made for after sales services amounting to Rs. 39,75,783/-. 4. On the other hand the effective grounds raised by the Assessee reads as under;- 2. The learned Commissioner has erred in not allowing deduction in respect of software expenses of Rs.8,73,485 paid in respect of purchase of operating software allowable as revenue expenditure u/s 37 of the Act. It is submitted that it be so held now. 2.1 Learned Commissioner has erred in not allowing the said expenses u/s 37 of the Act based on wrong interpretation of facts that these software are purchased as part of computers and therefore requires capitalization and hence eligible for depreciation. Learned Commissioner has erred in not appreciating the fact that the software are application software and not systems software. It is submitted it be so held now. We first take up Revenue's appeal (ITA No. 1310/AHD/2011) 5. During the course of assessment proceedings, AO noticed that Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are identical to that of A.Y. 03-04 and which ld. D.R. could not controvert by bringing any contrary material on record We find that in Assessee's own case for AY 2003-04 in ITA No 30/Ahd/2007 order dated 15.5.2009, the issue of "after sales service" was decided the coordinate Bench of Tribunal by holding as under:- 4 Ground No.2 in Revenue's appeal relates to deletion of the addition of Rs.83,677/- for provision for after sales service. The learned AR vehemently contended that this issue is duly covered by the decision of this Tribunal dated 29-08-2008 in ITA No.2670/Ahd/2004. The learned DR was fair enough to concede the position. We have carefully considered the rival submissions and perused the material on record along with the order of this Tribunal as relied on before us. We noted that this Tribunal while disposing of similar issue in ITA No.2670/Ahd/2004 has held as under: "2. Adverting first to the ground :no. l in the appeal AO disallowed an amount of Rs 5,33,700/- on account of provision for after sales service, relying upon his own order for earlier assessment years 1994-95 to 1998-99. On appeal, the Id. CIT(A) upheld the disallowance on the .ground that the taxpa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed and instead stated before him that it was not possible to produce evidence in support of the claim. Before us, there is nothing to suggest that the provision is being made by the taxpayer on the basis of actual expenditure incurred in the subsequent assessment year relating to the sales made in the relevant previous year, as was the case in A.Y 1992- 93, mentioned by the ITAT in their aforesaid decision while the Revenue have not brought to our notice any contrary decision. Accordingly, in the interest of justice, we restore the matter to the file of the ld. CIT(A) with the directions to reexamine the claim in the light of aforesaid decision of the ITAT after allowing sufficient opportunity to the taxpayer to establish their claim and thereafter adjudicate the issue in accordance with law. Thus, ground no. 1 in the appeal of the taxpayer is disposed of as indicated hereinabove." Respectfully following the aforesaid decision of this Tribunal, we restore the matter to the file of the CIT(A) with the direction to re-examine the claim in the light of the decision of this Tribunal for AY 1992-93 in ITA Nb,415&/Ahd/1995 after allowing sufficient opportunity to the taxpayer to estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of AO by holding as under:- 5.3 I have considered the facts of the case, assessment order and appellant's submission. Appellant purchased computer softwares for the purpose of its business however computer software is part of asset used for the purpose of business. It has been held in several decisions that computer software is a capital asset and part of computers for the purpose of claim of depreciation. As per depreciation schedule, item number 5 of machinery and plant section is computers including computer software on which 60% depreciation is allowable. Since computer software is clearly included as an item of asset eligible for depreciation, claiming the same @ 100 percent is not correct. In view of this, the addition made by the assessing officer is confirmed. 13. Aggrieved by the order of CIT(A), the Assessee is now in appeal before us. Before us, Ld AR reiterated the submissions made before CIT(A) and further submitted that the software have short life span. He further submitted that against the total revenue of more than Rs 35.65 crore, the expenditure is quite low and therefore it cannot be said that the motive of the Assessee to treat the expenses as Revenue ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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