TMI Blog2016 (8) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals). - ITA Nos. 814 & 815/Mds/2016 - - - Dated:- 15-7-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For The Appellant : Shri R. Sivaraman, Advocate For The Respondent : Shri P. Radhakrishnan, JCIT ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER These appeals by the assessee are directed against different orders of the Commissioner of Income-tax(Appeals) dated 21.01.2016 for the assessment years 2009-10 and 2010-11. 2. The first common ground in these appeals is with regard to confirming the disallowance of product development expenditure as capital expenditure. 3. Similar issue came for consideration before the Tribunal in assessee s own case in ITA Nos. 457, 458 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival contentions and also carefully perused the material on record. We note that the Assessing Officer has rejected the claim of the assessee as revenue expenditure on product development expenditure relying on Hon ble Rajasthan High Court judgement in the case of CIT vs. Arawali Constructions Co. (P.) Ltd. (259 ITR 30) in which the Hon ble High Court has observed that the payment was made for outright sale of computer software which is used as technique in mining operations. In the Lordships view the acquiring of technical know-how is of capital nature and therefore the Assessing Officer has rightly treated the expenditure on acquiring the computer software as capital expenditure and rightly allowed depreciation as per rules. The Special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the capital field. What exactly is meant by accrual of benefit in the capital field is that the said benefit should form part of the profit making apparatus of the assessee s business. 7. From the above, it is clear that in order to treat any expenditure as capital expenditure it should result in acquisition of advantage of enduring benefit and such benefit should accrue to the assessee in the capital field and the said benefit should form part of profit making apparatus of the assessee s business. In the case in hand the assessee got developed the software with TAKE Hub which is a warehouse management software against payment of ₹ 1 core. By doing so the assessee has acquired the absolute ownership and other rights regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices vs. State of Andhra Pradesh (271 ITR 401) wherein it was held that software contained a distinct tangible property by itself. The use by the assessee of such software in its business is enough to allow the claim of depreciation. The right which an assessee acquires by purchasing the disc or magnetic medium containing the computer software with limited or absolute right to use the same by itself would satisfy the requirement of plant. The assessee s ownership of limited right over the tangible asset is sufficient to conclude that the assessee is a owner of the plant. Apart from this the Special Bench of this Tribunal, Delhi Benches in the case of Amway India Enterprises vs. DCIT (supra) while deciding an appeal in the case of M/s SQL St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered as capital expenditure and the assessee is entitled for depreciation at 15% on its capital asset as held for the assessment year 2006-07. 4. The next common ground in these appeals is with regard to confirming the disallowance of ₹ 1,58,407/- and ₹ 1,58,655/-made u/s.14A r.w.Rule 8D(2)(iii) of the Act for the assessment years 2009-10 and 2010-11 respectively. 5. In this case, the CIT(Appeals) observed that the AO has correctly applied Rule 8D(2)(ii) of the Act, as no part of interest expenditure was directly attributable to the exempt income. Further, he observed that as the interest payment made during the year is not relating to any interest bearing loans utilized for investment, from which exempt income is earned, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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