TMI Blog2017 (5) TMI 1717X X X X Extracts X X X X X X X X Extracts X X X X ..... deletion of the amount from the income of the assessee. The ground raised by the assessee is allowed and that of the department is dismissed. Disallowance made u/s. 14A - HELD THAT:- As relying on case of ICICI Prudential Insurance Company Ltd. [ 2012 (11) TMI 13 - ITAT MUMBAI] held when the income of the assessee as well as the expenditure are governed by specific provision which have an overriding effect then it is not open for the AO to invoke the other provisions of the Act for carrying out the disallowance of adjustment in the income. Thus, we hold that no disallowance u/s 14A can be made in the case of the assessee and hence grounds raised by assessee allowed. Depreciation on computer software - HELD THAT:- There is no dispute to the fact that the assessee has acquired software and installed them in its computer. The AO has denied assessee s claim of depreciation only for the reason that the payment to be made for the software has been deferred to subsequent assessment year as per license agreement. In our considered opinion, that cannot be a valid reason to disallow assessee s claim of depreciation, once the assessee has acquired the asset and used it for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e all or any of the above grounds of appeal. The grounds raised by the department are as under: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing ₹ 2,32,22,600/- being prior period expenditure in computing the total income of the assessee. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing depreciation of ₹ 1,88,51,231/- on intangible assets being software installed in computers without appreciating the fact that license fee for software was payable on per annum basis for future use. 3. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. 4. The appellant craves leave to amend or alter any ground or add a new ground which may necessary 3. As could be seen, ground no.1 of both the appeals are on the common issue of prior period expenditure of ₹ 2,33,22,600/-. Briefly, facts relating to this issue are, the assessee a public sector enterprise is engaged in the business of insuring credit risk of exporters and bankers in India. For the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the assessee has not at all claimed the prior period expenditure of ₹ 2.58 crores in its profit loss account. The learned AR submitted, what the assessee has done is, it has adjusted the prior period income of ₹ 2,33,22,600/- against the prior period expenditure of ₹ 2,58,31,240/- and offered the net amount of ₹ 25,08,640/- as income. The learned AR submitted, the assessee has neither considered prior period income nor the prior period expenditure in the profit loss account, therefore, there is no question of disallowance of prior period expenditure as the expenditure as it was never claimed as deduction in the impugned assessment year. The learned AR submitted, the assessee is following the same accounting method consistently and, whenever, there is a net adjustment on account of prior period income and expenditure, the assessee has offered it as income in the earlier assessment years. He submitted, the AO has also accepted the aforesaid accounting treatment and income offered by the assessee in the preceding assessment years in assessment orders passed u/s. 143(3) of the Act. In support of the said contention, the learned AR furnished b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings, the AO noticing that assessee has earned exempt income by way of dividend amounting to ₹ 4,91,63,414/-, whereas, the assessee has made suo motu disallowance of ₹ 32,16,629/- u/s. 14A of the Act, called upon the assessee to explain why disallowance should not be made as per the method prescribed under Rule 8D. Though the assesse objected to the proposed disallowance, the AO rejecting the objections of the assessee computed disallowance u/s. 14A read with Rule 8D at ₹ 55,05,796/-, thereby adding back an amount of ₹ 22,89,167/- to the income of the assessee. The learned CIT(A) also confirmed the addition. 9. The learned AR submitted before us that identical issue has been decided in favour of the assessee in assessee s own case for A.Y. 2007-08. A copy of the order passed in ITA No. 1971/Mum/2011 dated 11.12.2015, is also placed on record. He also referred to the decision of the Mumbai Bench in the case of ICICI Prudential Insurance Company Ltd. v. ACIT in ITA No. 6854/Mum/2010 Ors dated 14.09.2012, wherein it is held that the provisions of section 14A would not apply to an insurance company due to overriding provisions of section 44 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other surviving issue is in relation to allowance of assessee s claim of depreciation on computer software as raised in ground no.2 of departmental appeal. Briefly the facts are, in course of assessment proceedings, the AO noticed that the assessee has claimed depreciation of ₹ 1,88,51,231/- on computer software. After calling for necessary details and examining them, the AO found that though the assessee claimed to have used the software, however, as per the invoices produced the payment towards such software is due and payable in subsequent assessment years. He found that the payments to be made are in the nature of license fees payable on annual basis. He therefore, concluded that since the license fees paid/payable by the assessee are meant for future use, assessee s claim of depreciation cannot be allowed. 14. The CIT(A) after considering the submissions of the assesse in the context of facts and materials on record having found that the software had already been installed in the computers of the assessee allowed the claim of depreciation. 15. We have considered the submissions of the parties and perused the material on record. There is no dispute to the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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