TMI Blog2020 (7) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Act and the other Acts and Rules published by assessee each year. The contention of the assessee of having owning the CMS software by it has not been controverted by the Revenue - incurring of expenditure on its development has also not been disputed by the Revenue. Before us the Ld AR has also pointed out the the software apart from being mainly used by the assessee for its own business is also being used by it to upgrade the website of the Income tax Department. These contentions of the Ld AR has not been controverted by Revenue by placing any material on record. Claim of depreciation made by the assessee in the subsequent year has not been disturbed by the Revenue. Thus we are of the view that the AO was not justified in deny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and circumstances of the case, the CIT(A) erred in sustaining disallowance of depreciation of ₹ 22,74,987 claimed @12.5% on Content Management Software ( CM Software ) under section 32 of the Income Tax Act, 1961 ( the Act) on the ground that (i) the said depreciation was claimed on webmaster software ; (ii) for which the appellant failed to satisfy the test of ownership for claiming depreciation. 1.1 That the CIT(A) erred on facts and in law in not appreciating that the depreciation was not claimed on webmaster software, but CMS software, satisfied the test in the hands of appellant. 1.2 Without prejudice that the CIT(A) erred on facts and in law in not appreciating if the appellant was not owner of the software, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t since the intangible was not owned by the assessee, the conditions stipulated u/s 32 of the Act were not fulfilled by the Assessee and therefore assessee was not eligible to claim depreciation. He accordingly denied the claim of depreciation amounting to ₹ 45,49,974/-. Thereafter, the AO vide order passed u/s 154 dated 15.02.2018 restricted the disallowance of depreciation to ₹ 22,74,987/- (computed @ 12.5% instead of 25% disallowed in the assessment order) as the expenditure incurred for the software was capitalized on 31.03.2003. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who upheld the order of AO and thereby dismissed the appeal of the assessee. Aggrieved by the order of CIT(A) assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esulting into improvement in quality, accuracy and finesse of the output. A part of the CMS is also used to control the version and to update the contents provided by the assessee to the Income tax Department. He submitted that in March 2014, assessee had entered into a website development and maintenance contract with Income Tax Department. The agreement was for providing the service of managing / updating the legal content on the website owned by the Income Tax Department namely incometaxindia.gov.in which is referred to as Web Master Software . The services were interalia for development of content and management of Web Master Software/website of the Income Tax Department. He submitted that in order to execute the services, assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment. He submitted that the CMS is also used to update and manage more than 200 other Bare Acts and Rules which are published by the assessee and it is not only used to update the documents but also used for integrating all the related documents. He submitted that CMS is not an off-shelf software but a proprietary and customized solution developed solely as per the requirements of the assessee which is owned by the assessee. The cost incurred by the assessee for the development of such software has been capitalized in its books of accounts. He submitted that since the software is owned by the assessee and used for the purpose of business the assessee has complied with the requirements of section 32 of the Income tax Act and is therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has given the description of the software, its functionality which was also submitted before the CIT(A) as can be noted from the order of CIT(A) wherein the contentions of the assessee have been reproduced. From the details and the submissions made by the Learned AR, it is the assessee s contention that the CMS Software has been developed by it, owned by it and it is used for the purpose of business by updating and managing the Income Tax Act and the other Acts and Rules published by assessee each year. The contention of the assessee of having owning the CMS software by it has not been controverted by the Revenue. Further, the incurring of expenditure on its development has also not been disputed by the Revenue. Before us the Ld AR has als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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