TMI Blog2004 (7) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... law, the learned CIT(A), Mumbai, erred in directing the AO to recompute the deduction under s. 80HHE holding that the AO had erred in making the addition of Rs. 25,15,728 while computing the deduction. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A), Mumbai, erred in holding that the claim regarding depreciation of Rs. 15,32,824 is in accordance with law and therefore, should be accepted. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A), Mumbai, erred in cancelling the disallowance of Rs. 3,41,000 towards software items." 2. The first ground of appeal pertains to the deletion of addition of Rs. 41.20 lakhs being software written off in the books as capital expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to the insertion of cl. (xi) in s. 6 by Finance Act, 1999, the assessee argued that it refers to computer system and not to software programme as stated by the AO. Reliance was placed on the following judgments: 1. Alembic Chemicals Works Co. Ltd. vs. CIT (1989) 77 CTR (SC) 1 : (1989) 177 ITR 377 (SC) 2. CIT vs. Western India State Motors (1994) 117 CTR (Raj) 281 : (1993) 203 ITR 363 (Raj) 3. Praga Tools Ltd. vs. CIT (1980) 16 CTR (AP) 356 : (1980) 123 ITR 773 (AP) 4. CIT vs. Kusum Products (P) Ltd. (1984) 41 CTR (Cal) 357 : (1984) 149 ITR 250 (Cal) 5. R.G.S. Industries vs. CIT (1990) 81 CTR (Gau) 6 : (1990) 183 ITR 31 (Gau) 6. Empire Jute Co. Ltd. vs. CIT (1980) 17 CTR (SC) 113 : (1980) 124 ITR 1 (SC) 7. Hin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rements and qualifications of an enduring capital asset. The rapid stride in science and technology in the field should make us a little slow and circumspect in too readily pigeon-holing an outlay such as this a capital.' The Jaipur Bench of Tribunal in the case of Business Information Processing Services vs. Asstt. CIT (2000) 67 TTJ (Jp) 131 has held that expenses on development of computer software are revenue in nature. The times are fast changing and computer system has emerged as a very important component during this fast changing era when day-by-day the systems are developed in a new way and softwares are needed like a raw material for use. As regards the AO's reliance on the amendment inserted in s. 36 by the Finance Act, 1999, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puter system and not to software programme and, therefore, the same is misplaced. In this view of the matter, we uphold the order of the CIT(A) on this issue. This ground of the Revenue fails. 6. The second ground pertains to deduction under s. 80HHE of the Act. The assessee claimed the deduction at Rs. 8,14,53,422 whereas the AO granted a higher deduction at Rs. 9,25,78,447 in view of the additions made to the total income. In this the AO made an addition of Rs. 25,15,728 towards exchange gain although it does not represent surplus arising out of sales realisation. In fact, it is only an accounting entry made in consequence to implementation of Accounting Standard No. 11 (AS-11), issued by the Institute of Chartered Accountants of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(c)(B) of the Act to state that the written down value in the case of any block of assets means the aggregate of the written down values of all assets falling within that block of assets at the beginning of the previous year as reduced by monies payable in respect of any asset falling within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount of the scrap value, if any, so however, that the amount of such reduction does not exceed the written down value. It was argued that since no monies have become payable in respect of write off of such assets, they continue to form a part of the block of assets. 8. The learned CIT(A) observed that the assessee had not received any mone ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
