2011 (9) TMI 1202 - AT - Income Tax

Summary

Issues involved:
The issues involved in the judgment are the disallowance of depreciation claimed by the assessee at the rate of 60% for digital content, the disallowance of deduction under section 10B, and the rectification of the assessment order under section 154.

Disallowance of Depreciation at 60% for Digital Content:
The Revenue challenged the action of the ld. CIT(A) in allowing the assessee's appeal claiming depreciation at 60% for digital content acquired for broadcasting digital movies. The Assessing Officer disallowed the claim of depreciation by adopting a rate of 25% for intangible assets. The assessee contended that digital content should be treated as a tangible fixed asset and depreciation at 60% should be allowed as per IT Rules. The ld. CIT(A) accepted the plea of the assessee, stating that digital content is a tool or machinery in the form of computer software, justifying the claim for depreciation at 60%. The appeal of the Department was allowed for statistical purposes, and the matter was remitted back to the Assessing Officer for re-decision after obtaining necessary details.

Disallowance of Deduction under Section 10B:
The assessee initially claimed a deduction under section 10B, but later withdrew the claim as the tax holiday period had expired by the relevant assessment year. The first appellate authority dismissed the appeal related to the disallowance of deduction under section 10B.

Rectification of Assessment Order under Section 154:
The assessment order was rectified under section 154, resulting in the determination of taxable income at a higher amount. The Assessing Officer did not consider the deduction allowed under section 35DDA for the assessment years 2003-04 and 2004-05. The matter was not adequately discussed in the original assessment order, leading to the decision to remit the issue back to the Assessing Officer for re-decision with proper consideration of relevant provisions and case law.