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2017 (4) TMI 441 - AT - Income TaxRate of depreciation allowable on computer software - Held that - In the light of the precedent in the assessee s own case, we deem it fit and proper to direct the Assessing Officer to allow the depreciation on computer software @ 60%. Accordingly, on this issue assessee succeeds. Disallowance made under section 14A - Held that - CIT(A) following the judgment of Godrej & Boyce Mfg. Co. Vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT) correctly noticed that rule 8D of the Rules was not applicable for the instant assessment year and that the same was applicable prospectively from assessment year 2008-09 onwards and, therefore, he disagreed with the action of the Assessing Officer and has corectly directed the Assessing Officer to restrict the disallowance under section 14A of the Act to2% of the exempted income, which came to ₹ 10,39,345/-. - Decided against assessee
Issues Involved:
1. Depreciation rate on computer software 2. Disallowance under section 14A 3. Adjudication of certain grounds raised before CIT(A) Issue 1: Depreciation rate on computer software: The appellant claimed depreciation on computer software at 60%, but the Assessing Officer allowed it at 25%, stating that the higher rate applies only when software is an integral part of computer hardware. The CIT(A) upheld this decision. The appellant cited a precedent where the Tribunal allowed 60% depreciation on software in a previous year. Considering this, the ITAT directed the Assessing Officer to allow depreciation on computer software at 60%, ruling in favor of the appellant. Issue 2: Disallowance under section 14A: The disallowance under section 14A was related to exempt income received by the appellant. The Assessing Officer applied Rule 8D to determine the disallowance amount, while the CIT(A) disagreed, citing that Rule 8D was not applicable for the relevant assessment year. The CIT(A) restricted the disallowance to 2% of the exempt income. The appellant argued that the 2% disallowance was excessive, but the ITAT found the CIT(A)'s estimation reasonable and upheld the decision, ruling against the appellant on this ground. Issue 3: Adjudication of certain grounds raised before CIT(A): Certain grounds raised by the appellant before the CIT(A) were not adjudicated. The appellant requested the issue to be sent back to the CIT(A) for fresh adjudication. The ITAT agreed with the appellant's plea and directed the CIT(A) to examine and adjudicate the unresolved issues, providing the appellant with a fair opportunity to present their case. The ITAT ruled in favor of the appellant on this ground for statistical purposes only. In conclusion, the ITAT partially allowed the appellant's appeal, directing the Assessing Officer to allow depreciation on computer software at 60%. The disallowance under section 14A was upheld, and the issue of certain grounds not adjudicated by the CIT(A) was remanded back for fresh consideration.
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