9911796707
TMI Blog2012 (11) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... reference: "(1). The learned Commissioner of Income Tax has erred in law and as well as on facts of the case by confirming the disallowance of depreciation of Rs.3,23,251/-." 3. The assessee is a Private Limited Company engaged in the business of software development. The assessee filed its return of income on 16-11-2006 electronically declaring total income of Rs.1,23,530/-. Thereafter the return was processed u/s 143 (1) of the Act and subsequently selected for scrutiny. The assessment was finalized u/s 143(3) of the Act on 08-12-2008, wherein the learned AO had disallowed the assessee's claim of depreciation amounting to Rs.3,23,251/- and added the same to the total income of the assessee. During the assessment proceedings, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f P & L A/c. However, this may not itself prove that the appellant carried on the business of development of software during the year. The software developed in the earlier year could have been sold / exported during the current year. This view gains support from the fact that the only expenses debited to P & L A/c during the year are Audit fees (Rs.11,224/-), Legal fees (Rs.44,010/-), Loss on sale of computers (Rs.38,990/-) and office maintenance expenses (Rs.6,647/-), in all totaling to Rs.99,871/-. In contrast the electricity expenses, guest house expenses, Insurance, Postage, Rent, Telephone expenses debited are nil, though Mercantile System is being followed. Further as stated by the A. O., the appellant vide submission dated 18-11-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30/- and therefore not entitled to depreciation. However it is pertinent to note that the assessee had conducted business transactions by achieving a turnover of Rs.4,06,214/- and also incurred some business expenditure in order to achieve the same. Further it is not a pre-condition by any statute to incur expenditure for the purpose of conducting business or to establish the existence of any business activity. All the activities which revolve round the business may not result in fiscal expenditure. It appears from the above transaction that the assessee was in possession of soft-wares which he had sold during the year. There is nothing to establish that the assessee had not used the building and furniture during the previous year. Such inf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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