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TMI Blog2013 (7) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Respondent : S.N. Divatia. ORDER:- PER : Akil Kureshi Since these appeals involve identical question, they are heard together and disposed of by this common order. 2. Before adverting to single question debated before us at considerable length, we may notice that in Tax Appeal No. 311 of 2013, there is an additional question No.2 regarding disallowance of expenditure of Rs. 11,098/-under Section 14A of the Income Tax Act, 1961 ('the Act' for short). Likewise, in Tax Appeal No. 312 of 2013, additional question No.2 is with respect to similar disallowance of Rs. 3,152/-. Both amounts are extremely small. Such questions are, therefore, not considered only on that basis. 3. Sole surviving question in all these appeals rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure of Rs. 1,87,81,830/-. The said software was registered as Trade Mark under the Trade Marks Act, 1999. Intangible assets include Trade-Mark, which is entitled to 25% depreciation under the I.T Act. In the appellant order dated 09/01/2004 for A.Y. 2001-02, my predecessor held that the expenditure or software was capital in nature. Depreciation was allowed to the appellant upto A.Y. 2005-06. In view of this A.O's action is not in accordance with law. Disallowance or depreciation is unwarranted and deleted. This ground of appeal is allowed." 7. We may notice that before the CIT(A), the assessee had, in the written submissions, outlined the details of the programme as also the nature of expenditure incurred in its development. Such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Evaluating concepts and products (b) Acquiring requisite scientific or technical knowledge and prototypes (c) Development of Business Plan Agreement with GVFL All expenditure incurred during the Research phase were expended out in F.Y. 2001-02. The Development phase of AVTAR TM commenced from 01-06-2000 and was concluded on 31.03.2002 which included following activities: (a) Technical feasibility of completing AVTAR TM (b) Intention to complete and use AVTAR TM (c) Ability to use AVTAR TM (d) A business model (B2C) which demonstrated how AVTAR TM would generate future economic benefits (e) Availability of adequate resources (funding from GVFL) (f) Ability to measure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. 6.6 Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially imported materials, devices, products, processes, system or services prior to the commencement of commercial production or use. 6.7 Amortization is the systematic allocation of the depreciable amount of an intangible asset over its useful life." 2. AVTAR TM has registered as Trade Mark in the name of NET NUTS LIMITED under the Trade Marks Act, 1999. 3. Apart from Accounting Standard 26 on Intangible Assets issued by ICAI, even the income tax Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that the expenditure incurred in development such software was not established by the assessee. 11. In this respect, the CIT(A) as well as the Tribunal have not accepted the Assessing Officer's version. It is true that such expenditure and the details thereof were placed by the assessee before the CIT(A) in the original assessment for the assessment year 2006-07. The revenue has not questioned such details supplied. More importantly, in the reopened proceeding, full facts were before the Assessing Officer. In the original assessment as well as in the fresh assessments, the accounts of the assessee would be available. The assessee has been contending at the outset that the software was developed in house and the expenditure incurred in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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