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TMI Blog2014 (4) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... peal in ITA no.9075/Mum./2010, vide which, following grounds have been raised. "i. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made under section 40(a)(ia) in respect of V-SAT charges of Rs.6,44,107 and transaction charges of Rs.3,30,000 paid to Stock Exchange, without appreciating the facts that these were composite charges for professional and technical services rendered by the stock exchange to its members and the assessee has failed to deduct TDS thereon. ii. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in ignoring the fact that these services are essential in nature as they can only be availed by members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ia) after detail discussion running into 10 pages. The learned Commissioner (Appeals) has allowed the assessee's appeal after following the decision of the Tribunal in Kotak Securities Pvt. Ltd. v/s ACIT, 124 TTJ 241 (Mum.) and DICT v/s Angel Broking Ltd., 35 SOT 457 (Mum.). 3. Before us, it has been submitted that insofar as the V-SAT charges are concerned, the same are covered by the decision of the Hon'ble Jurisdictional High Court in the case of CIT v/s Angel Capital and Debit Market Ltd., Income Tax appeal no.475 of 2011, passed by the Hon'ble Jurisdictional High Court, vide order dated 27th July 2011, wherein it has been held that on the payment of V-SAT charges, there is no liability of deducting TDS. Moreover, this issue is also c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance under section 40(a)(ia) can be made. Regarding transaction charges, we agree with the contention of the learned Departmental Representative that, whether the disallowance has been made for the first time and no such disallowance was made in the earlier years, is not clear from the records. Therefore, on this score, we set aside the issue of transaction charges to the file of the Assessing Officer, to verify, whether in the earlier years transactions charges have been paid and any disallowance has been made in the earlier years or not. If the assessee has paid the transaction charges in the earlier years and no disallowance has been made by the Department, then in view of the decision of the Hon'ble Jurisdictional High Court in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time. 1.3 The appellant therefore submits that, the expense on software is like regular ongoing business expenses and should be allowed as evenue expenses. Only because a new item has been added in the depreciation table, does not make any expenditure which is of nature Revenue expenditure, of the nature of capital expenditure." 7. The Assessing Officer has disallowed the claim of Rs. 2,60,000 incurred by the assessee on account of computer software which was claimed as revenue expenditure. The Assessing Officer has treated the same as capital expenditure because such software expenses have an enduring benefit and, therefore, he held that only depreciation should be allowed as per the new appendix of Income Tax Rules. 8. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not have any enduring benefit on the capital field. In support of his contention, he has strongly relied upon the decision of the Hon'ble Delhi High Court in CIT v/s Asahi India Safety Glass Ltd. [2012] 346 ITR 329 (Del.). He further submitted that the depreciation schedule in Appendix-I, which provides for rate of depreciation in case of computers and software will not lead to an automatic conclusion that all the software expenses are to be treated as capital expenses from A.Y.2006-07. Rules per-se cannot decide, what is capital asset or revenue expenditure, because the same has to be seen on the facts and circumstances of the case as well as the tests laid down by various Courts from time to time. 10. Per contra, the learned Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that in the Income Tax Rules, Appendix-I, Item no.5, which has been brought in Income Tax Rule w.e.f. assessment year 2006-07, mentions the rate of depreciation on computers including computer software @60%. From this, they have inferred that the computer software is nothing but capital asset on which depreciation has to be allowed. In our considered opinion, inclusion of the word "computer software" in new Appendix-I, giving the rate of depreciation, will not, per-se lead to a conclusive inference that from the assessment year 2006-07, computer software are to be held as capital asset only on which depreciation has to be allowed and any expenses on software cannot be held as revenue expenditure. Whether any particular expense falls in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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