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TMI Blog2012 (9) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... as raised five grounds of appeal wherein grounds No. 4 and 5 are general in nature and do not survive for adjudication. The surviving grounds No.1, 2 and 3 of the appeal of the revenue are reproduced herein below for reference: 1. The Ld. Commissioner of Income tax (A) has erred in law and on facts in deleting the disallowance of depreciation of ₹ 47,54,133/-. 2. The Ld. Commissioner of Income tax (A) has erred in law and on facts in deleting the disallowance of expenditure u/s 14A of ₹ 11,098/- 3. The Ld. Commissioner of Income tax (A) has erred in law and on facts in directing the AO to verify the contentions of the assessee regarding foreign expenses and to delete the addition of ₹ 12,18,834/- in contravention of Sec. 251. 3. Ground No.1: Deleting the disallowance of depreciation of ₹ 47,54,133/-:- The assessee is a Private Limited Company engaged in the business of software development and net applications, filed its return on 1-09-2003 declaring total loss at ₹ 75,16,130/- which was initially processed u/s 143(1) of the Act. In the return of income, the assessee claimed depreciation of ₹ 64,18,218/- which included depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appellate order dated 9-1-2004 for A. Y. 2001-02, my predecessor held that the expenditure on software was capital in nature. Depreciation was allowed to the appellant up to A. Y. 2005-06. In view of this, A. O. s action is not in accordance with law. Disallowance of depreciation is unwarranted and it deleted. This ground of appeal is allowed. 4. The learned DR supported the order of the learned AO. On the other hand the learned AR supported the order of the learned CIT(A) and prayed that his order may be sustained. 5. We have heard both the parties, perused the orders of the authorities below and considered the material on record. The learned CIT(A) has given categorical findings that the assessee had incurred expenditure of ₹ 1,87,81,830/- on development of AVTAAR and the said software was registered as trade mark under the Trade-mark Act,1999 in the name of the assessee and the same was utilized by the assessee for the purpose of his business and in view of this fact, deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 6. Ground No.2: deleting the disallowance of expenditure u/s 14A of ₹ 11,098/- :- The assessee had shown investment of ₹ 4,17,514/- in shares, income from which did not form part of assessee s total income. The learned AO required the assessee to explain why expenses related to the exempt income should not be disallowed u/s 14A read with Rule 8 D of the IT Rules. The assessee relied on the decision of the Hon ble Punjab Haryana High Court in the case of CIT Vs Hero Cycles Ltd., 189 taxman 50 and stated that provisions of section 14A are not applicable to the case of the assessee. However, the learned AO in view of the provisions of section 10(34) and relying on the decision of the Hon ble Apex Court in the case of Macdonnel and other decisions held that provisions of section 14A read with Rule 8D is applicable to the case of the assessee thereby computed the expenditure in relation exempt income at ₹ 11,098/- and disallowed the same and added to assessee s income. On appeal, the learned CIT(A) after considering the submissions of the assessee and the observations of the learned AO, deleted the addition made by the learned AO by observing in Para 4.2 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of the business of the assessee, the learned AO disallowed the claim of the assessee and added the same to the income of the assessee. The learned CIT(A) after perusal of the order of the learned AO and considering the submissions of the learned AR deleted the disallowance by observing in Para 5. 2 of his order as under: 5.2 I have considered the submission of made by the A. R. of the appellant and the observations of the assessing officer in the assessment order. During the course of hearing it was contended by the learned A. R. that the A. O. did not call for any supporting evidence during the course of assessment proceedings. In support thereof he filed copies of various notices issued by the A. O. He contended that all the necessary supporting evidences are available. A. O. is directed to verify the contentions contained in the submissions re-produced above and delete the disallowance. Thus subject to verification, this ground of appeal is allowed. 11. The learned DR supported the order of the learned AO. On the other hand, the learned AR supported the order of the learned CIT(A). 12. We have heard the rival submission, perused the orders of the authorities below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the same in AY 2004-05. On perusal of records, we find that the issues are similar and the facts of the case in the year under consideration are also identical with that of AY 2003-04, hence considering the submissions of the parties and in view of our decision in the revenue s appeal for AY 2003-04, we hereby dismiss grounds No.1 and 2 of the appeal of the revenue for AY 2004-05 and allow ground No. 3 for statistical purpose. 16. In the result, revenue s appeal in ITA No.1261/Ahd/2011 for AY 2004-05 is partly allowed for statistical purposes. ITA No.165/Ahd/2012 (Revenue s appeal for AY 2005-06) 17. In this appeal, the revenue has raised three grounds wherein grounds No.2 and 3 are general in nature. The only surviving ground No.1 of the appeal is reproduced herein below for disposal: 1. The Ld. Commissioner of Income tax (A) has erred in law and on facts in deleting the disallowance of ₹ 26,74,200/- being depreciation claimed on intangible assets. 18. Both the sides submitted that the issue and facts of the present case being similar and identical to the issue and the facts of the case in AY 2003-04 and the order passed by the Tribunal in AY 2003-04 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed in deciding the same in AY 2007-08 also. On perusal of records, we find that the issue is similar and the facts of the case in the year under consideration are also identical with that of AY 2003- 04. Therefore, considering the submissions of the parties and in view of our decision in the revenue s appeal for AY 2003-04, we hereby dismiss ground No.1 of the appeal of the revenue for AY 2007-08. 25. In the result, the appeal of the revenue in ITA No.2393/Ahd/2010 for AY 2007-08 is dismissed. ITA No.3037/Ahd/2011 (Revenue s appeal for AY 2008-09) 26. The revenue has in this appeal raised three grounds wherein grounds No.2 and 3 are general in nature and do not survive for adjudication. The lone surviving ground No.1 of the appeal is reproduced herein below. 1. The Ld. Commissioner of Income tax (A) has erred in law and on facts in deleting the disallowance of ₹ 11,20,344/- being depreciation on intangible asset. 27. Both the sides submitted that the issue and facts of the present case being similar and identical to the issue and the facts of the case in AY 2003-04 and the order passed by the Tribunal in AY 2003-04 may be followed in deciding the same ..... 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