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TMI Blog2021 (11) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... licable to intangible assets. a). Whether the Ld. CIT(A) has erred in holding that the software in question is covered in Item No. 5 in Part A "Tangible Assets" under the head "Machinery and Plant" in the Appendix under Rule 5, failing to appreciate that expression "computer including computer software" in the said Item implicitly refers to the systems software which runs the computer and is an integral part of computer itself as a "Tangible Asset" and that the payments for right to use specialized software applications constitute an "Intangible Assets" in Part B, being in the nature of license on which depreciation @ 25% only is admissible. b) Whether the Ld. CIT(A) has failed to appreciate that the asset in question i.e. payment for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. 6. Ld. Sr. DR vehemently argued that Ld. CIT(A) was not justified in allowing the claim of depreciation @ 60% as the software was customized and could be used without the operation of computer. He contended that such software would fall within the category of intangible assets. Therefore, the depreciation of such assets is allowable @ 25% only. 7. On the contrary, Ld. Counsel for the assessee opposed these submissions and supported the order of Ld. CIT(A). He submitted that the issue is no more res integra. The issue has already been decided in catena of judgments in favour of the assessee by allowing the depreciation @ 60%. He submitted that under the identical facts, the Hon'ble Madras High Court in the case of CIT vs. Computer A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adabad, ITAT V. TNS India Pvt. Ltd. v. ITO (2015)(69 SOT 22), Hyderabad ITAT VI. Amway India Enterprises Vs. DCIT, 111 ITD 112, Delhi ITAT. VII. Deepak Fertilizers & Petrochemicals Corpn. Ltd. vs. DCIT (ITA Nos. 4904 & 5027/Mum/2009) 6.1. I have carefully gone through the finding of the AO, submission of the appellant and the case laws. Ld. AR has relied upon decision of IT AT Delhi in the case of M/s. Amway India Enterprises (supra) in which ITAT has allowed depreciation on software @ 60%. Respectfully following the decision of ITAT Delhi. it is held that depreciation @ 60% is allowable in the case of software. In view of this the appeal of the appellant is allowed." 9. Further, Ld. Counsel for the assessee has placed reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule of interpretation, we find that the relevant entry under old appendix I Clause III (5) states computers including computer software and the Notes under the Appendix defines 'computer software' in Clause 7 to mean any computer program recorded on disc, tape, perforated media or other information storage http://www.judis.nic.in device. Noteworthy to mention that the notes contained in the appendix, the term 'computer' has not been defined. Therefore, as pointed out by the Division Bench in Bimetal Bearings Ltd. (supra), if a particular article would fall within the description by the force of words used, it is impermissible to ignore the word description. Thus, going by the usage of the equipment purchased by the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a party, wherein this Court considered a similar condition imposed in a non compete agreement. Therefore, we find that the Tribunal, on appreciation of the factual position, rightly held that a non compete fee has to be treated as a revenue expenditure. Hence, the second substantial question of law is to be necessarily answered against the Revenue."
10. In view of the binding precedents, we do not see any reason to interfere with the findings of the Ld. CIT(A), the same is hereby affirmed. Thus, ground raised by the Revenue is dismissed.
11. In the result, the appeal of the Revenue is dismissed.
Above decision was pronounced on conclusion of Virtual Hearing in the presence of both the parties on 09th November, 2021. X X X X Extracts X X X X X X X X Extracts X X X X
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