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TMI Blog2022 (4) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... e acquired by the assessee was in nature of application software and is eligible for deprecation at the rate of 60%. As concluded if a particular article would fall within the description by the force of the words used, it is impermissible to ignore the word 'description' and going by the usage of the equipment purchased by the assessee, a decision has to be arrived at. We find that there is no error in the decision arrived at by the Tribunal by taking note of the specific entry in contra distinction with the general entry. Therefore, the first substantial question of law has to be necessarily answered against the Revenue. - ITA No. 1032/Mum/2021 - - - Dated:- 22-4-2022 - Shri Prashant Maharishi, AM And Shri Rahul Chaudhary, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... %. The learned Assessing Officer held that deprecation at the rate of 60% is allowable only on computers and software embedded in such computers which are part and parcel and are inseparable. Therefore, according to the learned Assessing Officer assessee has acquired only the license and hence, it is eligible for depreciation at the rate of 25% applicable to intangible assets. The Assessing Officer relied on the decision of the co-ordinate bench in case of M/s Harland Clarke Holding Software India Pvt. Ltd. Vs. DCIT in ITA no. 113/Chny/2017 dated 30.10.2018. 05. The assessee preferred the appeal before the learned CIT(A). The learned CIT(A) held that depreciation at the rate of 60% is allowable only on system software which are integral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of Hon'ble Madras High Court in CIT vs. Computer Age Management Services (P.) Ltd. [2019] 109 taxmann.com 134 (Madras), wherein a software license acquired by the assessee is allowed depreciation at the rate of 60%. He further referred to the decision of the Hon'ble Bombay High Court in case of CIT vs. I-Flex Solutions Ltd [2014] 46 taxmann.com 88 (Bombay), wherein deprecation on the software was allowed at the rate of 60% and decision of co-ordinate Bench in case of ACIT vs. Indiabulls Venture Ltd. dated 2nd July, 2020, wherein also the depreciation at the rate of 60% was allowed on software. 07. The learned Departmental Representative vehemently supported the order of the lower authorities. He submitted that under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rate of 60% on computers including computer software. Note-7 states that computer software means any computer programme recorded on any disk, tape, perforated media or other information storage device. Apparently, it does not make any difference between application system software or application software. Further, part B of appendix-1 prescribed deprecation at the rate of 25% on certain intangible assets such as knowhow, patents, copy rights trademarks, license fee, franchise or any other business or commercial right of similar nature. Therefore, the question that arises is the license obtained by the assessee would fall in the definition of computer software so as to make it eligible as tangible asset and then depreciation rate at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputers including computer software are entitled to depreciation at 60%. Note 7 of the Appendix defines the expression 'computer software' to mean any programs recorded on CD or disc, tape, perforated media or other information storage devices. 9. The case of the Revenue is that software are licences and that they are intangible assets and would fall under Part B of New Appendix I, which deals with knowhow, patents, copyrights, trademarks, licenses, francises or any other business or commercial rights of similar nature. 10. We find that Part B of New Appendix I is a general entry whereas Entry 5 of Part A of New Appendix I is a specific entry read with Note 7. In the instant case, the Tribunal, in our considered view, rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 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 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 petitioner, we have to take a decision. 12. As held in the above decision, if a particular article would fall within the description b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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