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TMI Blog2023 (11) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... se of CIT vs. Computer Age Management Services [ 2019 (7) TMI 1153 - MADRAS HIGH COURT] has held that where software license acquired by the assessee was in the nature of software application, the assessee was eligible to claim depreciation @ 60%. Again, in the case of A.R. Kema Medical India Pvt. Ltd. [ 2022 (4) TMI 1182 - ITAT MUMBAI] again held that where the assessee purchased license of ERP SAP Software, the assessee was entitled to depreciation on such license @ 60%. Again, in the case of Castus Imaging India Pvt. Ltd. [ 2018 (5) TMI 636 - MADRAS HIGH COURT] decided that printer being part of computer, it is eligible for depreciation at higher rate of 60%. Thus CIT(A) has not erred in allowing depreciation @ 60% on such computer software. Decided in favour of assessee. Excess claim of consumption of own generation of electricity - HELD THAT:- We observe that on perusal of the paper book, it is seen that the assessee had filed various invoices for hiring of generator sets, which have not been disputed. Further, the assessee had also submitted that invoices for purchase of oil for running the DG sets. More importantly, it is also observed that the production in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of management fees of Rs. 2,11,50,685/- without bechmarking the transactions which is contrary to the - provisions of Section 92C of the Act and Rule 10A to 10C of the Income tax Rules? (v) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) is justified in deleting the addition of Rs. 9,47,864/- made by the Assessing Officer on account of disallowance of excess depreciation claimed on computer software license; without appreciating the fact that purchase of ME S Tool Kit (Nissan) CAD software License is only an additional tool used in the business which comes under the classification of intangible assets and accordingly the same is eligible for depreciation @ 25% only. 5. The assessee has raised the following grounds of cross objection:- The Ld. AO being aggrieved by the order dated 19th April 2021 passed by the Hon'ble CIT (A)-13, Ahmedabad which was subsequently rectified vide rectification order dated 05 May 2021, preferred an appeal before Ahmedabad Bench of Hon'ble ITAT vide ITA No. 317 of 2021, Against the same assessee wishes to cross object on the following grounds: The below mentioned grounds are witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to its associated enterprise but the DRP had directed to delete the disallowances of management charges. It was further submitted that in a similar issue of disallowance of management fee, the ITAT in the assessee s own case for assessment year 2011-12 had allowed 2% of the operating revenue towards payment of management fees. It was further submitted that assessee had entered into an APA with the CBDT on 29-12-2016 for the international transactions of payment of management fees (including other international transactions) with its associated enterprises and it has been agreed under the APA that the management fees may be kept at 2% of the operating revenue for assessment year 2015-16 and assessment year 2016-17 and at 3% from Assessment Year 2017-18 to Assessment Year 2019-20. Accordingly, in light of the arguments put forth by the assessee, the ld. CIT(A) in the order passed on 19-04-2021 held that addition on this issue should be restricted to 2% of the operation revenue for the under consideration. The Assessing Officer was directed to re-compute the addition accordingly. Thereafter, the ld. CIT(A) passed rectification order dated 05-05-2021 and rectified the above ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance in respect of operating revenue of manufacturing [email protected]%, the Bench has wrongly applied 2% of the same. 2. We have perused the order passed by the bench. The paragraph 7 thereof categorically deals with the percentage of operating revenue on the identical facts in case of the assessee in different years and finally applied 2% of the operating revenue of manufacturing segment, which was worked out at Rs. 2,20,88,379/- and therefore disallowance was made Rs. 10,47,454/- against the assessee in respect of the operating revenue of manufacturing segment. We do not find any error apparent on the face of the record which could at all be prayed for rectification. Hence the Miscellaneous Application is found to be devoid of any merit and thus dismissed. 3. In the result, the Miscellaneous Application filed by the Revenue is dismissed. 9.1 In view of the aforesaid observations made by the ITAT in assessee s own case for assessment year 2011-12, we observe that the ITAT has clarified that 2% of the operating revenue of manufacturing segment would be allowable to the assessee towards management charges. Accordingly, respectfully following the specific directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... succeeds. 12. The Department is in appeal before us against the aforesaid order passed by ld. CIT(A). 13. We observe that in the case of CIT vs. Computer Age Management Services supra , the Madras High Court has held that where software license acquired by the assessee was in the nature of software application, the assessee was eligible to claim depreciation @ 60%. Again, in the case of A.R. Kema Medical India Pvt. Ltd. 139 taxman.com 540 , the ITAT held that where the assessee purchased license of ERP SAP Software, the assessee was entitled to depreciation on such license @ 60%. Again, in the case of Castus Imaging India Pvt. Ltd. 93 taxman.com 396 , the High Court held that printer being part of computer, it is eligible for depreciation at higher rate of 60%. Accordingly, looking into the facts of the instant case and the judicial precedents on the subject, we are of the considered view that ld. CIT(A) has not erred in allowing depreciation @ 60% on such computer software. 14. In the result, ground no. )v) of Department s appeal is dismissed. 15. Now, we shall take up Department s appeal and assessee s cross appeal for assessment year 2013-14. 16. The Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge increase in the cost of own generation of electricity claimed by the assessee during the year under consideration. (vii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) is justified in deleting the addition of Rs. 1,11,12,560/- made by the Assessing Officer on account of excess claim of consumption of own generation of electricity unit without appreciating the fact that the assessee has failed to prove commercial expediency for generating the electricity at higher cost @Rs.13.16 per unit of electricity especially when there was purchase of electricity was available @ Rs. 6.96 per unit of electricity during the year under consideration and accordingly the Assessing Officer has rightly made the addition on account of excess claim of consumption of own generation of electricity. 17. The assessee has raised the following grounds in cross objection:- The Ld. AO being aggrieved by the order dated 19th April 2021 passed by the Hon'ble CIT(A)-13, Ahmedabad which was subsequently rectified vide rectification order dated 05 May 2021, preferred an appeal before Ahmedabad Bench of Hon'ble ITAT vide ITA No. 318 of 2021. Again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compared to cost of own generation of electricity. Further, the Assessing Officer observed that the submission of the assessee that rent has been paid by the assessee for hiring generator set is not substantiated with corroborating evidences like rent agreement and the assessee has only produced copy of invoices of DG set rental expenses which as per the Assessing Officer was not sufficient. The Assessing Officer was of the view that assessee did not produce the calculation of per electricity unit generated and used by it and therefore failed to justify rate taken for own generated units with supporting documents. Accordingly, the Assessing Officer restricted the allowability of cost of own electricity generated units @ 6.96 per unit instead of @ 13.16 per unit and worked the excess claim of Rs. 1,11,12,560/- and disallowed the same and added it to the total income of the assessee. In appeal, the ld. CIT(A) allowed the appeal of the assessee with the following observations:- 9. It is seen that there is neither any factual nor any legal basis for the AO to substitute the rate of Rs. 6.96 per unit as against rate of Rs. 13.16 per unit of self generated electricity more so withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book, it is seen that the assessee had filed various invoices for hiring of generator sets, which have not been disputed. Further, the assessee had also submitted that invoices for purchase of oil for running the DG sets. More importantly, it is also observed that the production in the aforesaid units had also taken place during the impugned year under consideration and the income therefrom has been offered to tax. Accordingly, looking into the facts, we are of the considered view that the assessee has produced necessary invoices for taking the DG sets on rent and the invoices for the purchase of oil for running the aforesaid DG sets. It is also an undisputed fact that the income from manufacturing units have duly been offered to tax by the assessee and also that while disallowing the aforesaid expenditure, the Assessing Officer has also not rejected the books of accounts of the assessee. Accordingly, we find no infirmity in the order of ld. CIT(A) while allowing this ground of appeal of the assessee, so as to call for any interference. 24. In the result, ground no. (vi) and (vii) of the Department s appeal are dismissed. 25. We shall now take up the Department s appeal for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of own generation of electricity claimed by the assessee during the year under consideration. (vi) Whether on the facts and in the circumstances of the case and in law, the Ld CIT (Appeals) is justified in deleting the addition of Rs 2,02,32,475/- made by the Assessing Officer on account of excess claim of consumption of own generation of electricity unit without appreciating the fact that the assessee has failed to prove commercial expediency for generating the electricity at higher cost @ Rs 15.49 per unit of electricity especially when there was purchase of electricity was available @Rs 7.58 per unit of electricity during the year under consideration and accordingly the Assessing Officer has rightly made the addition on account of excess claim of consumption of own generation of electricity. 27. The assessee has taken the following grounds in cross objection:- The Ld. AO being aggrieved by the order dated 19th April 2021 passed by the Hon'ble CIT(A)-13, Ahmedabad which was subsequently rectified vide rectification order dated 05 May 2021, preferred an appeal before Ahmedabad Bench of Hon'ble ITAT vide ITA No. 318 of 2021 Against the same assessee wishes t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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