Tribunal grants 60% depreciation rate for design software purchase by petrochemical company

The Tribunal allowed the appeal, granting depreciation at the rate of 60% for the purchase of design software by the assessee, a private limited company in the petrochemical business. Despite the initial denial of the claim by the Ld.AO and the partial relief granted by the Ld.CIT(A), the Tribunal ruled that the purchase constituted design software falling under computer software as per Note 7 of the Rules, thereby directing the Ld.AO to allow the higher depreciation rate.

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Issues:
Delay in filing appeal, Depreciation benefit on computer software.

Delay in Filing Appeal:
The appeal was filed with a delay of 34 days due to the Managing Director's official travel. The Ld. AR requested condonation of the delay, which was objected to by the Ld. DR. Despite not fully appreciating the reason, the Tribunal condoned the delay in the interest of justice to hear the appeal on merits.

Depreciation Benefit on Computer Software:
The main issue revolved around the denial of depreciation at the rate of 60% under the block of computer by the Ld.CIT(A). The assessee, a private limited company in the petrochemical business, filed its return for the assessment year 2012-13, claiming 60% depreciation on computer software acquisition. The Ld.AO disallowed this claim, allowing only 15% depreciation, resulting in an addition to the income. The Ld.CIT(A) partially granted relief, treating the purchases as intangible assets and allowed depreciation at 25%. The Tribunal, after examining the facts, ruled that the purchase constituted design software, which falls under computer software as per Note 7 of the Rules. Therefore, the Tribunal directed the Ld.AO to grant depreciation at 60% for the purchase of design software, thereby allowing the appeal.

In conclusion, the Tribunal allowed the appeal, emphasizing that the purchase of design software by the assessee qualified for depreciation at the rate of 60% under the block of computer. The decision was based on the classification of the purchase as computer software according to the Rules, despite the initial denial of the claim by the Ld.AO and the partial relief granted by the Ld.CIT(A).

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