The Appellate Tribunal addressed the disallowance of...

The Appellate Tribunal addressed the disallowance of depreciation claimed on software purchases u/s 40(a)(i)/(ia) due to non-deduction of tax at source. The AO contended that the software purchased were copyrights, hence payments were royalty. However, depreciation is a statutory deduction u/s 32, irrespective of TDS. The Tribunal cited a Supreme Court ruling emphasizing that for a payment to be royalty, there must be a right to use without commercially exploiting intellectual property. The Tribunal allowed the assessee's appeal on this issue. Regarding depreciation on servers/network equipment, the Tribunal relied on precedent and granted depreciation at 60%. The revenue's arguments were rejected.