2018 (7) TMI 745

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....aceuticals. It has filed return of income on 19.11.2011 declaring total income at Rs. 80,99,180. The return was processed under section 143(1), and thereafter selected for scrutiny assessment by issuance of notice under section 143(2) upon the assessee. During the assessment proceedings, it was noticed by the AO that the assessee has claimed depreciation of Rs. 54,14,319/- at the rate of 60% on block of assets viz. computer and software. The ld.AO doubted the claim of the assessee and issued a show cause notice asking as to why depreciation on software be not restricted to 25% instead of 60% claimed by the assessee. Assessee filed a reply dated 27.2.2015 which was been reproduced by the AO in the assessment order. Assessee submitted that the claim of the assessee was as per Appendix-I of the Income Tax Rule 5 wherein depreciation is allowable at 60% on computer including computer software. Reply of the assessee was not found convincing to the AO. The ld.AO in the assessment order discussed about the technicality of software and tried to dichotomize "software" into "system software" and "application software" so as to treat these two items as separate and mutually exclusive from the....

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....ommon business information with everyone concerned. Deployment of SAP itself can also involve a lot of time and resources and having long term business perspective. It cannot be compared with applications like MS office or tally etc. as tried to make out by the ld.AO, which is like comparing a mountain with a mole. Assessee has implemented SAP system in their various business tasks, and is part of its integrated computer system, and therefore, the assessee is entitled for depreciation at the rate of 60% as provided in the list of assets in the table of rates of application depreciation. It is pertinent to note that similar issue agitated by the Revenue before the Tribunal in Asstt.Year 2010-11 has been dismissed and the claim of the assessee was allowed. We find that Tribunal has relied upon the order of the Tribunal in the case of ACIT Vs. Zydus Infrastructure P.Ltd. (2016) 72 taxmann.com 199 (Ahd-Trib) and held that licenced software are also subjected to depreciation at the rate of 60%. Tribunal also observed that even if depreciation is lowered, then there would not be any change in taxable income of the assessee, as the assessee-company is a unit eligible for deduction under ....

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....TA No.2788/Ahd/2014 dated 2.7.2018 and perused the same. We have also gone through the record. 12. We find that the ld.CIT(A) has appreciated the facts in right perspective and arrived at a just conclusion by allowing the claim of the assessee. We make it a point to note the relevant findings of the ld.CIT(A) on this issue which reads as under: "After going through the facts of the case and the details submitted by the AR and also the findings given by the CIT(A) in the appellant's own case for the A.Y.2010-11, it is noticed that the appellant has reduced the gains due to foreign exchange rate fluctuation from the export turn over nut not from the profit and business income as per the provisions of section 10AA(7) of the I. T. Act but the AO in his working has reduced such gain from the business profit also. This working of the AO where he has completely excluded the said gain from deduction u/s.lOAA is not justified under the provision of income tax Act nor is supported by legal position interpreted by various judicial pronouncement which are discussed in detailed by the CIT(A) in the appeal order in the case of appellant for the A.Y.2010-11. As I have no reason to diffe....

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....r loss. I am inclined with appellant that as per the ratio of Hon'ble Gujarat High Court decision in the case of Priyanka Gems upholding the Hon'ble /TAT, Ahmedabad order in the same case, such gain and loss are part and parcel of the sale of export. I am also inclined with appellant that Hon'ble Bombay High Court for same issue and in similar facts (deduction u/s.10A of the Act) following its judgement in the case of CIT vs. Amber Export (India) & Hon'ble Gujarat High Court judgement in the case of CIT vs. Amba Impex (2006) 282 /TR 144 held in favour of assessee for large amount realized in terms of Indian Rupees as a result of a foreign exchange fluctuation that took place in the course of the export transaction. Similarly Hon'ble Mumbai /TAT in the case of Renaissance Jewellery (P)Ltd. (supra) after considering ratio of various case laws held that - "There is no material difference bebveen the requirement of section 80HHC and section 10A. The profit on account of foreign exchange gain is directly referable to the articles and things exported by the assessee. Such profits are, therefore, in the same nature as the sale proceeds and there is no reason while d....