TaxTMI 
TaxTMI 
2020 (7) TMI 305
X X X X Extracts X X X X
X X X X Extracts X X X X
....h is stated to be engaged in the business of publication of books on taxation corporate laws and trading in software. Assessee electronically filed its return of income for A.Y. 2015-16 on 27.11.2015 declaring total income of Rs. 69,03,560/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Income tax Act, 1961, vide order dated 14.11.2017 and the total income was determined at Rs. 1,14,53,530/-. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who vide order dated 08.02.2019 (in Appeal No.339/18-19) dismissed the appeal of assessee. Aggrieved by the order of CIT(A), assessee is now before us and has raised the following grounds :- 1. "That on the facts and circums....
X X X X Extracts X X X X
X X X X Extracts X X X X
....im of depreciation on the expenditure incurred on development of software and an alternative claim that alternatively, the expenditure be allowed as Revenue expenditure u/s 37(1) of the Act. 5. During the course of assessment proceedings, on the basis of the details furnished by the assessee, it was noticed that assessee had developed "Web Master Software" and on which the assessee had claimed depreciation. The assessee was asked to show-cause as to why the depreciation claimed on such intangible assets not be disallowed as the software was not owned by it and the ownership of the software belonged to the Income tax Department. The submissions that were made by the assessee were not found acceptable to AO. The AO was of the view that sin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he website of the Income tax Department. The CMS which has been developed has not even been licensed to the Income tax Department nor has the assessee parted with the title on such intangible assets. He submitted that the CMS software for which the expenses have been incurred is used for the internal purpose of the assessee and also for providing the services to the Income tax Department under webmaster contract. The software supports most of the contents including text, pdf, embedded graphics, photos, program code that displays content or interacts with the users. The CMS has the capability of version control and document trail with redressal human efforts and corresponding decrease in the cost of content making and updating resulting into....
X X X X Extracts X X X X
X X X X Extracts X X X X
....computer application which supports the creation and modification of content and is often used to support multiple users working in a collaborative environment. He submitted that CMS is used inter alia for web based publishing, history editing, Version control, search indexing and boosting, retrieval. He submitted that it is designed to support the easy management of the content of various titles published by the assessee and it supports contents including text, PDF, embedded graphics and photos etc. He submitted that the customized CMS which has been developed by the assessee is to control the content which is updated regularly and it is also used to content provided by the assessee for the national website of Income Tax Department. He sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was fully justified in raising the issue before the CIT(A) in view of the decision of Hon'ble Supreme Court in the case of NTPC Ltd vs. CIT reported in (1998) 229 ITR 383 (SC). He further submitted that in subsequent year no disallowance of depreciation has been made though the assessment has not been made u/s 143(3) but u/s 143(1). He, therefore, submitted that the claim of the assessee be allowed. 7. Learned DR on the other hand pointing to the orders of the lower authorities supported their orders. 8. We have heard the rival submissions and perused the materials available on record. The issue in the present ground is with respect to the claim of depreciation on the intangible being CMS software. Before us, assessee has given the de....