TaxTMI 
TaxTMI 
2021 (12) TMI 762
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....ii. Denying the benefit of deduction amounting to Rs. 7,71,505 under Section 80G of the Act The conclusions of the lower authorities in making addition and the reasons, basis, rationale in support of the impugned conclusion is contrary to facts, bad in law and liable to be quashed. (Tax effect being Rs. 11,12,120) 3. The Lower authorities erred in disallowing the Appellant's claim of additional depreciation amounting to Rs. 24,47,283 under Section 32(1)(iia) of the Act on the additions made to the block of assets 'Computers including Computer Software'- i. By incorrectly holding that the Appellant was not eligible for the said claim since the Appellant engaged in the business of software development, the said assets were not used in the manufacture or production of articles or things. This assumption of the LAA were without appreciating the fact that having regard to the inputs and activities performed in the process of development of software products, all essential characteristics of `manufacture' or 'production' of article or things have been met and therefore, the Appellant could not have been denied the said benefit of the claim ii. By incor....
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....nces under the other Acts; especially when in any case, the disallowance was already made under Section 37(1) of the Act in the return of income filed by the Appellant (Tax effect being Rs. 2,55,083) 5. The Lower Authorities erred in charging the interest under section 234D on assessed income consequent to additions made during the assessment. (Tax effect being Rs. 47,889) 6. Under The circumstances where under the grounds of Appeal with the substantiations are required to be filed within 60 days of the date of receipt of the Appellate order, the Appellant prays that it be permitted to add, amend, alter and improve upon the grounds of Appeal. (Tax effect being Rs. 11,12,120)" Brief facts of the case are as under: 2. The Ld.AO observed that the assessee is a 100% subsidiary of Sling Media Inc., USA and provides software development services to its parent company as a captive unit. It filed its returns for the Assessment Year 2016-17 on 30.11.2016 declaring total income of Rs. 8,45,29,290/-. The return was selected for scrutiny. The Ld.AO during the course of assessment proceedings called for various documents, that were submitted by the representative of assessee. 2.1 The....
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....aged in rendering software development and testing services to its parent company. He submitted that, for the purpose of business, assessee acquired new computers that forms part of block of assets, placed at pages 136-138 of the paper book. He also placed reliance on the invoices detailing the purchase of such computer equipments. It is submitted by the Ld.AR that assessee is engaged in rendering of software development services is to be regarded as an industrial undertaking engaged in the manufacture of article or thing that is eligible for deduction u/s. 32(1)(iia) of the Act. 5.1 The Ld.AR submitted that the software is developed based on the inputs fed into the computers that would result in an executable programme. He thus submitted that the entire process falls within the category of "manufacture of articles or things", to claim additional depreciation under the said section. He submitted that there is no dispute that these computers are installed in the office premises of assessee. The Ld.AR placed reliance on the decision of Hon'ble Bombay High Court in the case of ESI vs. Reliable Software Systems Pvt. Ltd. reported in [2012] 5 AIR BOM. R 795. He submitted that the said ....
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....multiple assets with different rates of depreciation. It is pointed that the third block of Appendix-1 includes computers, wherein computer is eligible for 60% depreciation. Thus, it cannot be denied that computer is covered within the purview of plant and machinery. 5.6 We note that co-ordinate bench in the case of Texas Instruments (India) Pvt. Ltd. Vs. Addl. CIT as reported in [2020] 115 taxmann.com 154 have considered an identical situation by observing as under. "18. We have heard the submissions of the learned counsel for the Assessee and the learned DR. The provisions of Sec.32(1)(iia) of the Act based on which the additional depreciation was claimed by the Assessee reads thus: "Sec.32 Depreciation. (1)In respect of depreciation of-- (i) buildings, machinery, plant or furniture, being tangible assets; (ii) know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned, wholly or partly, by the assessee and used for the purposes of the business or profession, the following deductions shall be allowed-- (i) in the c....
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....d by the assessee. Therefore, the contention that the setting up of a windmill had nothing to do with the manufacture of textile goods was totally not germane to the specific provision contained in section 32(1)(iia ). In the light of the aforesaid decision, we are of the view that one of the basis on which the revenue authorities disallowed the claim of the Assessee for disallowance of additional depreciation cannot be sustained. 20. As far as the question whether the assets on which the Assessee claimed additional depreciation should be regarded as "Plant" or "Office Equipment", we do not find sufficient material before the revenue authorities to come to a conclusion one way or the other. The learned counsel for the Assessee submitted in the course of his arguments that the assets on which additional depreciation is claimed were used for testing process while designing semi-conductors which was also a business which the Assessee was carrying on. These details have not been brought on record by the Assessee before the lower authorities nor before us. He also IT(TP)A No.169 & 149/Bang/2014 placed reliance on the decision of the Hon'ble Bombay High Court in the case of CIT Vs....
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....vity. Accordingly, relying on the decision of Hon'ble Bombay High Court in case of CIT vs. IBM World Trade Corporation reported in (1981) 130 ITR 739, we do not find any infirmity in the disallowance of additional depreciation to assessee. However, the alternative plea to allow the deprecation in the subsequent assessment year on the enhanced WDV of block of assets at the prevailing rates cannot be denied. Accordingly, we allow the additional ground raised by assessee and dismiss the Ground no. 3. 6. Ground no. 4 - The Ld.AR has submitted that assessee has been Rs. 15,77,889/- toward CSR activities. It has been submitted that donations were made to eligible institutions and deduction u/s. 80G was claimed to an extent of Rs. 7,71,505/- that pertained to such donations. It has also been submitted by Ld.AR that assessee has suo moto disallowed the said expenditure u/s. 37(1) of the Act for the year under consideration which is clear from pages 103-104 of the paper book. He placed reliance on the decision of co-ordinate bench of this Tribunal in the case of First American (India) Pvt. Ltd. vs. ACIT in ITA No. 1762/Bang/2019 by order dated 29.04.2020. The Ld.Sr.DR placed reliance on....