TaxTMI 
TaxTMI 
2022 (7) TMI 1569
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....F. No.263/CIT-I/2007-08 set-aside the Assessment order under Section 263 of the Act and formally dismissed the appeal before CIT(Appeals) for statistical purpose. Assessee challenged the same in ITA No. 254 and 255/Bang/2009. The ITAT restored the appeal on the file of CIT(Appeals). By his order dated June 30, 2010 under Section 250 read with 254 of the IT Act, the CIT(Appeals) partly allowed the appeal. The assessee challenged the same in ITA No.1143/Bang/2010 for the A.Y.2004-05, before the ITAT and the same has been allowed in part by the impugned order. 4. Revenue has framed following questions in this appeal: "1. Whether the Tribunal was correct in holding that the securities held under 'held to maturity' have the material characteristics of capital asset rather than stock in trade and the form part of investments only? 2. Whether the Tribunal was correct in allowing relief to the assessee writing off entire expense as revenue when the expenditure towards software item is capital in nature having enduring benefit eligible for depreciation at 60%? 3. Whether the Tribunal was correct in allowing relief to the issue on the issue of 'provision for expense....
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.... Tribunal's order on this aspect is unsustainable. In reply, Shri. Shankar argued that though the depreciation is allowed at 60% from the A.Y. 2003-04, the assessee will be entitled to claim depreciation at 60% in the first year and at the same rate on the remaining capital equipment for subsequent years. In ITA No.130/2007, this Court has recorded detailed reasons and held that software is an aid in manufacturing process rather than a tool itself. Though certain application has enduring benefit, it does not result into acquisition of capital asset. It merely enhances the productivity or the efficiency and therefore, it has to be treated as a Revenue expenditure. 8. We may record that in Oriental Bank of Commerce Vs. Additional Commissioner of Income-tax [2018] 93 taxmann.com 432 (Delhi) has held as follows: "7. The mere circumstance that the depreciation rate is spelt out in the Schedule to the Income-tax Act in our opinion is not conclusive as to the nature of the expenditure and whether it resulted in enduring advantage to a particular assessee. It is nobody's case that the assessee is dealing with computer softwares or is in the business of any related services. Rath....
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....mendment) Act, 1987, the provisions of Section 36(1)(vii) of the IT act and Section 36(2) of IT Act, 1961, has been amended to rationalize the provisions regarding allowability of bad debt with effect from April 1, 1989. It is further stated that the Legislative intention behind the amendment was to eliminate the litigation on the issue of allowability of 'bad debt' by doing away with the requirement for assessee to establish that the debt had in fact, become irrecoverable. He placed reliance on Big Bags International Pvt. Ltd. Vs. Deputy Commissioner of Income-tax (2021) 125 Taxmann.com 338 (para 6) in support of this contention. In view of the said Circular and the said authority wherein, this Court has held that the Act mandates that in order to claim bad debts, the assessee has to write-off the same in his Books of accounts and he is not required to prove that the debt was irrecoverable, we answer this question in favour of the assessee and against the Revenue. Re: Question No.4 12. Shri. Aravind submitted that Revenue does not press this Question. Re: Question No.5 13. Assessee has written off a sum of Rs.58,24,50,200/- under non-banking assets and the Assessing Of....
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....h Court in a similar circumstance has held that the properties continue to represent as 'Stock in Trade' of Banking business. We have carefully gone through both Woodward Governor and L.M. Devare. Shri. Shankar is right in his submission that Woodward Governor is an authority for Foreign Exchange. In L.M. Devare, certain immovable properties were acquired by the Bank from its debtors in satisfaction of the debts owed to it. In this case also, the Bank has acquired the assets. After considering decisions in the case of Coimbatore Anupparpalayam Bank Ltd., Vs. Commissioner of Income-tax (1961) 42 ITR 576 and other decisions, the Bombay High Court has held in L.M. Devare that the properties continued to be 'Stock in trade'. Shri. Shankar has also relied upon Karumuru Venkata Ramanadham Vs. Commissioner of Income-tax (1964) 52 ITR 742 in support of the same proposition that the properties acquired by the Bank should be treated as 'Stock in trade'. 16. In view of the above, we hold that the ITAT's conclusion that the asset shall be treated as 'Stock in Trade' does not call for any interference and accordingly, this question is answered in favour of t....