TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 1580
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....pectively. The assessments were framed by the DCIT, Corporate Circle 2(2), Chennai for the assessment years 2012-13 & 2014-15 u/s. 143(3) r.w.s. 92CA(3) of the Act vide orders dated 29.03.2016 & 19.12.2016 respectively. Revenue's Appeal in ITA No. 2018/CHNY/2019, AY 2013-14 2. The only issue in this appeal of Revenue is as regards to the order of CIT (A) deleting the disallowance of expenses made by the AO of expenses relatable to exempt income by invoking the provisions of section 14A r.w. rule 8D of the Income Tax Rules, 1962 for the reason that there is no exempt income in the case of the assessee. 2.1 We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the CIT (A) deleted the addition by noting the fact that the assessee has not earned any exempt income and following the decision of Hon'ble Jurisdictional High Court in the case of CIT v. Chettinad Logistics (P) Ltd., [2017] 80 taxmann.com 221 and Redington (India) Ltd., vs. Addl.CIT, [2017] 77 taxmann.com 257 and held as under:- 6. As regards to issue of disallowance u/s. 14A, the appellant before me has submitted that no dividend income is earned during the assessm....
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....y of Rs. 89 crores during the previous year ended 31.03.2010 and during the preceding year ending 31.03.2011, the assessee company obtained specific term loans from banks and financial institutions to the extent of Rs. 887 crores. Further, during previous year ending 31.03.2012 i.e., year under consideration, the assessee company obtained such specific term loans from banks amounting to Rs. 554 crores and received FCCD's amounting to Rs. 146 crores. The assessee claimed that such funds were kept ready for purchase of land, plant & machinery and construction activity. Since the assessee was setting up a mega power plant it required huge extent of land and same was not available easily. Since the assessee was in the process of acquiring land, setting up plant & machinery and carrying out construction activity in these three assessment years, the assessee kept this idle fund i.e., loan taken from banks of Rs. 550 crores and FCCD of Rs. 146 crores in its bank account in the FDs and earned interest of Rs. 6,27,70,128/- in this year. The assessee in its account capitalized the same and accordingly reduced the cost of the assets and the AO while framing ....
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....ary deposit of funds with banks and group companies. We also noted that it is undisputed fact that this interest earned will go to reduce the expenditure incurred during construction period and as such, it should be deposited against capital work-in-progress. This view of ours is supported by the decision of Hon'ble Supreme Court in the case of Bokaro Steel Ltd., supra wherein the Hon'ble Supreme Court has considered the identical issue and observed as under:- "The company may also, as in that case, keep the surplus funds in short-term deposits in order to earn interest. Such interest will be chargeable under Section 56 of the Income-tax Act. This Court also emphasised the fact that the company was not bound to utilize the interest so earned to adjust it against the interest paid on borrowed capital. The company was free to use this income in any manner it liked. However, while interest earned by investing borrowed capital in short-term deposits is an independent source of income not connected with the construction activities or business activities of the assessee, the same cannot be said in the present case where the utilisation of various assets of the company and the payments ....
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....or the setting up of the plant and machinery. In this view of the matter the ratio laid down by this court in Tuticorin Alkali Chemicals and Fertilizers Limited v. CIT, will not be attracted. The more appropriate decision in the factual situation in the present case is in CIT v. Bokaro Steel Ltd. . The appeal is dismissed. There will be no order as to costs. 8. Respectfully following these two Supreme Court decisions, we delete the addition and allow capitalization of the same. Similar are the facts on the other two assessment years on this issue, hence taking a consistent view, we allow this issue of assessee's appeals. ITA No. 1989/CHNY/2019, Assessment year 2012-13 9. The next issue in this appeal of assessee is as regards to the order of CIT (A) confirming the action of the AO in restricting the claim of depreciation of computer software at 25% as against the claim of assessee at 60%. For this, assessee has raised Ground No. 3, which we need not to reproduce. 10. At the outset, we noted that the assessee has claimed depreciation on computer software i.e., license is purchased amounting to Rs. 2,27,400/- @ 60%. The AO restricted the claim of depreciation on li....
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....re customized and some of which are single user licenses. 8. The question would be as to whether the software application, which was acquired by the assessee would fall under Entry 5 of Part A of New Appendix I, which states that computers including computer software are entitled to depreciation at 60%. Note 7 of the Appendix defines the expression 'computer software' to mean any programs recorded on CD or disc, tape, perforated media or other information storage devices. 9. The case of the Revenue is that software are licences and that they are intangible assets and would fall under Part B of New Appendix I, which deals with knowhow, patents, copyrights, trademarks, licenses, francises or any other business or commercial rights of similar nature. 10. We find that Part B of New Appendix I is a general entry whereas Entry 5 of Part A of New Appendix I is a specific entry read with Note 7. In the instant case, the Tribunal, in our considered view, rightly held that the assessee is eligible to claim depreciation at 60%. 11. In the decision rendered by a Division Bench of this Court in the case of CIT Vs. M/s. Cactus Imaging India Private Limited [reported in (2018) 406 ITR 406....