Case Law Details
CIT Vs Computer Age Management Services Pvt. Ltd. (Madras High Court)
In a significant ruling, the Madras High Court has allowed a 60% depreciation rate on computer software licenses, particularly emphasizing the specific entry in the tax laws. The case of CIT Vs Computer Age Management Services Pvt. Ltd. revolved around two primary issues: the depreciation rate for software licenses and the treatment of non-compete fees as revenue expenditure.
The Revenue had filed these appeals under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal (ITAT) for the assessment years 2012-13, 2013-14, and 2014-15. The central questions raised by the Revenue included the eligibility of the assessee to claim depreciation at 60% for software licenses and whether non-compete fees should be treated as revenue expenditure.
Depreciation on Software Licenses
The assessee in this case is engaged in the business of registrar and transfer agent licensed by the Securities Exchange Board of India (SEBI). They handle large volumes of market-sensitive data and information, primarily relying on customized application software for their operations. During the relevant years, the assessee capitalized software licenses and claimed a depreciation rate of 60%.
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