DCIT , CIR 8(2) (1) , MUMBAI vs M/S. OGILVY AND MATHER PVT. LTD, MUMBAI

Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI NARENDER KUMAR CHOUDHRY

For Appellant: Mr. Ajit Shah/Hetal Sangani

For Respondent: Mr. M P Ahuja, DR

Hearing: 10/05/2023Pronounced: 29/05/2023

PER BENCH:

These cross appeals and cross objections are directed against These cross appeals and cross objections are directed against These cross appeals and cross objections are directed against separate orders passed by the Ld. Commissioner of Income- separate orders passed by the Ld. Commissioner of Income separate orders passed by the Ld. Commissioner of Income (Appeals) for assessment year 2012 (Appeals) for assessment year 2012-13, 2013-14 14 and 2016-17 respectively. The facts and circumstances in these appeals and respectively. The facts and circumstances in these appeals respectively. The facts and circumstances in these appeals cross objections being being identical, samewere heard together and heard together and disposed off by way of this consolidated order for convenience and disposed off by way of this consolidated order for convenience and disposed off by way of this consolidated order for convenience and avoid repetition of facts. avoid repetition of facts.

Firstly, we take up Firstly, we take up the cross appeals of the assessee and the cross appeals of the assessee and Revenue and cross objections of the assessee for assessment year Revenue and cross objections of the assessee for assessment year Revenue and cross objections of the assessee for assessment year 2012-13. The relevant grounds raised in cross appeals and cross 13. The relevant grounds raised in cross appeals and cross 13. The relevant grounds raised in cross appeals and cross objections are reproduced as under: objections are reproduced as under:

Assessee’s Ground

Claim of Education Cess Claim of Education Cess of Rs. 1,04,06,747/-

In the facts and circumstances of the case, and in Law the Learned In the facts and circumstances of the case, and in Law the Learned In the facts and circumstances of the case, and in Law the Learned Assessing Officer (AO) /Commissioner of Income Tax (Appeals) ought Assessing Officer (AO) /Commissioner of Income Tax (Appeals) ought Assessing Officer (AO) /Commissioner of Income Tax (Appeals) ought to have allowed the deduction for Education Cess of Rs. to have allowed the deduction for Education Cess of Rs. to have allowed the deduction for Education Cess of Rs. 1,04,06,747/- (inadvertently mentioned as Rs (inadvertently mentioned as Rs.as expenditure u/s as expenditure u/s 37 and other applicable provisions of the Income Tax Act, 1961 (the 37 and other applicable provisions of the Income Tax Act, 1961 (the 37 and other applicable provisions of the Income Tax Act, 1961 (the Act).

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 3 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

Refund of Dividend Distribution Tax of Rs. 2,99,38,207/ Refund of Dividend Distribution Tax of Rs. 2,99,38,207/ Refund of Dividend Distribution Tax of Rs. 2,99,38,207/-

In the facts and circumstances of the case, and in law it should be In the facts and circumstances of the case, and in law it should be In the facts and circumstances of the case, and in law it should be held that the dividend distribution tax paid us 115 held that the dividend distribution tax paid us 115-0 of the Act by 0 of the Act by the the the appellant appellant appellant on on on the the the dividend dividend dividend distributed/paid distributed/paid distributed/paid to to to Foreign Foreign Foreign Shareholders should be restricted to the respectiverates as per Shareholders should be restricted to the respectiverates as pe Shareholders should be restricted to the respectiverates as pe relevant Article 10/11 relevant Article 10/11 -"Dividends" of the Double Taxation "Dividends" of the Double Taxation Avoidance Agreement (DTAA) between India and the country of Avoidance Agreement (DTAA) between India and the country of Avoidance Agreement (DTAA) between India and the country of respective foreign shareholder is a resident i.e. Netherlands, United respective foreign shareholder is a resident i.e. Netherlands, United respective foreign shareholder is a resident i.e. Netherlands, United Kingdom, and Mauritius and the excess corporate dividend Kingdom, and Mauritius and the excess corporate dividend Kingdom, and Mauritius and the excess corporate dividend distribution tax paid should be held as refundable to the appellant. tion tax paid should be held as refundable to the appellant. tion tax paid should be held as refundable to the appellant. Note: The aforesaid ground has been raised for the first time. Since The aforesaid ground has been raised for the first time. Since The aforesaid ground has been raised for the first time. Since involves question of law it is humbly prayed that the same should be involves question of law it is humbly prayed that the same should be involves question of law it is humbly prayed that the same should be considered and dealt with and decided in accordance with the considered and dealt with and decided in accordance with considered and dealt with and decided in accordance with provisions of law and merits of the claim. provisions of law and merits of the claim. 3. It is humbly prayed that the It is humbly prayed that the reliefs as prayed for hereinabove and as prayed for hereinabove and or/such other reliefs as may be justified by the facts and or/such other reliefs as may be justified by the facts and or/such other reliefs as may be justified by the facts and circumstances of the case and as may meet the ends of justice circumstances of the case and as may meet the ends of justice circumstances of the case and as may meet the ends of justice should be granted. should be granted. Revenue’s ground of appeal Revenue’s ground of appeal

Whether on the facts and circumstances of the case and in Whether on the facts and circumstances of the case and in Whether on the facts and circumstances of the case and in law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software bought off the shelf is a tangible asset and hence eligible for bought off the shelf is a tangible asset and hence eligible for bought off the shelf is a tangible asset and hence eligible for depreciation at the rate of 60% . depreciation at the rate of 60% . 2. Whether on facts and circumstances of the case and in law, on facts and circumstances of the case and in law, on facts and circumstances of the case and in law, Ld. CIT(A) erred in delegating the addition made us 154 of the Ld. CIT(A) erred in delegating the addition made us 154 of the Ld. CIT(A) erred in delegating the addition made us 154 of the Act on the ground that depreciation on software is allowable Act on the ground that depreciation on software is allowable Act on the ground that depreciation on software is allowable at the rate 60% or 25% is a debatable issue and hence cannot at the rate 60% or 25% is a debatable issue and hence cannot at the rate 60% or 25% is a debatable issue and hence cannot be rectified. 3. Whether on facts and circumstance of the case and in law, the r on facts and circumstance of the case and in law, the r on facts and circumstance of the case and in law, the Ld. CIT(A) erred in holding that the Assessing Officer is not Ld. CIT(A) erred in holding that the Assessing Officer is not Ld. CIT(A) erred in holding that the Assessing Officer is not justified in making rectification on a substantive issue. justified in making rectification on a substantive issue. justified in making rectification on a substantive issue. Cross Objections raised by the Assessee Cross Objections raised by the Assessee

In the facts and circumstances of th In the facts and circumstances of the case and in law: e case and in law:

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 4 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

(a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software bought were tangible assets and eligible for depreciation @ 60%. bought were tangible assets and eligible for depreciation @ 60%. bought were tangible assets and eligible for depreciation @ 60%. (b) The Ld. CIT(A) rightly held as to whether computer software is (b) The Ld. CIT(A) rightly held as to whether computer software is (b) The Ld. CIT(A) rightly held as to whether computer software is eligible for depreciation @ 60% or 2 eligible for depreciation @ 60% or 25% is a debatable issue and 5% is a debatable issue and hence allowance of depreciation at 60% could not be construed as a hence allowance of depreciation at 60% could not be construed as a hence allowance of depreciation at 60% could not be construed as a mistake apparent from record which could be rectified us. 154 of the mistake apparent from record which could be rectified us. 154 of the mistake apparent from record which could be rectified us. 154 of the Act. (c) The Ld. CIT (A) did not err in holding that the Assessing Officer (c) The Ld. CIT (A) did not err in holding that the Assessing Officer (c) The Ld. CIT (A) did not err in holding that the Assessing Officer was not justified in passing the order of rectification us. 154 of the in passing the order of rectification us. 154 of the in passing the order of rectification us. 154 of the Act involving substantive issue as to whether the correct rate of Act involving substantive issue as to whether the correct rate of Act involving substantive issue as to whether the correct rate of depreciation in respect of software is 60% or 25%. depreciation in respect of software is 60% or 25%. (d)The Appellate Order passed by the Ld. CIT (A) should be upheld (d)The Appellate Order passed by the Ld. CIT (A) should be upheld (d)The Appellate Order passed by the Ld. CIT (A) should be upheld wherein he has held wherein he has held that computer software are eligible for that computer software are eligible for depreciation @ 60%. depreciation @ 60%. 1.1 Without prejudice to each of the earlier Cross Objections, in the Without prejudice to each of the earlier Cross Objections, in the Without prejudice to each of the earlier Cross Objections, in the facts and circumstances of the case and in law the appeal filed by facts and circumstances of the case and in law the appeal filed by facts and circumstances of the case and in law the appeal filed by the Department for impugned assessment year 2012 the Department for impugned assessment year 2012-13 should be 13 should be dismissed as the tax effect mentioned in the Form 36 filed along dismissed as the tax effect mentioned in the Form 36 filed al dismissed as the tax effect mentioned in the Form 36 filed al with the Grounds of Appeal is Rs.19,53,430/ with the Grounds of Appeal is Rs.19,53,430/- which is less than Rs. which is less than Rs. 50 lakhs as per the InstructionsNo. 17/2019 dated 08/08/2019 50 lakhs as per the InstructionsNo. 17/2019 dated 08/08/2019 50 lakhs as per the InstructionsNo. 17/2019 dated 08/08/2019 issued by the Central Board of Direct Taxes as regards the appeal issued by the Central Board of Direct Taxes as regards the appeal issued by the Central Board of Direct Taxes as regards the appeal by the Department. by the Department. 2. It is humbly prayed that the relief It is humbly prayed that the reliefs prayed for hereinabove and/or s prayed for hereinabove and/or such other reliefs as may be justified by the facts and circumstances such other reliefs as may be justified by the facts and circumstances such other reliefs as may be justified by the facts and circumstances of the case and as may meet the ends of justice should be granted. of the case and as may meet the ends of justice should be granted. of the case and as may meet the ends of justice should be granted. 3. Briefly stated, facts of the case are that the assessee Briefly stated, facts of the case are that the assessee Briefly stated, facts of the case are that the assessee company was engaged in the business of advertising. The assessee filed its was engaged in the business of advertising. The assessee f was engaged in the business of advertising. The assessee f original return of income on 20.11.2012 declaring total income at original return of income on 20.11.2012 declaring total income at original return of income on 20.11.2012 declaring total income at Rs.109,55,38,640/-, , w which hich was was subsequently subsequently revised revised to to Rs.110,12,43,050/- on 26.03.2014. on 26.03.2014. In the return of income, fo In the return of income, for the purpose of the income tax, the assessee claimed depreciation on purpose of the income tax, the assessee claimed depreciation on purpose of the income tax, the assessee claimed depreciation on software expenses at the rate of the 60% of written down value.The software expenses at the rate of the 60% of written down software expenses at the rate of the 60% of written down return of income filed by the assessee was selected for scrutiny and return of income filed by the assessee was selected for scrutiny return of income filed by the assessee was selected for scrutiny

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 5 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

statutory notices under the Act were issued and co statutory notices under the Act were issued and complied with. The mplied with. The assessment u/s 143(3) of the Act was completed on 26.03.2016. In assessment u/s 143(3) of the Act was completed on 26.03.2016. assessment u/s 143(3) of the Act was completed on 26.03.2016. the assessment completed the claim of depreciation on software was the assessment completed the claim of depreciation on software was the assessment completed the claim of depreciation on software was allowed. However, subsequently the Assessing Officer noted that the allowed. However, subsequently the Assessing Officer noted that the allowed. However, subsequently the Assessing Officer noted that the assessee should have been allowed depre assessee should have been allowed depreciation only at the rate of ciation only at the rate of 25% instead of 60% claimed by the assessee 25% instead of 60% claimed by the assessee. Accordingly ccordingly, in the rectification order passed under section 154 of the Act on rectification order passed under section 154 of the rectification order passed under section 154 of the 30/03/2019, 30/03/2019, 30/03/2019, the the the Assessing Assessing Assessing Officer Officer Officer withdrawn withdrawn withdrawn the the the excess depreciation amounting to depreciation amounting to ₹ 58, 60, 877/-. On furt On further appeal, the Ld. CIT(A)held that, firstly , firstly, the Assessing Officer was not justified in , the Assessing Officer was not justified in rectification on a substantive issue and secondly rectification on a substantive issue and secondly, the assessee to be the assessee to be entitled for depreciation entitled for depreciation at the rate of the 60% with effect from the rate of the 60% with effect from 01/04/2003. Before the Ld. CIT( Before the Ld. CIT(A), the assessee also raised A), the assessee also raised additional ground claiming deduction for education cess, which was additional ground claiming deduction for education cess, which additional ground claiming deduction for education cess, which dismissed by the Ld. CIT(A). Aggrieved, both of the dismissed by the Ld. CIT(A). Aggrieved, both of the R Revenue and the assessee are before the assessee are before the Tribunal by way of raising respective ribunal by way of raising respective grounds.

We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. dispute and perused the relevant material on record. dispute and perused the relevant material on record.

4.1 As far as ground No. 1 of the appeal of the assessee is As far as ground No. 1 of the appeal of the assessee is As far as ground No. 1 of the appeal of the assessee is concerned, we find that the Ld. CIT(A) relying on the decision of the , we find that the Ld. CIT(A) relying on the decision of the , we find that the Ld. CIT(A) relying on the decision of the Hon’ble Supreme Court in the case of preme Court in the case of Commissioner of Income Commissioner of Income- tax vs K Srinivasan ( Srinivasan (1972) 83 ITR 346read with memorandum to read with memorandum to finance bill of 2004, held that , held thateducation cess is ultimately a part of education cess is ultimately a part of

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 6 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

the Income-tax and hence not tax and hence not allowable. We find that Hon’ble We find that Hon’ble Parliament has amended the section 40(a)(ii) of the amended the section 40(a)(ii) of the amended the section 40(a)(ii) of the Act by way of Finance act ,2022 and an Explanation Finance act ,2022 and an Explanation-3 has been introduced with 3 has been introduced with effect from 01/04/2005, which reads as under: effect from 01/04/2005, which reads as under:

“(ii) any sum paid on account of any rate or tax levied on any sum paid on account of any rate or tax levied on any sum paid on account of any rate or tax levied on the profits or gains of any busines the profits or gains of any business or profession or assessed s or profession or assessed at a proposition of, or otherwise on the basis of, any such at a proposition of, or otherwise on the basis of, any such at a proposition of, or otherwise on the basis of, any such profits or gains. profits or gains. [Explanation 1. [Explanation 1. – For the removal of doubts, it is hereby For the removal of doubts, it is hereby declared that for the purposes of this sub declared that for the purposes of this sub-clause, any sum clause, any sum paid on account of any rate or ta paid on account of any rate or tax levied includes and shall x levied includes and shall be deemed always to have included any sum eligible for be deemed always to have included any sum eligible for be deemed always to have included any sum eligible for relief of tax under section 90 or, as the case may be, relief of tax under section 90 or, as the case may be, relief of tax under section 90 or, as the case may be, deduction from the Indian Income deduction from the Indian Income-tax payable under section tax payable under section 91.] [Explanation 2. [Explanation 2. – For the removal of doubts, it is her For the removal of doubts, it is hereby declared that for the purpose of this sub declared that for the purpose of this sub-clause, clause, any sum paid on account of any rate or tax levied includes any sum paid on account of any rate or tax levied includes any sum paid on account of any rate or tax levied includes any sum eligible for relief of tax under section 90A.] eligible for relief of tax under section 90A.] [Explanation 3. [Explanation 3. – For the removal of doubts, it is For the removal of doubts, it is hereby clarified that for the purpose hereby clarified that for the purposes of this sub s of this sub- clause, the term “tax” shall include and shall be clause, the term “tax” shall include and shall be clause, the term “tax” shall include and shall be deemed to have always included any surcharge or deemed to have always included any surcharge or deemed to have always included any surcharge or cess, by whatever name called, on such tax; cess, by whatever name called, on such tax;]” ” 4.2 In view ofabove above retrospective amendment, the claim of education cess was not pressed before us by the learne was not pressed before us by the learned Counsel of was not pressed before us by the learne the assessee.

4.3 Further, we note that we note that the Hon’ble Supreme Court in the eme Court in the case of CIT Vs Chambal Chambal Fertilizersand chemicals Ltd in SLP© sand chemicals Ltd in SLP© No. 7379 /2019 has has upheld the retrospective amendment upheld the retrospective amendment and

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 7 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

confirmed that education cess is not allowable deduction. The hat education cess is not allowable deduction. The hat education cess is not allowable deduction. The relevant finding of the Hon’ble Supreme Court is reproduced as relevant finding of the Hon’ble Supreme Court is reproduced as relevant finding of the Hon’ble Supreme Court is reproduced as under:

“Learned “Learned “Learned senior senior senior advocate advocate advocate appearing appearing appearing on on on behalf behalf behalf of of of the the the respondent-assessee states that in view of the amendment vide assessee states that in view of the amendment vide assessee states that in view of the amendment vide the Finance Act, 2022 the Finance Act, 2022 with retrospective effect from 01.04.2005 with retrospective effect from 01.04.2005 to Section 40(a) (ii) of the Income Tax Act, 1961, the present to Section 40(a) (ii) of the Income Tax Act, 1961, the present to Section 40(a) (ii) of the Income Tax Act, 1961, the present appeal has to be allowed. appeal has to be allowed.

In view of the statement made, we direct that the Education In view of the statement made, we direct that the Education In view of the statement made, we direct that the Education cess paid by the respondent cess paid by the respondent-assessee would not be allowed as assessee would not be allowed as an expenditure under Section 37 read with 40 (a) (ii) of the expenditure under Section 37 read with 40 (a) (ii) of the expenditure under Section 37 read with 40 (a) (ii) of the Income Tax Act, 1961. Learned senior advocate appearing on Income Tax Act, 1961. Learned senior advocate appearing on Income Tax Act, 1961. Learned senior advocate appearing on behalf of the respondent behalf of the respondent-assessee states that they have also assessee states that they have also paid the applicable tax on the disallowance. paid the applicable tax on the disallowance.

Recording the above, the appeal Recording the above, the appeal is allowed in the aforesaid is allowed in the aforesaid terms, without any order as to costs.” terms, without any order as to costs.”

4.4 Respectfully, in Respectfully, in view of decision in the case of Hon’ble view of decision in the case of Hon’ble Supreme Court of Cham Supreme Court of Chambal Fertilizer (supra), the ground the ground No. 1 of appeal of the assessee is dismissed. appeal of the assessee is dismissed.

5.1 The ground No. 2 of t ground No. 2 of the appeal, which is is raised as an additional ground, ground, relates to dividend distribution of tax of relates to dividend distribution of tax of Rs.2,99,38,207/-. This ground was admitted as additional ground This ground was admitted as additional ground This ground was admitted as additional ground

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 8 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

in view of the settled principle of law being purely legal in nature in view of the settled principle of law being purely legal in view of the settled principle of law being purely legal and no investigation of the and no investigation of the fresh facts was required. required. In support of ground, the Ld. Counsel of the assessee relied on the following , the Ld. Counsel of the assessee relied on the following , the Ld. Counsel of the assessee relied on the following decisions:

Asst. CIT v. Saurashtra Kutch Stock Exchange Ltd. Asst. CIT v. Saurashtra Kutch Stock Exchange Ltd. Asst. CIT v. Saurashtra Kutch Stock Exchange Ltd. (2008) 219 CTR 90 (SC) (2008) 219 CTR 90 (SC) 2. Asst. Commissioner of Income tax Asst. Commissioner of Income tax – CC 8(2), Asst. Commissioner of Income tax Mumbai v. I Mumbai v. I-Flex Solutions Ltd. [2010] 42 SOT 7 ons Ltd. [2010] 42 SOT 7 (Mum) (Mum) 3. National Collateral Management Services P. Ltd. v. National Collateral Management Services P. Ltd. v. National Collateral Management Services P. Ltd. v. Addl. Addl. Addl. CIT CIT CIT Rg. Rg. Rg. 7(1) 7(1) 7(1) Mumbai Mumbai Mumbai (ITA (ITA (ITA No. No. No. 2237/Mum/2013) 2237/Mum/2013) 4. Arkema Chemicals India P. Ltd. v. ACIT (2022) ITA Arkema Chemicals India P. Ltd. v. ACIT (2022) ITA Arkema Chemicals India P. Ltd. v. ACIT (2022) ITA No. 1032/Mum/2021 (Mum Trib.) No. 1032/Mum/2021 (Mum Trib.) 5. Computer Age Management Services (P.) Ltd. [2019] Computer Age Management Services (P.) Ltd. [2019] Computer Age Management Services (P.) Ltd. [2019] 109 taxmann.com 134 (Madras High Court) 109 taxmann.com 134 (Madras High Court) 109 taxmann.com 134 (Madras High Court) 5.2 The Ld. Counsel however fairly accepted that the Tribunal The Ld. Counsel however fairly accepted that the Tribunal The Ld. Counsel however fairly accepted that the Tribunal Special Bench in the case of DCIT, Mumbai Vs Total Oil India P DCIT, Mumbai Vs Total Oil India P Special Bench in the case of Ltd in ITA No. 6997/Mum/2019 for AY 2016 Ltd in ITA No. 6997/Mum/2019 for AY 2016-17 17has held that dividend distribution tax on domestic companies has to be levied as dividend distribution tax on domestic companies has to be levied as dividend distribution tax on domestic companies has to be levied as per the provisions of the Income per the provisions of the Income-tax Act, and no benefit of the DTAA tax Act, and no benefit of the DTAA can be allowed. The relevant finding of the special bench of the The relevant finding of the special bench of the The relevant finding of the special bench of the Tribunal (supra) is reproduced as und Tribunal (supra) is reproduced as under:

“CONCLUSION: CONCLUSION: 83. For the reasons give above, we hold that where dividend 83. For the reasons give above, we hold that where dividend 83. For the reasons give above, we hold that where dividend is declared, distributed or paid by a domestic company to a is declared, distributed or paid by a domestic company to a is declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts Additional Income resident shareholder(s), which attracts Additional Income resident shareholder(s), which attracts Additional Income Tax (Tax on Distributed Profits) referred to in Sec.115 Tax (Tax on Distributed Profits) referred to in Sec.115 Tax (Tax on Distributed Profits) referred to in Sec.115-O of the Act, such additional income tax payable by the domestic Act, such additional income tax payable by the domestic Act, such additional income tax payable by the domestic company shall be at the rate mentioned in Section 115 O of company shall be at the rate mentioned in Section 115 O of company shall be at the rate mentioned in Section 115 O of the Act and not at the rate of tax applicable to the non the Act and not at the rate of tax applicable to the non the Act and not at the rate of tax applicable to the non-resident

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 9 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

shareholder(s) as specified in the relevant DTAA with shareholder(s) as specified in the relevant DTAA with shareholder(s) as specified in the relevant DTAA with reference to reference to such dividend income. Nevertheless, we are such dividend income. Nevertheless, we are conscious of the sovereign’s prerogative to extend the treaty conscious of the sovereign’s prerogative to extend the treaty conscious of the sovereign’s prerogative to extend the treaty protection to domestic companies paying dividend distribution protection to domestic companies paying dividend distribution protection to domestic companies paying dividend distribution tax through the mechanism of DTAAs. Thus, wherever the tax through the mechanism of DTAAs. Thus, wherever the tax through the mechanism of DTAAs. Thus, wherever the Contracting States to a tax treat Contracting States to a tax treaty intend to extend the treaty y intend to extend the treaty protection protection protection to to to the the the domestic domestic domestic company company company paying paying paying dividend dividend dividend distribution tax, only then, the domestic company can claim distribution tax, only then, the domestic company can claim distribution tax, only then, the domestic company can claim benefit of the DTAA, if any. Thus, the question before the benefit of the DTAA, if any. Thus, the question before the benefit of the DTAA, if any. Thus, the question before the Special Bench is answered, accordingly. Special Bench is answered, accordingly.” 5.3 In view of issue in dispute issue in dispute,beingcovered against the assessee against the assessee by the decision of the by the decision of the special bench of the Tribunal (supra), the special bench of the Tribunal (supra), the additional ground raised by the assessee is dismissed. additional ground raised by the assessee is dismissed. additional ground raised by the assessee is dismissed.

Now we take up the ground raised by the Now we take up the ground raised by the Now we take up the ground raised by the Revenue in its appeal. All the three rounds raised appeal. All the three rounds raised are in relation to depreciation on in relation to depreciation on the computer software allowed by the Ld. CIT(A) @ 60% of the the computer software allowed by the Ld. CIT(A) the computer software allowed by the Ld. CIT(A) written down value. The relevant finding of the Ld. CIT(A) is . The relevant finding of the Ld. CIT(A) is . The relevant finding of the Ld. CIT(A) is reproduced as under: reproduced as under:

“6.3 The first issue in the 6.3 The first issue in the present case is whether the computer present case is whether the computer software is a tangible or intangible asset and whether the assesses software is a tangible or intangible asset and whether the assesses software is a tangible or intangible asset and whether the assesses get ownership right by acquiring the same. In this case the computer get ownership right by acquiring the same. In this case the computer get ownership right by acquiring the same. In this case the computer software is acquired off the shelf. The agreement under which software is acquired off the shelf. The agreement under which software is acquired off the shelf. The agreement under which software is commonl software is commonly acquired, the assesses acquire only a licence y acquired, the assesses acquire only a licence to use the computer software for their own purpose and there is as to use the computer software for their own purpose and there is as to use the computer software for their own purpose and there is as such no acquisition of any asset. The intellectual property rights in such no acquisition of any asset. The intellectual property rights in such no acquisition of any asset. The intellectual property rights in computer software is recognized and protected by the Copyright Act computer software is recognized and protected by the Copyright Act computer software is recognized and protected by the Copyright Act and as per the provisions of s. 14(b) of the said statute, the use of a as per the provisions of s. 14(b) of the said statute, the use of a as per the provisions of s. 14(b) of the said statute, the use of a computer software under a licence is not exercise of a copyright. The computer software under a licence is not exercise of a copyright. The computer software under a licence is not exercise of a copyright. The acquisition of computer software under licence could be considered acquisition of computer software under licence could be considered acquisition of computer software under licence could be considered as a purchase of a copyrighted article wherein no intangible as a purchase of a copyrighted article wherein no i as a purchase of a copyrighted article wherein no i property is transferred asper the Copyright Act. The ratio laid down property is transferred asper the Copyright Act. The ratio laid down property is transferred asper the Copyright Act. The ratio laid down by the Hon'ble Supreme Court in the case of TCS (2004) 271 ITR 401 by the Hon'ble Supreme Court in the case of TCS (2004) 271 ITR 401 by the Hon'ble Supreme Court in the case of TCS (2004) 271 ITR 401 (SC) holding that computer software put in a medium of disk would (SC) holding that computer software put in a medium of disk would (SC) holding that computer software put in a medium of disk would be goods may lead to the inference that purc be goods may lead to the inference that purchase of such disk is hase of such disk is acquiring a tangible asset. If the disk, tape or floppy or other acquiring a tangible asset. If the disk, tape or floppy or other acquiring a tangible asset. If the disk, tape or floppy or other

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 10 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

electronic medium in which the software is stored is by itself goods, electronic medium in which the software is stored is by itself goods, electronic medium in which the software is stored is by itself goods, then the assessee who acquires the same, acquires a tangible asset. then the assessee who acquires the same, acquires a tangible asset. then the assessee who acquires the same, acquires a tangible asset. Computer software has not been d Computer software has not been defined in the Act, but in Note 7 to efined in the Act, but in Note 7 to Appendix I to the IT Rules, it has been explained to include computer Appendix I to the IT Rules, it has been explained to include computer Appendix I to the IT Rules, it has been explained to include computer program recorded on any disk, tape, perforated media or other program recorded on any disk, tape, perforated media or other program recorded on any disk, tape, perforated media or other information storage device. Therefore computer software in canned information storage device. Therefore computer software in canned information storage device. Therefore computer software in canned form is goods and a ta form is goods and a tangible asset by itself. These are covered in ngible asset by itself. These are covered in Note 7 to Appendix I to the IT Rules and eligible for depreciation @ Note 7 to Appendix I to the IT Rules and eligible for depreciation @ Note 7 to Appendix I to the IT Rules and eligible for depreciation @ 60%. 6.4 Canned software contained in a medium are bought and sold. It 6.4 Canned software contained in a medium are bought and sold. It 6.4 Canned software contained in a medium are bought and sold. It is an article of value. It is sold in various forms like floppies, disks, is an article of value. It is sold in various forms like floppies, disk is an article of value. It is sold in various forms like floppies, disk CD-ROMs, punch cards, magnetic tapes, etc. A program containing ROMs, punch cards, magnetic tapes, etc. A program containing ROMs, punch cards, magnetic tapes, etc. A program containing instructions in computer language is subject instructions in computer language is subject-matter of a licence. It matter of a licence. It has its value to the buyer. It is useful to the person w has its value to the buyer. It is useful to the person wh ho intends to use the hardware, viz., the computer in an effecti use the hardware, viz., the computer in an effective manner so as to ve manner so as to enable him to obtain the desired results. It indisputably becomes an enable him to obtain the desired results. It indisputably becomes an enable him to obtain the desired results. It indisputably becomes an object of trade and commerce. object of trade and commerce. 'Canned software means that is not specifically created for a 'Canned software means that is not specifically created for a 'Canned software means that is not specifically created for a particular consumer. The sale or lease of, or granting a license to particular consumer. The sale or lease of, or granting a license to particular consumer. The sale or lease of, or granting a license to use, canned software is not automatic data processing and ned software is not automatic data processing and ned software is not automatic data processing and computer services, but is the sale of tangible personal property. computer services, but is the sale of tangible personal property. computer services, but is the sale of tangible personal property. When the software marketed is canned software being a tangible When the software marketed is canned software being a tangible When the software marketed is canned software being a tangible property would be exigible to sales property would be exigible to sales-tax. These are eligible for tax. These are eligible for depreciation @ 60%. @ 60%. 6.5 It appears the software is acquired off the shelf. These are the 6.5 It appears the software is acquired off the shelf. These are the 6.5 It appears the software is acquired off the shelf. These are the kind of software purchased to run the hardware. Basically, there kind of software purchased to run the hardware. Basically, there kind of software purchased to run the hardware. Basically, there are two types of software programs.The first is an operational are two types of software programs.The first is an operational are two types of software programs.The first is an operational program which controls the hardware and actually makes the program which controls the hardware and actually mak program which controls the hardware and actually mak machine run; it is fundamental and necessary to the functioning of machine run; it is fundamental and necessary to the functioning of machine run; it is fundamental and necessary to the functioning of the computer hardware itself. Secondly, there is an applicational the computer hardware itself. Secondly, there is an applicational the computer hardware itself. Secondly, there is an applicational program which is a type of program designed to perform specific program which is a type of program designed to perform specific program which is a type of program designed to perform specific functions, such as preparation of the employee payro functions, such as preparation of the employee payroll, preparation ll, preparation of a loan amortization schedule, or any other specific job which the of a loan amortization schedule, or any other specific job which the of a loan amortization schedule, or any other specific job which the computer is capable of performing. Applicational programs instruct computer is capable of performing. Applicational programs instruct computer is capable of performing. Applicational programs instruct the central processing unit of the computer to perform the the central processing unit of the computer to perform the the central processing unit of the computer to perform the fundamental computations, comparisons, and se fundamental computations, comparisons, and sequential steps quential steps required to take incoming information and compute the desired required to take incoming information and compute the desired required to take incoming information and compute the desired output. [Commerce Union Bank vs. Tidwell 538 SW. 2d 405]. output. [Commerce Union Bank vs. Tidwell 538 SW. 2d 405]. output. [Commerce Union Bank vs. Tidwell 538 SW. 2d 405]. The 60% rate for depreciation is stipulated for i. computer software The 60% rate for depreciation is stipulated for i. computer software The 60% rate for depreciation is stipulated for i. computer software acquired off the shelf, i acquired off the shelf, if. operational software tha . operational software that controls

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 11 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

hardware, i. where the software is an integral part of the related hardware, i. where the software is an integral part of the related hardware, i. where the software is an integral part of the related hardware etc. In these cases these software which are recorded in hardware etc. In these cases these software which are recorded in hardware etc. In these cases these software which are recorded in any medium becomes tangible asset. any medium becomes tangible asset. 6.6 In the present case software purchased by the assessee for 6.6 In the present case software purchased by the assessee for 6.6 In the present case software purchased by the assessee for operationalpurpose. The expenditure incurred by the assessee on pose. The expenditure incurred by the assessee on pose. The expenditure incurred by the assessee on purchase purchase purchase of of of softwarescapital softwarescapital softwarescapital in in in nature. nature. nature. In In In AMWAY AMWAY AMWAY INDIA INDIA INDIA ENTERPRISES vs. DCIT (2008) 114 TTJ 0476(SB) : (2008) 4 DTR ENTERPRISES vs. DCIT (2008) 114 TTJ 0476(SB) : (2008) 4 DTR ENTERPRISES vs. DCIT (2008) 114 TTJ 0476(SB) : (2008) 4 DTR 0001 (SB) : (2008) 111 ITD 0112, the ITAT special bench opinedthat 0001 (SB) : (2008) 111 ITD 0112, the ITAT special bench opinedthat 0001 (SB) : (2008) 111 ITD 0112, the ITAT special bench opinedthat computer software is a t computer software is a tangible property. Though a licensee, the angible property. Though a licensee, the personpurchasing the disk or other medium containing the software personpurchasing the disk or other medium containing the software personpurchasing the disk or other medium containing the software is owner to the extent ofthe rights comprised in the license. Software is owner to the extent ofthe rights comprised in the license. Software is owner to the extent ofthe rights comprised in the license. Software contained in a disk is tangible propertyby itself. The use by the contained in a disk is tangible propertyby itself. The use by the contained in a disk is tangible propertyby itself. The use by the assessee of such software in his business is enough to allowthe such software in his business is enough to allowthe such software in his business is enough to allowthe claim for depreciation. The rights which an assessee acquires by claim for depreciation. The rights which an assessee acquires by claim for depreciation. The rights which an assessee acquires by purchasing thedisk or magnetic medium containing the computer purchasing thedisk or magnetic medium containing the computer purchasing thedisk or magnetic medium containing the computer software with limited or absoluteright to use the same by itself software with limited or absoluteright to use the same by itself software with limited or absoluteright to use the same by itself would satisfy the requirements of the plant. Theassessee's y the requirements of the plant. Theassessee's y the requirements of the plant. Theassessee's ownership of limited right over the tangible asset is sufficient to ownership of limited right over the tangible asset is sufficient to ownership of limited right over the tangible asset is sufficient to concludethat the assessee is the owner of the plant. With effect from concludethat the assessee is the owner of the plant. With effect from concludethat the assessee is the owner of the plant. With effect from 1st April, 2003, computersoftware has been classified as a tangible 1st April, 2003, computersoftware has been classified as a tangible 1st April, 2003, computersoftware has been classified as a tangible asset under the heading "Plant" inAppendix I to the IT Rules enti et under the heading "Plant" inAppendix I to the IT Rules entitled et under the heading "Plant" inAppendix I to the IT Rules enti to depreciation at 60 per cent. The assesseewould be entitled to to depreciation at 60 per cent. The assesseewould be entitled to to depreciation at 60 per cent. The assesseewould be entitled to depreciation at 60 per cent from 1st April, 2003. depreciation at 60 per cent from 1st April, 2003. 6.7 Further, I have found that on the identical issue for AY 2014-15 6.7 Further, I have found that on the identical issue for AY 2014 6.7 Further, I have found that on the identical issue for AY 2014 and 2015-16,the decision was taken by my predecessor i 16,the decision was taken by my predecessor i 16,the decision was taken by my predecessor i.e., Commissioner of Income Tax(Appeals) Commissioner of Income Tax(Appeals)-13, Mumbai. In both the 13, Mumbai. In both the assessment years, the CIT(A) held that the issueis covered in favour assessment years, the CIT(A) held that the issueis covered in favour assessment years, the CIT(A) held that the issueis covered in favour of the appellant by the decision of Special Bench, ITAT, Delhi inthe of the appellant by the decision of Special Bench, ITAT, Delhi inthe of the appellant by the decision of Special Bench, ITAT, Delhi inthe case of Amway India Enterprises vs. DCIT 111 ITD 112. Respectfully of Amway India Enterprises vs. DCIT 111 ITD 112. Respectfully of Amway India Enterprises vs. DCIT 111 ITD 112. Respectfully followingthe same, the CIT(A) has directed the Assessing Officer to followingthe same, the CIT(A) has directed the Assessing Officer to followingthe same, the CIT(A) has directed the Assessing Officer to allow the depreciation @60% for both the Assessment years. In the allow the depreciation @60% for both the Assessment years. In the allow the depreciation @60% for both the Assessment years. In the present year also, facts are identical.Hence, maintaining the present year also, facts are identical.Hence, maintaining t present year also, facts are identical.Hence, maintaining t consistency and also the reasons I have delineated above, itis held consistency and also the reasons I have delineated above, itis held consistency and also the reasons I have delineated above, itis held that the assessee is entitled for depreciation @ 60% for the that the assessee is entitled for depreciation @ 60% for the that the assessee is entitled for depreciation @ 60% for the computersoftware for the AY 2016 computersoftware for the AY 2016-17.I also rely on the following 17.I also rely on the following jurisdictional pronouncements: jurisdictional pronouncements: 1. Amway India Enterprises V 1. Amway India Enterprises V/s DCIT (2008) 111 ITD 112 New /s DCIT (2008) 111 ITD 112 New Delhi 2. MakeMy Trip (India) Pvt Ltd Vs DCIT 6(1) ITA No. 6055/Del/2010 2. MakeMy Trip (India) Pvt Ltd Vs DCIT 6(1) ITA No. 6055/Del/2010 2. MakeMy Trip (India) Pvt Ltd Vs DCIT 6(1) ITA No. 6055/Del/2010 dated 30.07.2018. dated 30.07.2018.

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 12 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

ACIT Vs Zyndus Infrastructure (P} Ltd [2016] 72 taxmann.com 199 3. ACIT Vs Zyndus Infrastructure (P} Ltd [2016] 72 taxmann.com 199 3. ACIT Vs Zyndus Infrastructure (P} Ltd [2016] 72 taxmann.com 199 (Ahmadabad Tribunal) 4. Ushodaya Enterprises Ltd V ACIT [2014] 149 ITD 352 4. Ushodaya Enterprises Ltd V ACIT [2014] 149 I 4. Ushodaya Enterprises Ltd V ACIT [2014] 149 I (Hyderabad) 5. Maruti Udyog Ltd. Vs DCIT [2005] 92 ITD 119 (Delhi) 5. Maruti Udyog Ltd. Vs DCIT [2005] 92 ITD 119 (Delhi) 6. National Collateral Management Services P. Ltd Vs Add CIT Rg 6. National Collateral Management Services P. Ltd Vs Add CIT Rg 6. National Collateral Management Services P. Ltd Vs Add CIT Rg 7(1) Mumbai (ITA No.2237/Mum/2013) 7(1) Mumbai (ITA No.2237/Mum/2013) 7. Sec. 154(1) of the Act confers power on the IT authorities, as 7. Sec. 154(1) of the Act confers power on the IT authorities, as 7. Sec. 154(1) of the Act confers power on the IT authorities, as enumerated insection 116 of the Act, to amend any order passed by insection 116 of the Act, to amend any order passed by insection 116 of the Act, to amend any order passed by it under the provisions of theAct. The power can be exercised, "to it under the provisions of theAct. The power can be exercised, "to it under the provisions of theAct. The power can be exercised, "to rectify any mistake apparent on record." Theexercise of power under rectify any mistake apparent on record." Theexercise of power under rectify any mistake apparent on record." Theexercise of power under s. 154(1) of the Act by the IT authorities are sub s. 154(1) of the Act by the IT authorities are subject to the condition ect to the condition that there is a mistake apparent from the record. In Asst. CIT that there is a mistake apparent from the record. In Asst. CIT that there is a mistake apparent from the record. In Asst. CIT vs.Saurashtra Kutch Stock Exchange Ltd. (2008) 219 CTR (SC) 90, vs.Saurashtra Kutch Stock Exchange Ltd. (2008) 219 CTR (SC) 90, vs.Saurashtra Kutch Stock Exchange Ltd. (2008) 219 CTR (SC) 90, the Supreme Court, while dealing with a case arising under s. 254 of the Supreme Court, while dealing with a case arising under s. 254 of the Supreme Court, while dealing with a case arising under s. 254 of the Act, considered the scope of the wo the Act, considered the scope of the words and phrase "mistake rds and phrase "mistake apparent on the face of the record". The hon'ble Supreme Court held: apparent on the face of the record". The hon'ble Supreme Court held: apparent on the face of the record". The hon'ble Supreme Court held: "In our judgment, therefore, a patent, manifest and self "In our judgment, therefore, a patent, manifest and self- -evident error which does not require elaborate discussion of evidence or argument which does not require elaborate discussion of evidence or argument which does not require elaborate discussion of evidence or argument to establish it, can be to establish it, can be said to be an error apparent on the face of the said to be an error apparent on the face of the record and can be corrected while exercising certiorari jurisdiction. record and can be corrected while exercising certiorari jurisdiction. record and can be corrected while exercising certiorari jurisdiction. An error cannot be said to be apparent on the face of the record if An error cannot be said to be apparent on the face of the record if An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is one has to travel beyond the record to see whether the judgment is one has to travel beyond the record to see whether the judgment is correct or not.An error apparent on the face of the record means an rect or not.An error apparent on the face of the record means an rect or not.An error apparent on the face of the record means an error which strikes on mere looking and does not need, long drawn error which strikes on mere looking and does not need, long drawn error which strikes on mere looking and does not need, long drawn out process of reasoning on points where there may conceivably be out process of reasoning on points where there may conceivably be out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to two opinions. Such error should not require any extraneous two opinions. Such error should not require any extraneous show its incorrectness. To put it differently, it should be so manifest show its incorrectness. To put it differently, it should be so manifest show its incorrectness. To put it differently, it should be so manifest and clear that no Court would permit it to remain on record. If the and clear that no Court would permit it to remain on record. If the and clear that no Court would permit it to remain on record. If the view accepted by the Court in the original judgment is one of the view accepted by the Court in the original judgment is one of the view accepted by the Court in the original judgment is one of the possible views, the case cannot be said possible views, the case cannot be said to be covered by an error to be covered by an error apparent on the face of the record". (emphasis supplied) apparent on the face of the record". (emphasis supplied) In the present case, considering facts and circumstances, I hold that In the present case, considering facts and circumstances, I hold that In the present case, considering facts and circumstances, I hold that the Assessing Officer is not justified in making a rectification on a the Assessing Officer is not justified in making a rectification on a the Assessing Officer is not justified in making a rectification on a substantive issue.” ”

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 13 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

The Ld. DR submitted that computer software submitted that computer software that if the submitted that computer software software is embedded in is embedded in computer hardware itself then only itself then only depreciation would be allowed @ 60 depreciation would be allowed @ 60%,otherwise it should be otherwise it should be restricted to 25% same % same, treating it to be ‘Plant’.

On the contrary, the Ld. Counsel of t On the contrary, the Ld. Counsel of the assessee relied on the he assessee relied on the finding of the Ld. CIT(A). finding of the Ld. CIT(A).

8.1 We have heard rival submission of the We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The Ld. CIT(A) dispute and perused the relevant material on record. T dispute and perused the relevant material on record. T in view of the decision of the special bench of the Tribunal in the in view of the decision of the special bench of the in view of the decision of the special bench of the case of Amway India Enterprises Vs DCIT (2008) 114 TTJ 476 Amway India Enterprises Vs DCIT (2008) 114 TTJ 476 Amway India Enterprises Vs DCIT (2008) 114 TTJ 476 (SB) allowed the claim of the assessee of depreciation at the rate of allowed the claim of the assessee of depreciation at the rate of allowed the claim of the assessee of depreciation at the rate of the 60% on computer software being a tangible property. the 60% on computer software being a tangible the 60% on computer software being a tangible Further,we find that under rule we find that under rule 5 of the Income tax ncome tax Rules, 1962, depreciation on any block of assets is to be depreciation on any block of assets is to be calculated, calculated, at the percentage specified in the second column of the table in the percentage specified in the second column of the table in the percentage specified in the second column of the table in the appendix I to those rules, rules, on the written down value of such block the written down value of such block of assets. From assessment year 2006 From assessment year 2006-07 onward new Appendix I 07 onward new Appendix I has been made effective. effective. In the part A of said appendix under the In the part A of said appendix under the head “tangible assets assets”, list of assets has been prescribed under been prescribed under three sub head. Under the su three sub head. Under the sub head of ‘Machinery and and Plant’, at Sr No. 5,item of computers including computer software has be item of computers including computer software has be item of computers including computer software has been prescribed for depreciation rate of 60% which has been prescribed for depreciation rate of 60% which has been prescribed for depreciation rate of 60% which has been amended to 40% w with effect from 01/04/2017. Since assessment from 01/04/2017. Since assessment year before us is year before us is 2012-13, therefore during relevant therefore during relevant period

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 14 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

depreciation rate prescribed was of 60 depreciation rate prescribed was of 60%.Further,a note %.Further,a note7 below the s been provided, which reads that computer software computer software appendix has been provided, which reads that meansany computer program recorded on any disk, tape, computer program recorded on any disk, tape, computer program recorded on any disk, tape, perforated media or other information storage device.In our perforated media or other information storage device. perforated media or other information storage device. opinion, the ld CIT(A) has correctly allowed the depreciation after the ld CIT(A) has correctly allowed the depreciation after the ld CIT(A) has correctly allowed the depreciation after verification of Rules verification of Rules and law on the issue and we don’t find any and law on the issue and we don’t find any infirmity in the order of the Ld. CIT(A) infirmity in the order of the Ld. CIT(A) on issue in dispute and accordingly, we uphold the same. The ground No. 1 and 2 of the we uphold the same. The ground No. 1 and 2 of the we uphold the same. The ground No. 1 and 2 of the Revenue are accordingly dismissed. Revenue are accordingly dismissed.

10.

In ground No. 3, the Revenue is agitated for In ground No. 3, the Revenue is agitated for In ground No. 3, the Revenue is agitated for not considering the issue of depreciation rate of computer software for the purpose the issue of depreciation rate of computer software for the purpose the issue of depreciation rate of computer software for the purpose of rectification. In this regard the Ld. CIT(A) in detailed finding held of rectification. In this regard the Ld. CIT(A) in detailed finding held of rectification. In this regard the Ld. CIT(A) in detailed finding held as under:

“7. Sec. 154(1) of the Act confers power on the IT authorities, as 7. Sec. 154(1) of the Act confers power on the IT authorities, as 7. Sec. 154(1) of the Act confers power on the IT authorities, as enumerated insection 1 enumerated insection 116 of the Act, to amend any order passed by 16 of the Act, to amend any order passed by it under the provisions of theAct. The power can be exercised, "to it under the provisions of theAct. The power can be exercised, "to it under the provisions of theAct. The power can be exercised, "to rectify any mistake apparent on record." Theexercise of power under rectify any mistake apparent on record." Theexercise of power under rectify any mistake apparent on record." Theexercise of power under s. 154(1) of the Act by the IT authorities are s. 154(1) of the Act by the IT authorities are subject to the condition to the condition that there is a mistake apparent from the record. In Asst. CIT there is a mistake apparent from the record. In Asst. CIT there is a mistake apparent from the record. In Asst. CIT vs.Saurashtra Kutch Stock Exchange Ltd. (2008) 219 CTR (SC) 90, vs.Saurashtra Kutch Stock Exchange Ltd. (2008) 219 CTR (SC) 90, vs.Saurashtra Kutch Stock Exchange Ltd. (2008) 219 CTR (SC) 90, the Supreme Court, while dealing with a case arising under s. 254 of the Supreme Court, while dealing with a case arising under s. 254 of the Supreme Court, while dealing with a case arising under s. 254 of the Act, considered the scope of the words and phrase "mistake the Act, considered the scope of the words and phrase "mistake the Act, considered the scope of the words and phrase "mistake apparent on the face of the record". The hon'ble Supreme Court held: parent on the face of the record". The hon'ble Supreme Court held: parent on the face of the record". The hon'ble Supreme Court held: "In our judgment, therefore, a patent, manifest and self "In our judgment, therefore, a patent, manifest and self- -evident error which does not require elaborate discussion of evidence or argument which does not require elaborate discussion of evidence or argument which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error appare to establish it, can be said to be an error apparent on the face of the nt on the face of the record and can be corrected while exercising certiorari jurisdiction. record and can be corrected while exercising certiorari jurisdiction. record and can be corrected while exercising certiorari jurisdiction. An error cannot be said to be apparent on the face of the record if An error cannot be said to be apparent on the face of the record if An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is one has to travel beyond the record to see whether the judgment is one has to travel beyond the record to see whether the judgment is correct or not.An error appar correct or not.An error apparent on the face of the record means an ent on the face of the record means an error which strikes on mere looking and does not need, long drawn error which strikes on mere looking and does not need, long drawn error which strikes on mere looking and does not need, long drawn

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 15 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

out process of reasoning on points where there may conceivably be out process of reasoning on points where there may conceivably be out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to two opinions. Such error should not require any extraneous matter to two opinions. Such error should not require any extraneous matter to show its incorrectness. To put it differently, it should be so manifest ctness. To put it differently, it should be so manifest ctness. To put it differently, it should be so manifest and clear that no Court would permit it to remain on record. If the and clear that no Court would permit it to remain on record. If the and clear that no Court would permit it to remain on record. If the view accepted by the Court in the original judgment is one of the view accepted by the Court in the original judgment is one of the view accepted by the Court in the original judgment is one of the possible views, the case cannot be said to be covered by an error possible views, the case cannot be said to be covered by an error possible views, the case cannot be said to be covered by an error apparent on the face of the record". (emphasis supplied) apparent on the face of the record". (emphasis supplied) In the present case, considering facts and circumstances, I hold that In the present case, considering facts and circumstances, I hold that In the present case, considering facts and circumstances, I hold that the Assessing Officer is not justified in making a rectification on a the Assessing Officer is not justified in making a rectification on a the Assessing Officer is not justified in making a rectification on a substantive issue.” ” 11. We have heard rival submission We have heard rival submission of the parties on the issue in he parties on the issue in dispute and perused the relevant material on record. In our dispute and perused the relevant material on record. In our dispute and perused the relevant material on record. In our opinion, whether the computer software opinion, whether the computer software should be should be subject to depreciation @ 60% or 25% depreciation @ 60% or 25% ,cannot be a matter of rectification as cannot be a matter of rectification as there are no apparent mistake of record poi there are no apparent mistake of record pointed out by the Ld. DR. nted out by the Ld. DR. Accordingly, we do not find any error in the order of the Ld. CIT(A) Accordingly, we do not find any error in the order of the Ld. CIT(A) Accordingly, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute and we uphold the same. The ground No. 3 on the issue in dispute and we uphold the same. The ground No. 3 on the issue in dispute and we uphold the same. The ground No. 3 of the appeal of the Revenue is dismissed. of the appeal of the Revenue is dismissed.

12.

In the cross objection, the assessee has supported In the cross objection, the assessee has supported In the cross objection, the assessee has supported the finding of the Ld. CIT(A) on the issue of depreciation of computer software. of the Ld. CIT(A) on the issue of depreciation of computer software. of the Ld. CIT(A) on the issue of depreciation of computer software. Since, we have already dismissed the ground of the Revenue on this Since, we have already dismissed the ground of the Revenue on this Since, we have already dismissed the ground of the Revenue on this issue therefore, this ground is rendered merely academic and issue therefore, this ground is rendered merely academic and issue therefore, this ground is rendered merely academic and hence, same is dismissed as infructuous. , same is dismissed as infructuous.

12.1 The grounds raised in cross appeals for AY 2013 The grounds raised in cross appeals for AY 2013 The grounds raised in cross appeals for AY 2013-14 and cross objection by the assessee objection by the assessee for AY 2012-13 are identical identical to grounds raised in cross appeal raised in cross appeals for assessment year 2012 for assessment year 2012-13 and cross

M/s Ogilvy and Mather Pvt. Ltd. M/s Ogilvy and Mather Pvt. Ltd. 16 ITA Nos. No. 1637 & 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors.

objection of the assessee objection of the assessee, therefore, same are decided mutatis therefore, same are decided mutatis mutandis.

13.

In assessment year 2016 In assessment year 2016-17, the assessee is only in appeal 17, the assessee is only in appeal. The grounds raised in the appeal of the assessee are identical he grounds raised in the appeal of the assessee are identical to he grounds raised in the appeal of the assessee are identical grounds raised in the assessment year 2012 grounds raised in the assessment year 2012-13 and therefore, same 13 and therefore, same are decided mutatis mutandis. are decided mutatis mutandis.

14.

In the result, the In the result, the cross appeals of the assessee and Revenue of the assessee and Revenue are dismissed. The cross objection he cross objections of the assessee are also of the assessee are also dismissed.

Order pronounced in the open Court on nounced in the open Court on 29/05/2023. /05/2023. Sd/- Sd/- Sd/ (NARENDER KUMAR CHOUDHRY NARENDER KUMAR CHOUDHRY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 29/05/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai

DCIT , CIR 8(2) (1) , MUMBAI vs. M/S. OGILVY AND MATHER PVT. LTD, MUMBAI