SANJIB BANERJEE,J. - (1.) The appeals are at the instance of the department and the following questions of law have been raised: (i) "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has erred in allowing payment of commission of Rs. 190.99 lakhs to an Iraqi agent, Md. Ali Samarie of Baghdad, on sale of fork lift trucks and spares @ 23%, inter alia, as the assessee's name figured in the Volker Commission Report and the payment of commission was not authorised by the U.N. ?" (ii) "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has erred in allowing drawings/designs software consultancy charges of Rs. 8 lakhs as revenue expenditure overlooking the fact that computer software's are classified as fixed assets on which depreciation is allowed @ 60% as per the Income-tax Rules, 1962 ?" (iii) "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has erred in allowing deduction of write-off of Rs. 14,99,987, being earnest money and tender deposits made for filing tenders under section 37(1) of the Income-tax Act, 1961, in face of the provisions of section 36(2) of the Income-tax Act, 1961, in terms of which only those debts can be allowed as bad debts which were accounted for as income in the earlier years ?"
(2.) As is evident from the first of the questions framed by the department, it is purely a question of fact as to whether the particular person was or was an agent and as to whether he was paid commission. The Tribunal found, as a matter of fact, that Md. Ali Samarie of Baghdad was an agent and rendered services to the assessee. As such no question of law is involved in such regard.
(3.) As to the second question, it is true that computer software is treated as a capital asset and is amenable to depreciation, but consultancy charges in respect of computer software cannot be treated as capital expense. As is evident from, inter alia, paragraphs 11 and 12 of the order impugned, the consultancy charges were on account of drawings and designs prepared by a particular agency. The drawings and designs could have been treated as a capital asset and subjected to depreciation. The question is unworthy of being admitted for consideration.;