2002 (7) TMI 41 - RAJASTHAN HIGH COURT

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in treating the expenditure in the acquisition of software of ₹ 1,38,360 as of revenue nature?" - The facts on record are that the payment of ₹ 1,38,360 was not paid for consultancy fee to Hindustan Computers Ltd., in fact, the payment was made for out-right sale of "computer software" which is used as technique in mining operations. The finding of the Commissioner of Income-tax (Appeals) is that the acquisition of software cannot be treated to be an asset of endurable nature. If the programme is used in one mining to another mining operation why it should not be treated as a capital asset and expenditure on that is capital expenditure. - in our view, the acquisition of technical know-how is capital expenditure, therefore, the Assessing Officer has rightly treated the expenditure on acquiring the computer software as expenditure of capital nature and rightly allowed depreciation as per rules.