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2013 (8) TMI 835 - ITAT HYDERABADCapital or Revenue expenditure - Expenditure on acquisition of software - CIT held it as Revenue expenditure - Held that:- When the assessee acquires a computer software or for that matter the license to use such software, he acquires a tangible asset and becomes owner - software becomes obsolete with technological innovation and advancement within a short span of time. It can be said that where the life of the computer software is shorter (say less than 2 years), it may be treated as revenue expenditure. Any software having its utility to the assessee for a period beyond two years can be considered as accrual of benefit of enduring nature. However, that by itself will not make the expenditure incurred on software as capital in nature - Once the tests of ownership and enduring benefit are satisfied, the question whether expenditure incurred on computer software is capital or revenue has to be seen from the point of view of its utility to a businessman and how important an economic or functional role it plays in his business. In other words, the functional test becomes more important and relevant because of the peculiar nature of the computer software and its possible use in different areas of business touching either capital, or revenue Held or its utility to a businessman which may touch either capital or revenue field - CIT has not mentioned what is the exact span of life of the software and whether it satisfies the functional test to be treated as revenue expenditure - Following decision of Amway India Enterprises Versus Deputy Commissioner of Income-tax, Circle 1(1), New Delhi [2008 (11) TMI 432 - ITAT DELHI] - Matter remitted back - Decided in favour of Revenue. Disallowance of lab development charges - Held that:- assessee has failed to reconcile before the Assessing Officer not only at the time of assessment but also during the remand whether actually the amount of Rs. 48,95,925 was included in the lab maintenance charges of Rs. 1,37,86,523 and has been included in the gross income of the impugned assessment year - Therefore, matter is remitted back to A.O. - Decided in favour of Revenue.
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