Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2021 (9) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 1151 - MADRAS HIGH COURTNature of expenses - software expenses incurred by the assessee - capital or revenue expenditure - functionality test - whether claim of license fee on software expenses paid to its parent company was for the utilization of the software which gave a enduring benefit and therefore capital in nature? - HELD THAT:- Tribunal was right in confirming the order passed by the CIT(A). We note the decision, which was referred to by the Tribunal in the case of CIT Vs. Raychem RPG Ltd. [2011 (7) TMI 953 - BOMBAY HIGH COURT] wherein the ERP package software, which facilitated the assessee's trading operation to conduct its business more efficiently or more profitably but was held to be not in the nature of ‘profit-making apparatus' and the software expenditure was allowable as revenue expenditure. With regard to the license fee, which was for acquiring a software license of shelf life of less than two years was held to be as allowable as revenue expenditure in CIT Vs. Toyota Kirloskar Motors (P.) Ltd. [2013 (2) TMI 108 - KARNATAKA HIGH COURT] - Thus substantial questions of law in favour of the assessee by treating the expenses incurred in developing/upgrading the software to be revenue expenditure.In CIT, Trichy Vs. Lakshmi Vilas Bank Ltd. [2018 (9) TMI 1094 - MADRAS HIGH COURT] expenditure incurred by the assessee towards software expenses was treated as revenue expenditure as advantage, though endured for an indefinite period, it merely facilitated assessee's trading operation, enabling it to carry on business more efficiently. We hold that the Tibunal was right in dismissing these appeals filed by the revenue. - Decided against revenue.
|