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2014 (10) TMI 2 - HC - Income TaxClassification of expenses – capital or revenue - Expenses on software – Held that:- Following the decision in Commissioner of Income Tax V. Southern Roadways Ltd. [2007 (6) TMI 193 - MADRAS HIGH COURT] – The concept of enduring benefit must respond to the changing economic realities of the business - The expenses incurred by installation of software packages in the present computer world, which revolves on the modern communication technology, enables the assessee to carry on its business operations effectively, efficiently, smoothly and profitably - such software itself does not work on a standalone basis - It has to be fitted to a computer system to work - Such software enhances the efficiency of the operation - It is an aid in the manufacturing process rather than the tool itself - the payment for application software, though there is an enduring benefit, does not result in acquisition of any capital asset and it merely enhances the productivity or efficiency and has to be treated as revenue expenditure - the Tribunal had rightly held that the expenditure incurred on software packages as a revenue expenditure – Decided against revenue.
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