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Income Tax - Highlights / Catch Notes

Home Highlights November 2016 Year 2016 This

Expenses incurred on up-gradation of software do not result into ...

Income Tax

November 24, 2016

Expenses incurred on up-gradation of software do not result into acquisition of any asset nor acquisition of enduring benefits as software become obsolete very quickly - allowed as revenue expenditure - AT

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  1. Software consumable expenses – The expenditure was incurred for application software and not for system software – The software was not of enduring nature and would...

  2. E-connectivity charges are revenue in nature as they do not result either in the acquisition of software by the assessee or in any enduring benefit to the assessee

  3. Software expenses - revenue or capital expenditure - real intent and purpose - expenditure incurred by the assessee on software is allowable as revenue expenditure. - AT

  4. Nature of expenses - Expenses incurred on Enterprise Resource Planning (“ERP”) and software expenses - revenue or capital expenditure - in today’s fast changing...

  5. Expenses on purchase on new items - Acquisition of new assets for replacement of existing assets as current repairs - 10% of items listed by the AO are held to be of capital - AT

  6. Disallowance on account of depreciation claimed on the cost incurred in relation to the land being non depreciable asset - To our understanding, the impugned expenses...

  7. Nature of franchise expenses – it was not an expenditure incurred for acquisition of source of profit, but enabled the assessee to run the business profitably - held as...

  8. Capital or Revenue expenses – The number of entries for purchase of software tools is running into 170 - thus, the expenditure incurred by the assessee was revenue in...

  9. Discontinued Business - Disallowance out of depreciation and disallowance out of travelling, repairs, insurance expenses – expenses incurred to protect the business...

  10. Disallowance of software expenses - revenue or capital expenditure - payment was made for maintenance/hosting services not resulted in any enduring benefit and there was...

 

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