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2011 (7) TMI 303 - ITAT, NEW DELHIAddition - Expenditure incurred on purchase of softwares - No data whatsoever has been furnished in respect of useful life of the softwares and the purpose for which they are used - In assessment year 2005-06, the assessee had capitalized the expenditure in respect of card scanner software - This has been claimed as revenue expenditure in this year - In absence of the details above the nature, use and useful life of the softwares, it is held that the lower authorities were right in capitalizing the expenditure, as the burden cast on assessee u/s 37 has not been discharged Royalty payment- the terms of agreement are quite comprehensive and the whole technical know-how to set up the business has been provided by the Gates Corporation, USA. The assessee has been given indivisible non-transferable and exclusive license to assemble and manufacture products and parts in the territory of India and to sell the products so assembled or manufactured. Comprehensive technical know-how has been provided because of which the assessee is a market leader - the agreement is valid for a period of 10 years and is further extendable, which shows that the benefit is not restricted only to 10 years - The assessee does not retain any residual right under the agreement - Therefore, exclusive right to manufacture goods in India for 10 years does not lead to inference of benefit of enduring nature in the capital field - At the same time it is seen that the license fee is paid on the basis of net turn over and it has a direct relationship with an item in the revenue field - Therefore, the expenditure is of revenue in nature.
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