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2010 (12) TMI 880 - AT - Income TaxCapital or revenue expenditure - Software Expenses and web-hosting expenses - Depreciation - It was his submission that the expenditure pertains to the purchase of licences/packages of computer programs which are application programmes/upgrading the programs - assessee is following the consistent practice of writing off the software for a period of 12 to 24 months in the business of 'comprehensive, systematic, consistent, object, well documented quest research pre-employment screening program - it is noticed that there are certain OS licences as well as application licences - in the case of Amway India Enterprises (2008 -TMI - 64346 - ITAT DELHI-C) - Held that: fact that 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 - Since the functionality test is to be examined with reference to the items of licensed software purchased/expenditure claimed in the interest of justice - Appeal is allowed by way of remand to AO Regarding web-hosting expenditure - The advance of technology and the wide spread use of the internet has provided a very powerful medium to companies to publicize their activities to a larger spectrum of people at a much lower cost - Since the details of expenditure were not examined by the A.O., we are of the opinion that he might have considered the entire expenditure towards web hosting expenditure - It is directed to treat as revenue expenditure - In the result, appeal is allowed for statistical purpose
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