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2013 (10) TMI 1225 - HC - Income TaxNature of expenditure Capital or revenue expenditure Expenditure is made on acquisition of software Held that:- When the life of a computer or software is less than two years and as such, the right to use it for a limited period, the fee paid for acquisition of the said right is allowable as revenue expenditure and these softwares if they are licensed for a particular period, for utilizing the same for the subsequent years fresh licence fee is to be paid. Therefore, when the software is fitted to a computer system to work, it enhances the efficiency of the operation. It is an aid in manufacturing process rather than the tool itself. Though certain application is an enduring benefit, it does not result into acquisition of any capital asset. It merely enhances the productivity or efficiency and, therefore, it has to be treated as revenue expenditure Decided against the Revenue. Addition of provision made for doubtful debts while computing book profit u/s 115JA Held that:- The Explanation to the section states for the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under subsection (2) as increased by the amount mentioned in the Explanation. One such amount is in sub-clause (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities Reliance has been placed on the judgment in the case of COMMISSIONER OF INCOME TAX AND OTHERS VERSUS M/s WEIZMANN HOMES LTD. [2013 (5) TMI 123 - KARNATAKA HIGH COURT] - Said amount is to be added to the book profit Decided in favor of Revenue. Interest u/s 234B of the Income tax act Held that:- Reliance has been placed upon the judgment of the Honble Supreme Court in the case of Rolta India Ltd. reported in [2011 (1) TMI 5 - SUPREME COURT OF INDIA] Also, as per Circular No. 13 of 2001, it has been clarified that section 115JB is a self-contained code and thus, all companies were liable for payment of advance tax under section 115JB and, consequently, the provisions of sections 234B and 234C imposing interest on default in payment of advance tax were also applicable Decided in favor of Revenue.
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