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2018 (11) TMI 1632 - AT - Income TaxClassification of expenditure - software licence fee - revenue or capital expenditure - Audit Wing of the Department examined the records of the assessee and found that the licence fee paid for software is not a revenue expenditure - whether the classification of income under the head “Revenue expenditure” or “Capital expenditure” could be decided by the Assessing Officer or by the Audit Wing of the Department? - HELD THAT:- Classification of expenditure has to be decided only by the AO. At the best, the wrong classification can be brought to the notice of the AO by the Audit Wing of the Department. In this case, when the Audit Wing of the Department found that it has to be classified as capital expenditure, AO reiterated his view by way of a reply to the Audit Wing of the Department. Since the Audit Wing has not accepted the reply filed by the assessee, the Assessing Officer reopened the assessment by issuing notice under Section 148. Therefore, the Commissioner directed the AO to file an appeal. Tribunal is of the considered opinion that licence fee paid to obtain software is nothing but revenue expenditure. Moreover, the Assessing Officer has rightly reiterated that it has to be treated only as revenue expenditure. In those circumstances, this Tribunal do not find any merit in the Miscellaneous Petition filed by the Revenue. Accordingly, the same is dismissed.
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