Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2016 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (3) TMI 691 - HC - Income TaxDisallowance of agency commission paid for arrangement of loan, holding it to be capital expenditure - Whether on a true and proper interpretation of Explanation-8 to Section 43(1) of the Act interest paid on borrowed funds used for acquisition of capital assets by a running concern can be disallowed as deduction under Section 36(1)(iii) of the Act? - Held that:- The proviso to Section 36(1)(iii) was introduced with effect from 1st April, 2004 whereas we are concerned in this case with the assessment year 1997-98 and tat the proviso has only prospective effect. See CIT -Vs.- Associated Fiber and Rubber Industries reported in [1999 (2) TMI 2 - SUPREME Court ] - Decided in favour of assessee Disallowance of expenditure incurred for software development - revenue v/s capital expenditure - Held that:- The Apex Court in Alembic Chemicals [1989 (3) TMI 5 - SUPREME Court ] has recognised the fact that in a field where advancements are taking place rapidly and where technology which was once the state of the art becomes obsolete in a short time, the test of enduring nature cannot always reliably be applied. Software industry is one such field where advancements and changes happen at a lightning pace and it is difficult to attribute any degree of endurability even to system software let alone application software. In view of the aforesaid discussion, question is answered in the negative and in favour of the assessee.
|