TMI Blog2014 (1) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... , it may be useful to the assessee for various functions like sales, finance, logistics operations and use of ERP system and it may confer certain benefits to the assessee but it cannot be said that there is enduring benefit to the assessee – The decision in CIT v. Raychem RPG Ltd. [2011 (7) TMI 953 - Bombay High Court ] followed - the expenses incurred by the assessee to acquire the software licence is of revenue expenses – Decided against Revenue. - ITA Nos. 369 and 370/Mds/2013 - - - Dated:- 28-6-2013 - Dr. O. K. Narayanan And Shri V. Durga Rao,JJ. For the Appellant : Dr. S. Moharana, CIT - DR For the Respondent : Shri T. Banusekar, C.A. ORDER Per V. Durga Rao, Judicial Member:- These two appeals of the Revenue are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the issue involved in this appeal is squarely covered by the decision of the Tribunal in assessee's own case in I.T.A. No. 612/Mds/2011 for the assessment year 2005-06 vide order dated 09.05.2012. 6. On the other hand, the ld. DR has supported the order passed by the Assessing Officer. 7. We have heard both sides, perused the material on record and have gone through the orders of authorities below. The only issue involved in this appeal is whether the software expenses incurred by the assessee are revenue or capital. The very similar issue has already been considered by this Tribunal in assessee's own case for the assessment year 2005-06 in I.T.A. No. 612/Mds/2011, wherein the Tribunal has held that the software expenses incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngent upon upgradation and that the expenses do not provide any enduring benefit and only aids in day-today accounting and reporting process of the company. However, the Assessing Officer has not accepted the submissions of the assessee and has observed that the assessee by entering into IT services with Danfoss IY, Denmark, it had acquired the licence to use software which is not only confers an enduring benefit, but also provides higher functional utility for the point of view of generating various functions of the assessee like sales, finance, logistics operations and for use of the ERP system which is uniform/custom-made for use among all the group companies and for support software to supplement routine operations and disallowed the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bombay High Court in the case of CIT v. Raychem RPG Ltd. (supra) has observed that when it is applied the functional test suggested by the Special Bench of the Tribunal, the impugned software does not form part of the profit-making apparatus of the assessee and hence the same is to be disallowed as revenue expenditure. In the said case, the business of the assessee company is that of manufacturing of telecommunication and power cable accessories and trading in oil retracing system and other products and the impugned software is an enterprises resources planning (ERP) package and hence it facilitates the assessee's trading operations or enabling the management to conduct the assessee's business more efficiently or more profitably but it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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