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The Tax PublishersITA Nos. 1257 & 1486/Mum/2014
2019 TaxPub(DT) 3188 (Mum-Trib) : (2020) 204 TTJ 0689INCOME TAX ACT, 1961
Section 37(1)
The expenditure incurred by the assessee on purchase of software application and payment made for acquiring licence to use those applications was to be allowed as a revenue expenditure.
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Capital or revenue expenditure - Software expenses - Purchase of software application and licence to use application -
It was observed by the AO that as the purchase of computer software was in the nature of know-how and a license to use the software, therefore, the explanation of the assessee that the expenditure incurred on the purchase of the same was in the nature of a revenue expenditure did not merit acceptance. Held: As the software purchased by the assessee did not form part of its profit making apparatus and only facilitated carrying its business more efficiently, therefore, the same was rightly claimed by it as a revenue expenditure. The AO was, therefore, directed to allow the software expenses of Rs. 14,00,800 as claimed by the assessee.
Followed:CIT v. Amway India Enterprises (2012) 346 ITR 341 (Del) : 2011 TaxPub(DT) 1956 (Del-HC). Relied:Pr. CIT v. Holicin Services (Sourth Asia) Ltd. (2018) 93 Taxmann.com 270 (Bom) and CIt v. Raychem RPG Ltd. (2012) 346 ITR 138 (Bom) : 2012 TaxPub(DT) 716 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2009-10
INCOME TAX ACT, 1961
Section 35(2AB)
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