Software license fees duration less than two years is revenue expenditure: ITAT Bangalore

ITAT Bangalore held that if the duration of software license is less than two years, then it should be treated as revenue expenditure and if the duration is more than two years, then it should be treated as capital expenditure.

Facts- The case of the assessee was selected for scrutiny. As the assessee had international transaction, AO referred the case to TPO. The shortfall adjustment made for SWD segment at Rs.235,727,549 and for ITeS segment at Rs.505,298,858. Further, TPO computed interest on delay receivables by allowing 30 days credit period at Rs.19,99,96,106. Accordingly the total adjustment u/s. 92CA was made at Rs.941,022,513 and the TPO passed the order on 29.07.2021.

Based on the above order of TPO, AO passed the filed assessment order. Being aggrieved, assessee preferred the present appeal. Assessee has also contested disallowance of software expenses as capital in nature.

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