Motorola Solutions India Private Limited Vs ACIT (ITAT Delhi)
ITAT Delhi held that software expense has not given any benefit of enduring nature and hence the same is not capital in nature. Accordingly, software expense allowed as revenue expenditure.
Facts- Vide the present appeal, the appellant has mainly contested that CIT(A) has erred in disallowing expense incurred on acquiring computer software and treating the same as capital expenditure. It is contested that the computer software expense is to be allowed as revenue expenditure.
Conclusion- Coordinate Bench has held that it cannot be said that the software has given any benefit of enduring nature to the assessee or are capital expenditure in nature. In view of this is the expenditure incurred by the assessee on software expenditure is day-to-day routine expenditure and annual renewal charges only, we are of the opinion that it is revenue in nature.
Held that this issue is covered in favour of the assessee hence held that expenditure involved is software expenditure which is not in the capital nature, therefore, similar expenditure was incurred in this year also may be allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals) – 2, Faridabad [“Ld. CIT(A)”, for short] dated 16.06.2014 for the Assessment Year 2005-06 and the assessee and Revenue has also filed cross appeals against the order of ld. CIT (A)-1, Gurgaon dated 26.03.2015 for the Assessment Year 2006-07.
