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Issues involved: Appeal against CIT(A) order allowing 100% depreciation on steel rollers and treating software expenses as revenue expenditure.
Regarding the purchase of steel rollers: The Department objected to the claim of 100% depreciation on 32 steel rollers purchased from M/s S.P. Engineering Works, alleging the purchases were bogus. The AO raised concerns about the genuineness of the purchases, citing lack of sales tax numbers, quick order execution, and absence of proof of payment. However, the CIT(A) found the purchases genuine based on evidence provided, including correspondence, delivery certificates, and lease agreements. The CIT(A) considered details of installation, use, and monthly rent payments, concluding that the assets were legitimately leased to Usha Rectifiers. The Tribunal upheld the CIT(A)'s decision, noting the lack of evidence to disprove the genuineness of the transactions. Regarding software expenses: The AO treated software expenses as capital expenditure, but the CIT(A) deemed them revenue expenditure, considering them as related to computer hardware. The Tribunal supported the CIT(A)'s decision, emphasizing that expenses on computer software, especially when in the form of licenses and not new software, should be treated as revenue expenditure. The Tribunal cited precedents and consistent views of various benches in similar cases to confirm the treatment of software expenses as revenue. In conclusion, the Tribunal dismissed the Department's appeal, upholding the CIT(A)'s decisions on both issues.
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