2002 (7) TMI 41

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..... of software cannot be treated to be an asset of endurable nature. If the programme is used in one mining to another mining operation why it should not be treated as a capital asset and expenditure on that is capital expenditure. - in our view, the acquisition of technical know-how is capital expenditure, therefore, the Assessing Officer has rightly treated the expenditure on acquiring the computer software as expenditure of capital nature and rightly allowed depreciation as per rules.
Judge(s) : Y. R. MEENA., SHASHI KANT SHARMA. JUDGMENT On an application under section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for our opinion: "Whether, on the facts and in the circumstances of the case, the .....

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..... unsel submitted the following written explanation which reads as under: "During the accounting year 1984-85, the assessee has purchased the computer programme from Hindustan Computers Ltd. This computer programme is in fact a revenue expenditure being debited to the profit and loss account. The computer software purchase is in fact a consultancy fee being paid to Hindustan Computers Ltd. for the programme required for the data analysis for the mining purpose, has been purchased. This is not an asset, as stated by you during the course of discussion, as the life of this is restricted to shorter period, for a particular time only this thing is required and again they have to get the programme when get another nature of work....whereas softwa .....

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..... ting with secret process and technical knowledge to the assessee, a lump sum payment was made in addition to royalty based on the sale price of the manufactured articles, it was treated as revenue expenditure. When the technical know-how has not been transferred in the case of the Delhi High Court that has no application as in the case of technical know-how, i.e., programme of technical know-how, has been transferred by way of feeding of the programme in computer to make use in the mining operation, therefore, the Delhi High Court has no application. In CIT v. Borosil Glass Works Ltd. [1986] 161 ITR 286, the Bombay High Court has treated acquisition of technical know-how as revenue expenditure. Mr. Mathur brought to our notice the latest d .....

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