9911796707
TMI Blog2018 (9) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... reof would constitute capital expenditure or the same would be revenue expenditure. For the Assessment Year 2008-09, the assessee had claimed a total amount of Rs. 3,40,80,049/- as revenue expenditure under these heads in relation to acquisition of SAP and MS-Office software packages. The Assessing Officer had disallowed the entire expenditure claimed by the assessee as revenue expenditure but allowed depreciation thereon treating software package as capital assets. The particulars of the software and expenses for procuring licenses, maintenance, consultancy and technical support services have not been detailed in the assessment order but have been given under broad heads. But that factor is not of much relevance at this stage of the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32(1) are attracted to these two items. Accordingly, the A.O. is directed to treat the expenditure for purchase of SAP license & MS Office license as capital expenditure and allow depreciation as per the provision of section 32(1). The A.O. is further directed to allow the remaining expenses as revenue expenditure. This ground of appeal is partly allowed." The assessee's appeal before the Tribunal on this count was allowed. The sums which were coming within the purview of the assessee's income on account of acquisition of the said two software packages constituted Rs. 1,76,98,890/- out of the total expenditure claimed by the assessee for Rs. 3,40,80,049/-. The Tribunal examined the issue and came to a finding that expenditure incurred tow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets. But the Hon'ble Supreme Court of India found that know-how could not be said to be having the requisite degree of durability and non-ephemerality to share the requirements and qualifications of an enduring capital asset. In this appeal the actual agreement between the assessee and supplier of software packages is not before us. The Tribunal, however, opined that the expenditure incurred towards procuring license of software could not create new assets. The expression 'license' itself denotes transfer of limited use to the acquirer thereof and there is no contrary evidence which could demonstrate that title of the software had been transferred or shifted to the assessee. The Tribunal, came to finding of fact while holding that expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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