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TMI Blog2019 (6) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the license and on facts, recorded a finding that the assessee acquired only a right to use the software and that there was no enduring benefit acquired by the assessee on account of the license promoted by them on payment of annual fee. Thus, in our considered opinion, no substantial question of law arises for consideration in this appeal. - Decided against revenue - Tax Case Appeal No.291 of 2019 - - - Dated:- 3-6-2019 - Mr. Justice T.S. Sivagnanam And Mrs. Justice V. Bhavani Subbaroyan For the Appellant : Mrs.R.Hemalatha, SSC JUDGMENT T.S.SIVAGNANAM, J. We have heard the learned Senior Standing Counsel for the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Tribunal was dismissed by order dated 31.5.2017 on the ground that it was hit by low tax effect, as the demand was less than ₹ 10 lakhs. Subsequently, the Revenue filed a miscellaneous petition to recall the order dated 31.5.2017 on the ground that the appeal was filed before the Tribunal due to audit objection. Thereafter, the Tribunal heard the appeal on merits and by the impugned order, the Tribunal dismissed the appeal filed by the Revenue. 5. The short question, which falls for consideration, is as to whether the expenditure incurred by the assessee towards software installed in their computer system to the tune of ₹ 16.16 lakhs qualifies as a revenue expenditure or as a capital expenditure. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital expenditure. However, this explanation did not find favour with the Assessing Officer. The CIT(A), while considering the said issue, had taken into consideration the terms and conditions of the licence, which was granted to the assessee by M/s.Financial Technologies (India) Limited (FTIL). The CIT(A) referred to the relevant portions of he conditions of licence and more particularly with regard to the copyright and ownership. 9. At this juncture, it would be relevant to take note of the following written submissions made by the assessee before the CIT(A) : During the subject assessment year, the appellant has purchased licenses for computer to computer link (CTCL) software from Financial Techno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the base package offered for licensing. Since the appellant has acquired only right to use the software, the licence fee cannot be considered to be capital in nature. 10. After taking into consideration of the above conditions, the CIT(A) held that the assessee acquired only a right to use the software (CTCL), that the software renewal expenditure was incurred every year based on the number of licenses used and that the intellectual property rights of the software were held by the software vendor (FTIL). Therefore, it was held that the contentions raised by the assessee merited acceptance and more particularly, when the assessee did not derive any enduring benefit and that they were authorized to use th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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