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TMI Blog2021 (9) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... its business more efficiently or more profitably but was held to be not in the nature of profit-making apparatus' and the software expenditure was allowable as revenue expenditure. With regard to the license fee, which was for acquiring a software license of shelf life of less than two years was held to be as allowable as revenue expenditure in CIT Vs. Toyota Kirloskar Motors (P.) Ltd. [ 2013 (2) TMI 108 - KARNATAKA HIGH COURT] - Thus substantial questions of law in favour of the assessee by treating the expenses incurred in developing/upgrading the software to be revenue expenditure.In CIT, Trichy Vs. Lakshmi Vilas Bank Ltd. [ 2018 (9) TMI 1094 - MADRAS HIGH COURT] expenditure incurred by the assessee towards software expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Heard Mrs. R.Hemalatha, Learned Senior Standing Counsel appearing for the appellant-Revenue and Mr. R.Sivaraman, Learned Counsel for the respondent-assessee. 4. The assessee is engaged in the business of marketing and service of automatic control and filed the income tax return for the assessment years under consideration (AY 2007-08 and 2008-09). The return was processed and some details were called for, after issuance of notice under Section 143(2) of the Act. The assessee debited in the profit and loss account the software expenses and classified the same as exempt expenses under the head IT Software Bills and License . For the assessment year 2007-08 the expenses only towards the software expenses and for the assessment year 2008- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2012 allowed the assessee's appeals, after noting the decision of the Tribunal in the assessee's own case for the assessment year 2005-06 in I.T.A.No.612/Mds/2011, dated 09.05.2012. 7. Aggrieved by the same, the Revenue preferred an appeal before the Tribunal, which has been dismissed by the impugned order. As could be seen from the orders passed by the CIT(A) as well as the Tribunal, the functional test was applied to the assessee's case and it was found that the software does not found part of the profit-making apparatus of the assessee and it only facilitates the assessee's trading operations or to conduct the assessee's business more efficiently or more profitably, but, it is not in the nature of the profit-mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; and the software expenditure was allowable as revenue expenditure. 11. With regard to the license fee, which was for acquiring a software license of shelf life of less than two years was held to be as allowable as revenue expenditure in CIT Vs. Toyota Kirloskar Motors (P.) Ltd. reported in [2013] 30 Taxmann.com 294 (Karnataka) . In CIT, Bangalore Vs. Robert Bosh India Ltd. reported in [2014] 50 Taxmann.com 275 (Karnataka), the amount paid by the assessee for purchase of software was held to be revenue expenditure even when the same was used in course of business of assessee not only during the assessment year under consideration, but also during the subsequent year. In Oriental Bank of Commerce Vs. Additional CIT reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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