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TMI Blog1985 (5) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure by the Commissioner (Appeals). 2. The assessee is a dealer for Hindustan Computers Ltd. It purchased a computer for purposes of demonstration and also to provide data processing service to its customers. It claimed a deduction of Rs. 1,24,964 as technical services paid to Hindustan Computers Ltd. The IAC allowed Rs. 20,000 out of the claim and treated the balance of Rs. 1,04,964 as capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner (Appeals) after referring to various case laws allowed the assessee's claim. The revenue is in appeal against the allowance of Rs. 94,976. 3. The main thrust of the revenue's argument against the allowance of the above sum was that the payment constituted part and parcel of the purchase price of the computer. When the assessee had capitalised the value of the computer purchased fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... user of the computer to make effective use of the machine. The computer is programmed to receive and retain the information that is required and later retrieve the information, verify, make the necessary calculations, analysis, etc., and then give the information in the required form to the user. This is done with the help of the software purchased. Therefore, the purchase of the software has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s software is Rs. 20,000. (2) As it is very important to know the full capabilities of the computer, we will train 3 of your people in programming and systems analysis in our training centre in Madras. The duration of training is 3 weeks, and the cost of training is Rs. 20,000 for 3 people which includes lodging facilities. (3) In order to supervise and control the various software development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogical obsolescence the purchase of software should also be treated as revenue expenditure. The assessee is continuing to use the same system and it has sufficient clientele which does not require anything more sophisticated than the present system in operation. We, accordingly, restore the addition made by the IAC to the extent of Rs. 20,000 on which the IAC will allow depreciation as usual. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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