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June 28, 2022

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Upgradation of software expenditure approved by ITAT as revenue expenditure


Upgradation of software expenditure approved by ITAT as revenue expenditure

The assessee made an upgrade of the software expenditure for integrating the internal communication system email in Lotus Notes within the company. This Expense The expenses have been incurred only to facilitate the trading operation, leaving the fix untouched.

However, the Assessing Officer, being permanent in nature, has not allowed the above expenditure to be reduced as capital expenditure. ld cit[A] This confirmed growth even after allowing depreciation on these expenses.

Before ITAT, counsel for Ld presented the matter to the High Court of that jurisdiction CIT-Vs-NJ India Invest (P.) Ltd. reported in [2013] 32 taxmann.com 367 (Gujarat) held at Expenditure on maintenance, back-up and support services of existing hardware and software is revenue in nature, and therefore allow expenditure as revenue in nature.

On the contrary LDDR could not contravene this decision and could not pass any judgment in favor of Revenue.

Therefore respectfully following the judicial decision in the case of NJ India Invest P Ltd. [cited supra] on it Allowed this basis and removed the addition made by AO.

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