tratment of software during tax audit

[r e]

Purchasing a tally software worth rs. 12000 during tax audit what treatment will be done?

 1) wheteher shown in repair & maintenance ac/c

2) w2hether shown in fixed assets a/c.

AI Summary

Accounting Treatment of Tally Software: Capitalize as Fixed Asset with 60% Depreciation, Special Rule for Short Use A query was raised about the accounting treatment of purchasing Tally software worth Rs. 12,000 during a tax audit. The options considered were whether it should be shown under repair and maintenance or as a fixed asset. The response suggested that software could be capitalized under computers and software, with a depreciation rate of 60% for tax purposes. If the software is used for less than 180 days, half the depreciation is allowed. In cases of replacement, it might be treated as revenue expenditure, though this could lead to litigation. It was advised to treat it as part of the asset block for examination purposes.