TaxTMI 
TaxTMI 
TaxTMI 
2010 (2) TMI 869
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....early in the revenue field since software technology changes rapidly and it cannot be said that there is an advantage of enduring nature; 2. That the ld. CIT (Appeals) further erred in law in disallowing the deduction claimed on account of employees contribution to Provident Fund amounting to Rs.2,40,595/-; 3. That the ld. CIT (Appeals) also erred in law in disallowing the claim on account of depreciation amounting to Rs.15,489/- on the tube well installed at the factory site at Faridabad." 3. The first issue for consideration relates to treating the expenditure on software acquisition as capital in nature. The facts of the case stated in brief are that the assessee incurred expenditure of Rs.14,50,000/- on purchase ....
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.... to the fact that software becomes obsolete with technological innovation and advancement within a short span of time, it can be said that where the life of the computer software is shorter (say less than 2 years), it may be treated as revenue expenditure. Any software having its utility to the assessee for a period beyond two years can be considered as accrual of benefit of enduring nature. However, that by itself will not make the expenditure incurred on software as capital in nature and the functional test as discussed above also needs to be satisfied. (iii) Once the tests of ownership and enduring benefit are satisfied, the question whether expenditure incurred on computer software is capital or revenue has to be seen from the p....
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....ince the assessee has incurred expenditure on purchase of software and neither the AO nor ld. CIT(A) had examined the issue in the light of decision of Special Bench we set aside the matter to the file of AO with the directions to examine the question whether expenditure on computer software is capital or revenue in view of the criteria laid down by ITAT, Delhi Special Bench 'C' New Delhi in the case of Amway India Enterprises v/s DCIT after giving an opportunity of being heard to the assessee. 6. The next issue for consideration relates to disallowing the deduction on account of employees contribution to provident fund amounting to Rs.2,40,595/-. The facts of the case stated in brief are that as per the tax audit report the amount ....
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.... contribution towards Provident fund where payments were made after due date prescribed under respective statute but before the due date of furnishing the return of income under section 139(1) of the Act. Since the payment has been made before the due date of filing of the return under section 139(1) of the Act, respectfully following the precedent, it is held that the assessee will been entitled for deduction u/s 43B of the Act in respect of employee's contribution. Accordingly in our considered opinion, the ld. CIT (A) was justified in deleting the addition of Rs.2,40,595/- on account of employee's contribution for the month of September, 2005 paid on 31st October, 2005. to Provident Fund. 8. The last issue for consideration relat....