TaxTMI 
TaxTMI 
2013 (12) TMI 1419
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....d to as 'the Act'). 2. The assessee - Company is in the business of software development and software product sales and services. It filed its return of income on 31.10.2001 declaring a total loss of Rs. 17,60,09,818/-. The case was selected for scrutiny under Section 143(3) of the Act. After service of notice, the assessee entered appearance and supported the return which it had filed earlier. The assessee has claimed an amount of Rs. 9,27,34,277/- as product development cost whereas in the books, the assessee has capitalized this amount. It also claimed deduction as revenue expenditure. The Assessing Officer rejected the case of the assessee that it constituted revenue expenditure and levied taxes on the ground that it is a capital asset....
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....; 2. Whether the Appellate Authorities were correct in granting relief to the assessee u/s.35(1)(iv) of the Act, when the Assessing Officer had treated this improvement as a capital asset and had allowed depreciation over it and when such double deduction is not permissible in accordance with Section 35(2)(iv)of the Act? 5. Learned Counsel for the Revenue assailing the impugned order contends that, though in respect of any expenditure of capital nature on scientific research related to the business, the assessee is entitled to deduction, but in the instant case, there is no such scientific research, eligible for ' exemption under Section 35(1)(iv) of the Act and therefore, he submits that the Appellate Authority has commi....
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.... expenditure incurred on further development of the software has to be treated as capital in nature. 7. Section 43 of the Act defines certain terms in the Act. One such term defined is "scientific research" at Section 43 of the Act. Section 43(4)(iii)(a) reads as under: "43.(4)(i) "scientific research" means any activities for the extension of knowledge in the fields of natural or applied science including agriculture, animal husbandry or fisheries; (ii) .................... (iii) references to scientific research related to a business or class of business ....