TaxTMI 
TaxTMI 
2014 (6) TMI 906
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....ing the profits of business and not the gross interest income as held by the Assessing Officer and confirmed by the CIT? (ii) Whether the Tribunal was correct in holding that the amount paid for purchase of software was a revenue expenditure even when the same was used in the course of business of the assessee not only during the current assessment year but also during subsequent year resulting in an enduring benefit and consequently a capital expenditure?" This Court had an occasion to consider the first substantial question of law in the case of CIT v. Krone Communication Ltd. [2011] 333 ITR 497/9 taxmann.com 145 (Kar.) where after noticing the statutory provisions and after review of the entire case laws this Court has held at P....
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....an expense. This guidance value is not flowing from clause (baa) but from the scheme of section 80HHC, read with the Memorandum to the Finance (No. 2) Act of 1991. By the Finance (No. 2) Act, 1991 with effect from April 1, 1992, for the first time, the expression "profits of the business" stood defined to mean the "profits of the business" as computed under the head "Profits and gains of business" under sections 28 to 44D. Therefore, before giving deduction under section 80HHC, the gross total income of the assessee being profits from business had to be arrived at in terms of clause (baa) to the Explanation. While calculating "business profits" the same had to be done in terms of section 28 to section 44D alone. The idea of section 80HHC is....
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....s made not only once and for all but also with a view to bringing into existence an asset or an advantage for the enduring benefit, the same can be properly classified as capital expenditure. At the same time, even though the expenses are once and for all and may give an advantage for enduring benefit but is not with a view to bringing into existence any asset, the same cannot be always classified as capital expenditure. The test to be applied is, is it a part of company's working expenses or is it expenditure laid out as a part of process of profit earning. Is it on the capital layout or is it an expenditure necessary for acquisition of property or of rights of a permanent character, possession of which is condition on carrying on trad....