2015 (6) TMI 1052

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....med deduction of Rs. 69,59,572/- on account of software license fees. The assessee maintained that as per its accounting policy, these fees were treated as deferred revenue expenditure in the assessee's books. During the year, the assessee had incurred software license expenses of Rs. 67,04,692/-. Out of this, Rs. 22,64,231/- were actually debited in the books as software license fees and thus they were included in the total amount of Rs. 69,59,572/- and the balance amounts were debited in the books of account in the subsequent years. The entire expenditure of Rs. 67,04,692/- had, though, been claimed during the year. The A.O., however, added back the amount of Rs. 69,59,572/-, disallowing the deduction of Rs. 67,04,692/-, included therein.....

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....o March 2009 Software for protecting Microsoft email server from spam & viruses. 2 First Advantage Corporation 70,648   April 2009 Software for protecting Microsoft email server from spam & viruses. 3 First Advantage Corporation 68,957   May 2009 Software for protecting Microsoft email server from spam & viruses. 4 First Advantage Corporation 70,064   June 2009 Software for protecting Microsoft email server from spam & viruses. 5 Relyon Software  2,000   April 2009 to March 2010 Updation of TDS software used for filing TDS returns. 6 Wipro Limited 65,617 1,619 01-07-2009 to 30-06-2010 Support service for maintenance of Sonic....

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....nbsp;   6. The expenses, it is seen, undisputedly, were treated as deferred revenue expenditure by the assessee in the books of account. The total amount of Rs. 69,59,572/- comprised of part of the expenditure of the earlier year and part of the expenditure for the year under consideration, as follows:- Year Ended Amount 31st March, 2008  Rs. 27,91,692/- 31st March, 2009  Rs. 19,03,649/- 31st March, 2010 Rs. 22,64,231/- Total Rs. 69,59,572/-   7. During the year, the assessee had incurred total software license expenses of Rs. 67,04,692/-. A part of this amount, totaling Rs. 22,64,231/- was debited in the books of account as software license fees and this was included in the tota....

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....e functionality test, the Department again does not refute the fact that the software license was acquired by the assessee to carry out its routine operations in a more efficient manner. Further, the fixed capital of the assessee has not been shown to have undergone any change as a consequence of the acquisition of the license. In fact, it was either an antivirus software, or a software for filing TDS return or payments for support service for maintenance of firewalls, maintenance charges of Microsoft licenses, annual hosting fees, etc. Therefore, the nature of the software acquired is that of a revenue expense, the ld. CIT(A) has rightly held it to be so. 9. It is pertinent to note that the ld. CIT(A) capitalized the expense for softwar....