TaxTMI 
TaxTMI 
2016 (8) TMI 20
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....roduct development expenditure as capital expenditure. 3. Similar issue came for consideration before the Tribunal in assessee's own case in ITA Nos. 457, 458 and 459/Mds/2013 for the assessment years 2006-07, 2007-08 and 2008-09. The Tribunal after elaborate discussion vide order dated 30.09.2013 held as under : "14. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The issue involved in this appeal is whether the expenditure i.e. product development expenses incurred by the assessee is a capital expenditure or revenue expenditure. The Assessing Officer, after examining the entire facts of the case and by considering the decision of the Hon'ble Rajasthan High Court in the case of ....
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....ficer has rightly treated the expenditure on acquiring the computer software as capital expenditure and rightly allowed depreciation as per rules. The Special Bench of' this Tribunal (Delhi Bench) in the case of Amway India Enterprises vs. DCIT (supra) has held on the issue of capital or revenue expenditure in para 44 as under: "In other situation, the expenditure can be treated as capital expenditure only when it results in accrual of advantage o enduring nature to the assessee in the capital field. The relevant tests applied to determine the nature of expenditure in such a situation are the functional tests and the test of enduring benefit. An advantage is to be considered as of enduring benefit if the benefit accruing is not of a trans....
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.... warehouse management software against payment of Rs. 1 core. By doing so the assessee has acquired the absolute ownership and other rights regarding software. Apart from this the assessee also purchased a division that developed product blue yantra, a software from Istartweb Limited Co. and also purchased a division that developed product i-point from Metalogics Systems India Pvt. Ltd. In all three acquisitions of software the assessee has become absolute owner of the product as well as also acquired the intellectual property rights other property rights relating to the product and divisions so purchased. Since the assessee is engaged in the business of software development, the acquisition of these softwares by the assessee is either for ....
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....ial Bench of this Tribunal, Delhi Benches in the case of Amway India Enterprises vs. DCIT (supra) while deciding an appeal in the case of M/s SQL Star International Ltd., it was held that the assessee company is engaged in the business of software development as well as running a training centre to impart specialized training to the students in software technology. If the software were used in such business to impart training to the students, then the same would be part of the profit making, apparatus of the assessee and consequently expenditure on software is capital in expenditure. In view of the above discussion, we are of the considered opinion that in the case in hand the expenditure incurred on computer software satisfies the test of ....