TaxTMI 
TaxTMI 
2016 (8) TMI 69
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....Chennai dated 29.01.2014 pertaining to the assessment year 2004-05. Another appeal of the Revenue is directed against the order of the Commissioner of Income-tax (Appeals),Large Taxpayer Unit dated 29.01.14 pertaining to assessment year 2007-08. Since issues involved in all these Revenue's appeals as well as assessee's appeal are common in nature, these appeals are clubbed together, heard together, disposed off by this common order for the sake of convenience. ITA No.1367/Mds./12(Assessee's Appeal: 2004-05) 2. In this appeal, only one ground for our consideration is with regard to not granting 100% depreciation on software purchase. 3. The facts of the case are that the assessee is engaged in the manufacture of pharmaceutical formu....
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....The Ld.A.R submitted that the software purchased by the assessee is accounting software namely Pharma Protocol, which is application software and accounting software namely TALLY, which was replaced by new Application software. Further, ld.A.R submitted that application of software is used to enhance the productivity and efficiency of presenting the data and is not asset. ld.A.R submitted that since software needs regular up-gradations and also does not have enduring benefits, therefore, it is in the nature of revenue expenses. The ld.A.R placed reliance in the following case laws in support of his arguments. a) In the case of ACIT Vs.Torrent Pharmaceuticals Ltd. reported in (2012) 137 ITD 301. b) In the case of CIT Vs.Sundaram Clayto....
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.... of computer software is nothing but acquisition of know-how and relevant expenditure is a capital expenditure. This software falls in the new entry was introduced as Sl. No.iii(5) in Part-A of the Table of rates for the depreciation in Appendix-I in respect of computer including computer software. In view of the above, we have no doubt in our mind that software acquired by the assessee is "intangible" within meaning of clause (ii) to Sec.32(I) of the Act and the CIT(A) considering the above observed that it is an intangible asset entitled for depreciation @ 60% and being the software used by the assessee during the second half of the relevant previous year and granted deduction at 30% and the same is confirmed. This ground is dismissed. ....
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....es and perused the material on record. We have gone through the above expenditure. The expenditure is not relating to the assessment year under consideration and it was incurred prior to the commencement of the assessee's business and it is prior period expenditure and the assessee placed reliance in the judgement of M/s.Madras Industrial Investment Corporation Ltd. Vs. CIT (supra) have no relevance. Since the expenditure is wholly and exclusively laid out for the purpose of marketing of the business of the assessee in earlier assessment year, it cannot be allowed as revenue expenditure during the assessment year under consideration as this expenditure is not related to the assessment year 2004-05. Accordingly, this ground of Revenue is all....
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....ment was made in foreign currency as advance for purchase of software, without deduction of tax at source and obtaining certificate u/s.195(2), would clearly fall under Explanation 2 to u/s.9(1)(vi) of the Act. Further, ld.D.R placed reliance in the case of Gracemac Corpn. Vs. ACIT reported in 134 TTJ 257 wherein it was held that consideration received will be in the nature of Royalty if it is in respect of transfer of all or any right (including grant of licence) in respect of same, under Clause (v) of Explanation 2 of Sec.9(1)(vi). Further, ld.D.R submitted that the purpose behind making such payment is for the purpose of utilizing the same in India and shall be considered only as the payment made towards royalty, which would clearly fall....