AI Drafter 
TaxTMI 
TaxTMI 
2020 (7) TMI 648
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....766/Mum/ 2014 and 1355/Mum/2014 for the assessment year 2009-10. 3. The appeal has been filed on the following three questions stated to be substantial questions of law:- "(a) Whether on the facts and the circumstances of the case and in law, the Tribunal was justified in treating computer software expenses of Rs. 5,82,62,091.00 to be revenue in nature without examining the agreement between Aker Norway and the assessee and the terms regarding the usage of the software? (b) Whether on the facts and the circumstances of the case and in law, the Tribunal was justified in treating computer software expenses of Rs. 5,82,62,091.00 to be revenue in nature without appreciating the fact that the usage of software is for more th....
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....Addl. CIT erred in allowing depreciation at an incorrect rate of 25%, instead of 60% for computer software allowable as per the Income- tax Rules, 1962. 19. So far as this ground of appeal is concerned, the relevant material facts are as follows. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed a deduction of Rs. 5,82,62,091 as expenditure on the software. The Assessing Officer was of the view that this software was used in certain projects, running for a period of 1-3 years, it should be treated as a capital expenditure. The Assessing Officer extensively quoted from the special bench decision in the case of Amway India Enterprises Vs DCIT [(2008) 11ITD SB 112 (Del)] to justif....
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....ccasion for treating the same as capital expenditure. As regards the remaining amount also, as evident from the copies of invoices before us, the payment is for the licence fees on annual basis, and not for the entire project period. The fact that the licence is used in a project which has a life span of over one year does not mean that the benefit from the licence fees was more than one year. In our considered view, in the light of these facts evident from material on record, it is unambiguous that the authorities below have wrongly held the software payment to be capital expenditure in nature. We, therefore, uphold the grievance of the assessee and direct the Assessing Officer to treat the software expenses as revenue expenditure in natur....
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....e specific issue on which advice was sought pertained to the sale transaction. Merely because the transaction in question is a capital asset, the legal expenses will not also become capital expenditure. As we deal with this aspect of the matter, we are reminded of very well articulated views of Hon'ble Madras High Court, in the case of CIT vs Bush Boake Allen India Ltd [(1982) 135 ITR 306 (Mad)], wherein Their Lordships had observed as follows: We think that the only merit of this argument is the apparent logical simplicity of it. But abstract logic has seldom conditioned the evolution of principles in tax law, as in other laws. Recent judgments of Courts have tended to regard the nature and allowability of legal expen....
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....#39;s business profits. This contention, however, was negatived by the Supreme Court. They referred to an express provision in the IT Act under which interest on capital borrowed for, the purpose of the assessee's business was allowable as an item of deduction in the computation of profits under the head "Business". On the same analogy they held that any legal expenses incurred by the assessee for borrowing money, irrespective of whether the borrowing went in for a revenue purpose or for a capital purpose, must be necessarily regarded as an item of revenue outgoing. In coming to that conclusion the Supreme Court stated the principle thus : "On the facts of this case, the money secured by the loan was the things for the....