2015 (6) TMI 1259

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....C. SHARMA (A.M) : This is an appeal filed by the assessee against the order of CIT(A)- 13, Mumbai, dated 27-10-2010 for the assessment year 2006-07 in the matter of order passed u/s.143(3) of the I.T.Act. 2. The assessee is aggrieved for confirming disallowance of software expenses by CIT(A) holding the same as capital in nature. We have gone through the nature of expenditure incurred and fo....

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....r format. Disallowance was also made in respect of purchase of Arcserve software, which is an off the shelf software which is used to take back up of the data into a media. The software allows the flexibility to restore a single file/data from the tape. The AO disallowed on the plea that the software expenditure so incurred are capital in nature. The Hon'ble Bombay High Court in the case of Rayche....

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....High Court in the case of Varinder Agro Chemicals Limited, 309 ITR 272 (P&H), held that since technology is fast changing and day-by-day systems are being developed in a new way, software may be needed like raw material. Accordingly computer software expenses are essentially revenue in nature. 8. In view of the above discussion, following the proposition of law laid down by the Hon'ble Bombay H....

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....m and in turn gives benefit of enduring nature to the asessee's business. 10. We have considered rival contention and found that the amount incurred on purchase of Ram and hard disk drive amounting to Rs.22,100/- and Rs.16,000/- is recurring in nature and no advantage of enduring benefit is achieved by the assessee. Accordingly, there is no justification for treating the same as capital expendi....