2008 (5) TMI 294

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....11,62,560 by learned CIT(A) was based on the reasoning that assessee had paid this sum for acquiring a client access license from M/s Financial Technologies India Ltd., and it included various software products like Derivatives Front Office, Cash Front Office etc. and therefore it deserved to be treated as capital expenditure. Assessee had explained before the AO as well as learned CIT(A) that the payments were for purchase of licence to use software, to the owner of such software namely, M/s Financial Technologies India Ltd. and needed annual renewal. It was also explained that this acquisition did not result in any permanent asset or permanent or enduring benefit being and was more like a lease payment. None of these submissions found fav....

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....during benefit. If it had to continue to have the access, it was required to pay the amount periodically. The software ownership was not transferred to the assessee since the invoice of the party clearly mentions 'Client Access Licence'. Though it did help the assessee to be competitive in its line of business and for the efficient conduct of its day-to-day business, this alone would not be sufficient to hold the outgoes to be expenditure of capital nature. Thus, we find that the disallowance of the impugned amount was not called for. Hence, we set aside the order of the AO and the learned CIT(A) in this regard and delete the disallowance of Rs. 11,62,560. 7. Assessee succeeds in ground No. 1. 8. In the second ground, assessee is aggr....

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....whole purchase price for purchase and to deliver the shares in case of sale. It was further submitted that AO himself having acknowledged the client to be a debtor in this deal, when such dues became irrecoverable, they are either allowable as bad debts or as business loss. It was also submitted that assessee satisfied all conditions laid down under s. 37(1) and therefore, eligible for write off the amount as a business loss, in any case. 11. We have perused the orders of the authorities and also the submissions made by the learned counsel. There is no dispute that the assessee had originally claimed the sum as bad debt and alternatively as business loss. This contention was pursued by it before the learned CIT(A) also. Clause (i) of sub....