TaxTMI 
TaxTMI 
2004 (7) TMI 287
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....of Rs. 41,20,000 made by the AO holding that the software does not have any degree of endurability and permanence due to change of system and change of technology. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A), Mumbai, erred in directing the AO to recompute the deduction under s. 80HHE holding that the AO had erred in making the addition of Rs. 25,15,728 while computing the deduction. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A), Mumbai, erred in holding that the claim regarding depreciation of Rs. 15,32,824 is in accordance with law and therefore, should be accepted. 4. On the facts and in the circumstances of the case and in law, the le....
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.... as an enduring capital asset. The magnitude of expenditure is not important as what is relevant is its true nature and character. The software is a raw material which by no stretch of argument can be considered as a plant. With regard to the AO reference to the insertion of cl. (xi) in s. 6 by Finance Act, 1999, the assessee argued that it refers to computer system and not to software programme as stated by the AO. Reliance was placed on the following judgments: 1. Alembic Chemicals Works Co. Ltd. vs. CIT (1989) 77 CTR (SC) 1 : (1989) 177 ITR 377 (SC) 2. CIT vs. Western India State Motors (1994) 117 CTR (Raj) 281 : (1993) 203 ITR 363 (Raj) 3. Praga Tools Ltd. vs. CIT (1980) 16 CTR (AP) 356 : (1980) 123 ITR 773 (A....
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....manence to the technical know-how at any particular stage in this fast-changing area of medical science. The state of the art in some of the areas of high priority research is constantly updated so that the know-how cannot be said to be the element of the requisite degree of durability and non-ephmerality to share the requirements and qualifications of an enduring capital asset. The rapid stride in science and technology in the field should make us a little slow and circumspect in too readily pigeon-holing an outlay such as this a capital.' The Jaipur Bench of Tribunal in the case of Business Information Processing Services vs. Asstt. CIT (2000) 67 TTJ (Jp) 131 has held that expenses on development of computer software are reve....
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....a software does not have any degree of endurability and permanence due to change of system and change of technology. The case law relied upon by the CIT(A) are squarely applicable to the case of the assessee. With regard to the reference by the AO to cl. (xi) in s. 36 by Finance Act, 1999, we agree with the assessee that it refers to computer system and not to software programme and, therefore, the same is misplaced. In this view of the matter, we uphold the order of the CIT(A) on this issue. This ground of the Revenue fails. 6. The second ground pertains to deduction under s. 80HHE of the Act. The assessee claimed the deduction at Rs. 8,14,53,422 whereas the AO granted a higher deduction at Rs. 9,25,78,447 in view of the additions made ....
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.... the practice to write off computer related items in the books once they become obsolete as the extent of obsolescence in respect of these types of items is quite high in information technology industry. The assessee admitted to have actually used these assets. The assessee invited the attention of the CIT(A) to the provisions of s. 43(6)(c)(B) of the Act to state that the written down value in the case of any block of assets means the aggregate of the written down values of all assets falling within that block of assets at the beginning of the previous year as reduced by monies payable in respect of any asset falling within that block, which is sold or discarded or demolished or destroyed during that previous year together with the amount ....