M/S. ODISHA HYDRO POWER CORPORATION LTD.,BHUBANESWAR vs. ACIT, CORPORATE CIRCLE-1(2), BHUBANESWAR

PDF · subscribers
ITA 281/CTK/2016Status: DisposedITAT Cuttack22 June 2022AY 2009-103 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal followed the Delhi High Court's decision in CIT vs. Amway India Enterprises, holding that software expenses are revenue in nature. Consequently, the software expenditure incurred by the assessee was directed to be treated as revenue expenditure.

What were the facts?

The Assessing Officer (AO) disallowed software expenditure, treating it as capital. The Commissioner of Income Tax (Appeals) deleted this addition. The Revenue appealed this deletion, while the assessee argued the expenditure was revenue in nature.

What were the issues?

The primary issue was whether software expenditure should be treated as capital or revenue expenditure, impacting the allowability of depreciation.

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK

Hearing: 22/06/2022Pronounced: 22/06/2022

O R D E R Per Bench : These are the cross appeals filed by the revenue and assessee against the order of the ld. CIT(A)-1, Bhubaneswar, dated 26.05.2016 passed in I.T.Appeal No.0356/14-15 for the assessment year 2009-2010.

2.

It was submitted by the Id. AR that the AO had disallowed the expenditure relating to software expenditure. It was the submission that the expenditure was revenue in nature and consequently the issue is covered by the decision the Hon'ble Delhi High Court in the case of CIT Vs. Amway India Enterprises, reported in 346 ITR 341 (Delhi).

3.

It was submitted by the Id. CIT-DR that the revenue is in appeal against the action of Id. CIT(A) in deleting the addition of Rs.34,81,882/- in respect of software expenditure capitalised by the AO on which depreciation had been granted @60%. It was the submission that the software gives enduring benefit to the assessee, therefore, the same is liable to be treated as capital expenditure.

4.

We have considered rival submissions.

5.

A perusal of the decision of Hon'ble Delhi High Court in the case of Amway India Enterprises(supra), shows that the software expenses are to be treated as revenue expenditures. In these circumstances, following the principle of law laid down by the Hon'ble Delhi High Court in the case of Amway India Enterprises (supra), software expenses incurred by the assessee is directed to be held as revenue expenditure. Consequently, the appeal of the assessee is allowed and the appeal of the revenue stands dismissed.

Recent GST High Court judgments

Search GST case law →