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

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).

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.

We have considered rival submissions.

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.