Section 80-O of the Income Tax Act
The decision most relied on for Section 80-O is CIT v. Raychem RPG Ltd. (346 ITR 138), cited in 93 of the 55 judgments on BharatTax that turn on this section.
Leading authorities on Section 80-O
Expenditure incurred on modifying an existing software system is revenue in nature and is allowable as a business expenditure. This is determined by applying a functional test to assess if the software creates an enduring benefit or forms part of the enduring profit-making apparatus.
The definition of 'plant' for income tax purposes is broad, encompassing assets like technical know-how and software, making them eligible for depreciation allowances. This includes items like film software libraries, treated as important apparatus for business.
Extinguishment of rights in a capital asset includes transfer and attracts capital gains computation provisions. Demolition and conversion of a building into scrap constitutes a form of transfer.
Expenses incurred on issuing Global Depository Receipts (GDRs) are allowable as a deduction under Section 35D of the Income Tax Act, 1961.
Expenditure incurred for the issue of bonus shares is treated as revenue expenditure and is allowable as a deduction. However, expenditure related to increasing share capital is not allowable as revenue expenditure.
Findings in earlier assessment years are not conclusive and facts can be reconsidered in later years, leading to different findings.
