Expenditure on purchase of software is revenue expenditure

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HIGH COURT OF DELHI

CIT v. Amway India Enterprises

IT APPEAL NOS. 1344 AND 1363 OF 2009

NOVEMBER 4, 2011

The first issue being: the treatment to be accorded to expenditure incurred by the assessee on purchase of software applications. These applications being: MS Office Software, Anti Virus software, Lotus Notes Software and Message Exchange applications. The assessee in respect of these applications acquired a licence to use the said applications on payment of consideration. The said expenditure has been disallowed by the Assessing Officer in each of the assessment years by treating the expenditure as one incurred on capital account. Accordingly, depreciation at the rate of 25% was allowed to the assessee.