Sec. 37 of Income Tax Act, 1961 – Business Expenditure – Capital or revenue expenditure – Since the amount is paid on the basis of actual use of software and not for acquisition of software, there was no question of treating the said expenses as capital expenditure

Facts: Whether Tribunal was justified in treating computer software expenses of Rs. 5,82,62,091.00 to be revenue in nature without examining the agreement between Aker Norway and the assessee and the terms regarding the usage of the software?

Held, that Tribunal has held that the only dispute before it was whether the aforesaid amount should be treated as a revenue expenditure or as a capital expenditure. It has been held that since the amount is paid on the basis of actual use of software and not for acquisition of software, there was no question of treating the said expenses as capital expenditure. Therefore, Tribunal held that the authorities below had wrongly held the software payment to be capital expenditure in nature and accordingly upheld the stand taken by the assessee directing the Assessing Officer to treat the software expenses as revenue expenditure. There is no error or infirmity in the conclusions reached by the Tribunal – PR. CIT Vs. AKER POWERGAS PVT. LTD. [2020] 423 ITR 536 (BOM).