Capitalization of software.

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CA sanjeev kumar (Querist)
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03 June 2013 I bought a software costing 1.9L should i capitalize it and amoortize in 10 yrs. as life of the software cannot be determined.With reference to AS-26.Plz reply am i right in doing so?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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03 June 2013 ERP Soft ware expenses is revenue expenditure.

Citation :- CIT Vs. Southern Roadways Ltd (2008) 304 ITR 84 (Mad).

Findings :- The payment of such application soft ware, though there is an enduring benefit,does not result in acquisition of any capital asset and it merely enhances the productivity or efficiency and hence, has to be treated as REVENUE EXPENDITURE.

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