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Computer software - revenue or capital

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This query is : Resolved

kunal (Querist)

15 April 2014 I m preparing for CA finals. RTP has a recent case of Oriental Ceramics & Industries lts (2013)358 ITR 49 Delhi- where it has been held that Computer & its peripherals including COMPUTER SOWTWARE are to be depriciated under block of 60 %. On the othr hand, amendmended defination of ROYALTY as per FA 2012 includes payments for Computer software. explation says that IT Rules provide for depre on softwares at 60 % but now as per IT ACT software is a royalty payment and is thus allowable expenditure u/s 37(1) subject to TDS as per 40a(i) / 40a(ia). Rules cannot override act and so softwares are to be expensed out. what should i write in exam considering the contradictory decision of the Delhi HC.

Rupesh Jain

Rupesh Jain (Expert)

21 April 2014 if you are buy/or developing the software then you have to deducting the tds then you can make payment to out side india or inside india.

but your asking regarding the royalty.

royalty for the use of any software it will always exp. off. due to it payable as pass of time or on the basis of production of goods.

then you can not claim as exp. till you not pay the tds.

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