Dep.on software

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CA Sanjay Baheti (Querist)
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11 June 2011 An assessee has purchased Tally software and another ERP software. What is the dep. rate under Income Tax? 60 percent or 25 percent as applicable for intangibles?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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11 June 2011 Computer Software is no way a asset as it is to be upgraded every year and for that renewal charges are to be paid.
I think , in-spite of treating it as an asset, from income tax point of view, we should debit it as an expense.

If you do not think it proper, charge depreciation @60%

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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12 June 2011 Madras High Court in the case of CIT Vs. Southern Road ways Ltd reported in 304 ITR 84 said replacement cost of software,though there is enduring benefit, is revenue expenditure.
Pl go through the decision and try to equate with your case.

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