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Purchase of user licence for operating a software

This query is : Resolved 
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(Querist)
09 July 2013 Hi,

Please suggest whether Purchase of user licence for operating ERP needs to be capitalised as intangible asset in the books of account as per AS-26 or expensed off in the year of purchase?

Thanks

Poonam
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Ganeshbabu K

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Ganeshbabu K (Expert)
09 July 2013 For accounting purpose:-

upgradation of software , purchase of licences and purchase of computer software are intangeble assets,

therefore, expenditure incurred on purchase of software/upgradation software should have been capitalised and amortised over their estimated useful life as per AS 26,

Reference

opinion given by icai commitee
https://220.227.161.86/eac/eacfinal/vol26/2.htm

Thanks & regards
Ganesh babu k
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Ganeshbabu K

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Ganeshbabu K (Expert)
09 July 2013 For income tax purpose treat it as revenue expenditure:-

Citation:-

a)CIT Vs Southern Roadways Ltd.(2008)304ITR 8
4(Mad)

b)CIT Vs Asahi India Safety glass Ltd.(2011)Del.


Thanks & regards
Ganesh babu k
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CS,CA F,Numrologi TusharSampat

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CS,CA F,Numrologi TusharSampat (Expert)
10 July 2013 It is to be treated as revenue exp.
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