Sap user license fee nature

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amarnath

amarnath (Querist)

27 August 2013 SAP USER LICENSE FEE IS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE?

Ganeshbabu K

Ganeshbabu K (Expert)

28 August 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

Ganeshbabu K (Expert)

28 August 2013 But For income tax purpose i would like to treat it as revenue expenditure:-

you can see below attached

https://www.cainindia.org/news/3_2008/expenditure_on_software_is_of_revenue_nature_special_bench.html

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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amarnath

amarnath (Querist)

28 August 2013 In the last financial year SAP USER LICENSES SHOWED IN COMPUTER BLOCK IN BALANCE SHEET.Now how can we treat this expenditure?

Ganeshbabu K

Ganeshbabu K (Expert)

28 August 2013 Refer to paragraph 10 & 11 in ICAI expert committee opinion which i have linked in my first reply

You can get answers to all of questions in icai expert opinion attached,,kindly refer to it

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