Software Expenses Are 'Revenue In Nature' If Fixed Capital Did Not Undergo Any Change Consequent To Acquisition Of Licensed Software: Mumbai ITAT

The Income Tax Appellate Tribunal (ITAT) in Mumbai ruled that software expenses are of a revenue nature and do not constitute a capital asset that changes the structure of fixed capital. Consequently, the expenses incurred in acquiring licensed software should be treated as deductible revenue expenses rather than capital expenditures. This decision provides clarity on the tax treatment of software expenses, affirming that they should not be capitalized but expensed in the year they are incurred.