Upgradation of software expenditure allowed as Revenue Expense by ITAT
The assessee incurred up-gradation of software expenditure to integrate the internal communication system email to Lotus notes within the company. This expenditure has been incurred only for facilitating the trading operation leaving the fixes untouched.
However, the assessing officer has disallowed the above expenditure under-treated as capital expenditure being enduring the nature. The ld CIT[A] also confirmed this addition after allowing Depreciation on these expenses.
Before ITAT, the Ld Counsel submitted that jurisdictional High Court in the case of CIT-Vs-N.J. India Invest (P.) Ltd. reported in  32 taxmann.com 367 (Gujarat) held that Expenditure on maintenance, back-up and support services to existing hardware and software is revenue in nature, and therefore allow the expenditure as revenue in nature.
Per contra the Ld DR could not contravent this decision and could not produce any decision in favour of the Revenue.
Therefore respectfully following the jurisdictional judgement in the case of the NJ India Invest P Ltd [cited supra] ITAT allowed this ground and deleted the addition made by the AO.
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