Tds on software

This query is : Resolved

Piyush Agrawal (Querist)
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17 August 2013 Dear All,

If we have purchased a software from a developer cum dealer for operating a machine,
then where it should be booked in royalty and deduct tds or as a Intangible Assests.

My client is arguing that it can not be booked as royalty,as IT Act specify the royalty treatment of software when the payment was made for licence or updation not for purchase.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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17 August 2013 If the benefit of the software is for more than 2 years then it is a capital expenses and it is to be booked as Fixed assets otherwise it is a direct revenue expense if the benefit is for less than two years. This has been decided by ITAT Special Bench Delhi and also applied in the case of Vekrangee Software Ltd.

Ganeshbabu K

Ganeshbabu K (Expert)
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17 August 2013 IT SEEMS SOFTWARE IS REQUIRED TO RUN MACHINE...SO FOR FIRST TIME PURCHASE IT CAN BE CAPITALISED..TO MACHINERY
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AND TDS REQUIRED IN MY OPINION AS IT IS CUSTOMIZED ONLY FOR YOUR REQUIREMENTS

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