Hello Freinds, My company want to use a customized software for the purpose of making the business in line. for that purpose company has made an agreement/contract with the software company w.e.f. Nov. 2015 that their software developer will make an customized software for a compnay and they (software developer) have to provide necessary guidance on the same during the customization of the software. As the software still in the process, we have shown them under WIP. My ? is now in 31/03/2016, can we claim a depreciation on software. A bill raised by software company showing that they have provided a neccesary guidance as a consulting fees, whether TDS has to be deducted under which section whether contact or Professional fees. where the Software will be appearing in the balance sheet.
1 Replies
CA Harshal Totla
(Chartered Accountant)
(2229 Points)
Replied 12 June 2016
Hii Bhavesh! Answers to your questions is as follows;
1) Since the software development is still in progress, you cannot claim depreciation on the same. The asset must be ready to use as as a necessary condition for claiming depreciation.
2)Yes, tds needs to be deducted on consulting fees. Here the services provided by developer is of professional nature hence section 194-J shall apply and not 194-C.
1) Since the software development is still in progress, you cannot claim depreciation on the same. The asset must be ready to use as as a necessary condition for claiming depreciation.
2)Yes, tds needs to be deducted on consulting fees. Here the services provided by developer is of professional nature hence section 194-J shall apply and not 194-C.
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