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[2009] 309 ITR 272 (PUNJ. & HAR.) HIGH COURT OF PUNJAB AND HARYANA Commissioner of Income-tax v. Varinder Agro Chemicals Limited ADARSH KUMAR GOEL AND L. N. MITTAL, JJ. I.T. APPEAL NO. 598 OF 2007 OCTOBER 31, 2008 S ection 37(1) of the Income-tax Act, 1961 - Business Expenditure - Allowability of - Computer software expenses are revenue in nature [Assessment year 2002-03] [In favour of assessee] CIT v. Varinder Agro Chemicals Ltd. [2009] 309 ITR 272 /224 CTR (Punj. & Har.) 326 Where the assessee claimed deduction in respect of amounts spent on software, which was disallowed by the Assessing Officer and the Tribunal held that the computer software expenses were revenue in nature. Held that there was nothing to show that the software used by the assessee was of enduring nature and would not become outdated. Since technology is fast changing and day-by-day systems are being developed in a new way, software may be needed like raw material. The view taken by the Tribunal was certainly a possible view. Thus, no substantial question of law arose. Rajesh Sethi for the Appellant. JUDGMENT Adarsh Kumar Goel, J.-The Revenue has preferred this appeal under section 260A of the Income-tax Act, 1961 (in short, "the Act"), against the order of the Income-tax Appellate Tribunal, Chandigarh Bench "B", Chandigarh, passed in I. T. A. No. 138/Chandi/2006, dated April 24, 2007, for the assessment year 2002-03, proposing to raise the following substantial question of law : "Whether, on the facts and in law, the hon'ble Income-tax Appellate Tribunal was justified in holding that computer software expenses were revenue in nature, disregarding the meaning of plant under section 43(3) and the fact that enduring advantage was derived by the assessee by incurring such expenditure ?" 2. The assessee claimed deduction in respect of amounts spent on software, which was disallowed by the Assessing Officer. The Commissioner (Appeals) upheld the claim of the assessee, which has been affirmed by the Income-tax Appellate Tribunal. 3. The finding recorded by the Tribunal on the question proposed to be raised is as under : "4. In regard to the third ground of appeal, it is stated that the…

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