Adarsh Kumar Goel, J. - (1.) SINCE the registry has not been able to send the file on account of fire in the court premises, Learned Counsel for the Revenue has furnished a copy of the paper -book which is taken on record. We proceed to decide the matter after hearing Learned Counsel for the parties. This appeal has been preferred by the Revenue under section 260A of the Act against the order dated September 23, 2005, passed by the Income -tax Appellate Tribunal, Delhi Bench "SMC", in I.T. A. No. 1365/(DEL)/2004, for the assessment year 1995 -96, claiming the following substantial questions of law : (i) Whether, on the facts and in the circumstances of the case, the hon'ble Income -tax Appellate Tribunal was right in treating the expenses incurred on purchase of computer software as revenue expenses in nature despite the fact that the assessee had capitalized the expenses under the head 'office equipment' but claimed depreciation at 100 per cent. ? (ii) Whether, on the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was right in treating the computer software expenses as revenue expenses despite the fact that the expenses were incurred in obtaining advantage of enduring nature and the expenditure was capitalized by the assessee itself ? (iii) Whether, on the facts and in the circumstances of the case, the hon'ble Income -tax Appellate Tribunal was right in holding that the assessee had 'put to use' the plant and machinery during the year relevant to the assessment year 1995 -96 though the assessee had done only trial -run by March 31, 1995 ?
(2.) THE Assessing Officer did not accept the plea of the assessee for treating the computer software as revenue expenditure. It was held that the expenditure in question was capital expenditure and the assessee was only entitled to depreciation. The Commissioner of Income -tax (Appeals) upheld the said view. On further appeal, the Tribunal upheld the plea of the assessee with the observation that technological changes are taking place at fast pace on account of which expenditure on software development had to be treated as revenue expenditure. We have heard Learned Counsel for the parties.
(3.) LEARNED Counsel for the Revenue submits that the expenditure should have been treated to be on office equipment as per the proviso to Explanation 5 to section 32(1).;