T.S. Sivagnanam, J.

We have heard the learned counsel on either side.

2. The Revenue preferred this appeal challenging the order passed by the Income Tax Appellate Tribunal dated 12.5.2008 in ITA.No.465/Mds/2007 for the assessment year 2003-04.

3. The above appeal has been admitted on 19.8.2008 on the following substantial questions of law :

"i. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the cost of the acquisition of the computer software is capital in nature and is not liable to be deducted as revenue expenditure in computing the income ?

ii. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in holding that the expenditure on foreign exchange is liable to be reduced from the export consideration in arriving at the export turnover ? and

iii. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in holding that while the expenditure incurred in foreign exchange is liable to be deducted from the export consideration to arrive at the export turnover, the same is not liable to be deducted from the total turn