9911796707
TMI Blog2013 (9) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... 454 - ITAT DELHI-C], wherein it has been held that for ascertaining as to whether the expenditure on computer software gives an enduring benefit to an assessee, the duration of time for which the assessee acquires right to use the software becomes relevant. Website development charges, a capital expenditure or revenue – Held that:- Reliance has been placed upon the judgment in the case of CIT vs. Indian Visit.com P. Ltd [2008 (9) TMI 8 - DELHI HIGH COURT], wherein it has been held that just because a particular expenditure may result in an enduring benefit would not make such an expenditure of a capital nature. What is to be seen is what is the real intent and purpose of the expenditure and as to whether there is any accretion to the fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and facts of the case. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition made by disallowing a software expenditure amounting to Rs.1,75,500/- for obtaining MS Office Licence and Marketing Data Management System which are capital in nature. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition made by disallowing the expenses for website development amounting to Rs.8,02,139/- which are capital in nature. 3. Briefly stated, the assessee company filed the return of income on 31.10.2001 declaring loss of ₹ 26,95,86,068/-. The return was processed under section 143(1) and accepted the same. Subsequently the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SB). After considering the facts and contentions of the assessee the CIT(A) deleted the addition stating as under:- 5. I have carefully considered the above facts and find merit in the contentions of the appellant. From the very nature of the software, the payment of such expenses on such application software though enduring in nature, does not result in acquisition of any capital asset and merely enhances the productivity and has to be treated as revenue. The concept of enduring benefit must respond to the changing economic realities of the business. Apart from the case of Amway Enterprise (supra), case of the appellant is also supported by the recent decision in the case of CIT vs. Southern Roadways Ltd. (2009) 183 Taxman 234 (Mad) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware being less than two years, the expenditure is rightly treated as revenue expenditure. Accordingly order of the CIT(A) is confirmed. 6. Ground No. 2 is with reference to deleting the addition of ₹ 8,02,139/- made on account of website development charges. The A.O. noticed that the assessee has debited an amount of ₹ 8,02,139/- under the head website development charges . The A.O. asked why the same should not be treated as capital expenditure. It was submitted that the website offers the various details of the company s business and products it offers. Hence it is essentially an advertisement expenses and allowable as revenue in nature. The A.O. did not accept the contentions of the learned A.R. and treated the expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to withdraw depreciation allowed to the appellant. 7. We have considered the issue. In our view the CIT(A) has rightly considered the nature of expenditure as revenue in nature. Similar issue was considered by the Hon ble Delhi High Court in the case of CIT vs. Indian Visit.com P. Ltd. (2008) 219 CTR 603 (Del), wherein it was held as under: - Just because a particular expenditure may result in an enduring benefit would not make such an expenditure of a capital nature. What is to be seen is what is the real intent and purpose of the expenditure and as to whether there is any accretion to the fixed capital of the assessee. In the case of expenditure on a website, there is no change in the fixed capital of the assessee. Although the w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
