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TMI Blog2013 (9) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 Rs. 26,95,86,068/-. The return was processed under section 143(1) and accepted the same. Subsequently the case was selected for scrutiny under section 143(3) and completed the assessment on 08.03.2004 making certain additions. In appeal before the CIT(A) the assessee challenged the additions and the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. 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 which also, the assessee claimed expenditure incurred on software packages as revenue one. It was held that such expense which revolves on the modern communication technology enables the assessee to carry on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 139/- made on account of website development charges. The A.O. noticed that the assessee has debited an amount of Rs. 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 expenditure as capital in nature stating that the life span of the website is quite long and it is an asset in the cyber space. However, he allowed depreciation @ 25% on website development charges. Before the CIT(A) it was subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 website may provide an enduring benefit to an assessee, the intent and purpose behind development of a website is not to create an asset but only to provide a means for disseminating the information about the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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