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TMI Blog2013 (9) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... mpletion method and percentage completion method is the year of allowability of expenditure and the year of booking of income. - Decided in favor of assessee. Revision u/s 263 is not correct - CIT is wrong to direct the AO to treat the entire expenditure of Rs.9,49,039/- as capital in nature and disallow the same. - ITA No.2095/Del/2011 - - - Dated:- 4-1-2013 - U B S Bedi and J Sudhakar Reddy, JJ. For the Appellant : Shri O P Sapra, Adv. For the Respondent : Shri Satpal Singh, Sr.DR ORDER:- Per: J Sudhakar Reddy: This is an appeal filed by the Assessee directed against the order of the CIT(A)-VIII, dated 28.2.2011 pertaining to the Assessment Year 2003-04. 2. Brief facts:- The assessee is a company. It filed its return of income on 2.12.2003 declaring a loss of Rs.1,41,74,626/-. The return was processed under Section 143(1) of the Income Tax Act, 1961 on 9.3.2004. Thereafter the assessment order under Section 143(3) was passed on 28th February,2006 accepting the loss returned. 3. On 29.2.2008 notice under Section 263 of the Income Tax Act, 1961 was issued by the Commissioner of Income Tax (Appeals)-IV, New Delhi. Thereafter an order under Section 263 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09. In view of the aforesaid, the action of the Assessing Officer is being sustained. 7. On the additional ground raised, the Commissioner of Income Tax (Appeals) at para 5 of his order held as under. 5. As regards additional ground raised by the appellant company to allow the necessary claim in the respective AYs, I find that the claim of the appellant is not in order. Firstly, the expenses of Rs.94,49,039/- have been held to be capital in nature and, therefore, there is no question of allowing them as revenue expenses either in the year under consideration or in the years in which the same was incurred. Secondly, the assessments for the AYs 2000-01 to 2003-04 have already been finalized on the basis of returns of income furnished by the appellant company and therefore no directions can be given to the Assessing Officer at this stage. 8. Aggrieved the assessee is in appeal before us on the following grounds. 1. That there is no justification on the part of the authorities below to disallow expenditure of Rs.94,49,039/- as claimed by the appellant company by debiting the same to its P L account on various factual and legal grounds. Various observations made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee whether the expenditure incurred on discontinued project was revenue expenditure or capital expenditure. 10. He relied on the Jurisdictional High Court decision in the case of CIT vs. Indian Visit.Com Pvt.Ltd. 219 CTR (Delhi) (603) for the proposition that expenditure incurred on development of web site is to be allowed as revenue expenditure. Alternatively he submitted that without prejudice it is held to be capital expenditure depreciation has to be allowed. He relied on the following case laws. CIT vs. Mahalakhsmi Textile Mills, 66 ITR 701 (S.C.) Calcutta Steel Containers Ltd. vs CIT, 112 ITR 995 CIT vs. Jindal Equipment Leasing Consultancy Services Ltd. 325 ITR 87 11. Alternatively he submitted that if project completion method adopted by the assessee company is not accepted, then the expenditure should be allowed in the respective years. 12. The Ld.D.R. on the other hand controverted the arguments of the assessee and submitted that the expenditure is in the capital field. He relied on the order of the CIT passed under Section 263 of the Income Tax Act, 1961 as well as the order of the Assessing Officer and that of the Commissioner of Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Delhi High Court in the case of India Visit.Com(P) Ltd. (supra) held as follows. Held : 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 web site, there is no change in the fixed capital of the assessee. Although the web site may provide an enduring benefit to an assessee, the intent and purpose behind development of a web site is not to create an asset but only to provide a means for disseminating the information about the assessee. The same could very well have been achieved and, indeed, in the past, it was achieved by printing travel brochures and other published materials and pamphlets. The advance of technology and the wide spread use of the internet has provided a very powerful medium to companies to publicise their activities to a larger spectrum of people at a much lower cost. Web sites enable companies to do what the printed brochures did but, in a much more efficient manner as well as in a much sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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