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TMI Blog2010 (7) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... site. 3. On this issue the AO observed that assessee had capitalized websites and claimed depreciation @ 60 per cent on written down basis. He opined that IT Act did not provide for treatment of expenses on websites. Assessee submitted vide letter dt. 3rd March, 2006 before the AO as under : That the assessee company is engaged in the business of publication of daily English newspaper namely, 'The Pioneer' a famous daily English newspaper for the last 140 years. The company incurred an amount of ₹ 2,07,76,911 relating to the expenses of development of website, named www.dailypioneer.com in the previous year and shown WIP, which has been capitalized under the head computer, during the year under assessment, which is evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equested to allow deduction under s. 35D of the Act. Assessee also furnished details of the expenditure. 4. From the above, AO observed that the assessee out of the total expenses amounting to ₹ 2,08,93,164 has incurred only ₹ 58,07,758 on portal developments and balance was incurred on personal expenses, interest and financial expenses, editorial expenses, administrative expenses and depreciation. AO found that it was seen from the details furnished that these expenses were not covered under s. 35D of the Act and hence not allowable. AO further observed that assessee vide letter dt. 13th March, 2006 had stated that development of portals was an integral part of the strategy of expansion of business of the assessee company an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative relied upon orders of authorities below. 7. Learned counsel for the assessee submitted that the assessee is entitled to 60 per cent depreciation on computer software in as much as website is nothing but a computer programme recorded on a storage device and as such covered within the meaning of software and eligible deduction. He has further contended that in case the contention of the Revenue that website is not covered within the meaning of software, expenditure on website will be revenue expenditure on which 100 per cent depriciation is allowable in the very first year as per Delhi High Court order in the case of CIT vs. Indian Visit.Com (P) Ltd. (2008) 13 DTR (Del) 258. 8. We have heard both the counsel and perused the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and on facts by deleting addition of ₹ 1,42,801 made by the AO on account of outstanding sundry creditors ignoring the fact that the assessee itself agreed during the assessment proceedings that the liability was outstanding for more than 3 years. 10. On this issue the AO observed that details of sundry creditors were called for from the assessee. He found that some creditors totalling ₹ 1,42,801 comprising 31 parties were outstanding for more than three years. AO asked the assessee as to why these credit balances should not be treated as deemed income of the assessee under s. 41(1). Assessee submitted that in the initial years of operation of the company, it suffered losses and hence was not in a position to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment proceedings that the liability was outstanding for more than three years. 13. We have carefully considered the submissions of both the parties and perused the material available on record. We find that there is no rule that liability outstanding for more than three years need not be paid and the same becomes income of the assessee. Decision of Hon'ble apex Court relied upon by the AO was on different facts. In that case, the claim of deposits by the customers had become barred by limitation and the assessee itself has treated the money as its own money and taken the amount to P L a/c. In that context, Hon'ble apex Court has held that the amount was assessable as income. Here it is not the case that AO has issued summ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Dy. CIT vs. Datacraft India Ltd. in ITA Nos. 754 and 7462/Mum/2007 vide order dt. 9th July 2010 [reported at (2010) 133 TTJ (Mumbai)(SB) 377: (2010) 45 DTR (Mumbai)(SB)(Trib) 121'Ed.], wherein it has been held that internal hardware parts of a computer are often referred to as 'components' while external hardware devices are usually called 'peripherals'. Together, they all fall under the category of computer hardware. It was held that it was not only the equipment which performs such functions which can be called as computer. All the input and output devices which support in the receipt of input and outflow of the output are also part of computer. The Bench agreed with the view taken by the Kolkata Bench in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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