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TMI Blog2017 (4) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... 77,569 made by the Assessing Officer on account of website development expenses treating the same as capital in nature. 2. The assessee in the present case is a company, which is engaged in the business of website development. The return of income for the year under consideration was filed by it on October 31, 2002 declaring a loss of Rs. 1,75,97,080. The said return was initially processed by the Assessing Officer under section 143(1) on February 3, 2003. Thereafter he noticed the following aspects from the relevant record : "(i) The assessee debited Rs. 1,37,77,768.86 as website development expenses written off. Further scrutiny of assessment records revealed that the assessee's accumulated website development expenditure aggregati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer under section 143(3)/147, an appeal was preferred by the assessee before the learned Commissioner of Income-tax (Appeals) disputing the disallowance made by the Assessing Officer on account of website development expenses and after considering the submissions made by the assessee as well as the material available on record, the learned Commissioner of Income-tax (Appeals) deleted the said disallowance made by the Assessing Officer for the following reasons given in paragraphs 4.2 to 4.5 of his impugned order : "4.2. On consideration of the rival contentions on the issue, my findings and decision thereon are as follows. On a critical analysis of the issue at hand, in my opinion, expenditure incurred towards computer software shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bly while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The apex court further observed that in such cases the test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case. 4.4. In the case of Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 (SC) the apex court finally decided that the expenditure on the website was of a revenue nature and not of a capital nature. The highlight of the judgment is that just because a particular expenditure may result in an enduring benefit would not make such an expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be treated as revenue expenditure rather than capital. The addition made by the Assessing Officer on account of this expenditure is therefore directed to be deleted." Aggrieved by the order of the learned Commissioner of Income-tax (Appeals), the Revenue has preferred this appeal before the Tribunal. 4. I have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the issue involved in this appeal of the Revenue is squarely covered in favour of the assessee, inter alia, by the decision of the hon'ble Supreme Court in the case of Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 (SC), wherein it was held that the expenditure incurred by the assessee on website d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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