9911796707
TMI Blog2017 (9) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... such activity. AO made disallowance of ₹ 16.12 crore simply by means of a mathematical exercise carried out by him. If he found the expenditure incurred by the assessee to be on higher side, it was incumbent upon him to specifically point out as to which expenses were not incurred for the purposes of business. - Decided against revenue Treatment given to the website expenditure - revenue or capital expenditure - nature of expenditure - Held that:- in view of the judgment of the Hon’ble jurisdictional High Court in CIT vs. India Visit.com (P) Ltd. (2008 (9) TMI 8 - DELHI HIGH COURT) in which it has been held that the expenditure on development of website is a revenue expenditure. Similar view has been taken by the Tribunal in the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness. The Tribunal s reasoning for Assessment Year 2008-09, for the relevant year pertinently is extracted below:- 14. Ground no. 1 of the Revenue s appeal is against the deletion of disallowance of ₹ 16,12,31,000/-. The facts apropos this ground are that the AO observed that the assessee declared revenue receipts of ₹ 112.97 crore for the current year as against the revenue receipts of ₹ 124.67 crore for the immediately preceding year. The assessee was found to have incurred expenditure during the instant year at ₹ 130.02 crore as against the expenditure of ₹ 94.80 crore in the preceding year. On the perusal of details, it was observed that the assessee had not shown any income during the year in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having these businesses; during the assessment year 2005-06 when these businesses remained with the assessee for a part of the year, the percentage of expenses went up to 73.5%; and during the year under consideration when these businesses were not at all carried on by the assessee, the percentage of expenses increased to 107.8%. The AO inferred that though: there is no income on account of these two businesses to the assessee, but, still, it is incurring expenses for these two businesses. Applying the percentage of expense at 62.8% as relevant for the A.Y. 2004-05, the AO made disallowance for the remaining expenses of ₹ 16,12,31,000/-. This disallowance was deleted in the first appeal. The Revenue is aggrieved against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot be said that any substantial question of law arises. Even otherwise, the AO s order presumed that the levels of expenditure necessarily had to drop, since the internet based business had been sold by the assessee. Such a conclusion could not have been arrived at unless the AO had considered all other factors including the nature of commercial activities that subsisted without such activity. 4. In ITA No.716/2017, another ground is urged by the Revenue as to the treatment to be given to the website expenditure. The AO had disallowed the assessee s claim that properly fell in the revenue stream holding that the expenditure resulted in the capital advantage of an enduring nature. Both the CIT and the ITAT upset the findings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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