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TMI Blog2013 (4) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs.83,20,821/- treating the said expenditure as capital in nature. On the facts circumstances of the case the appellant submit that they have incurred revenue expenditure under various heads aggregating to Rs.83,20,821/- for development of Contents , in the course of their business. The appellant could not successfully market certain contents for which the revenue expenditure is incurred aggregating to Rs.83,20,821/-. The appellant therefore submit that the conclusion reached by the Ld.CIT(A) that the expenditure of Rs.83,20,821/- is a capital expenditure is erroneous and such addition may be deleted. 2. On the facts circumstances of the case the appellant submit that the Ld.CIT(A) has erred in confirming the disallowance of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for development of educational software and other related expenses. In keeping with the company s policy, these expenses are to be capitalized as intellectual property rights (IPR) upon completion of the project. After capitalization, they are amortized over a period of five years. However, during the current year, it is realized that some of these projects are not likely to result in any economic benefits and hence the capital work in progress of these projects is written off and the projects have been abandoned. The capital work in progress written off pertains to certain software under development for educational programs. However, these software are not ready for marketing and hence the same were written off. In support of the content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l production during previous year and made substantial sales and, thus, it was entitled to claim expenses in question as deduction - Assessing Officer disallowed expenses on ground that business of HRC project had not started commercial production - Whether since HRC project was an extension of existing business, revenue expenditure incurred even prior to commercial production had to be allowed as deduction - Held, yes - Whether, further, assessee's claim in respect of interest on capital borrowed and lease rent relating to said business was also to be allowed - Held, yes [In favour of assessee] . Following the ratios in the said decisions of the co-ordinate benches of the ITAT, we are of the view that the expenditure incurred by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance sheet under the head Advances, the amounts have been written off as irrecoverable. As the amounts are paid in the course of business the assessee is entitled for the deduction of the same. On the other hand, the Ld.DR has relied on the order of the Ld.CIT(A) in support of the Revenue s case. He has further stated that the purpose for which the advances are made does not qualify the expenditure as revenue in nature and thus the assessee is not entitled for the deduction. 4.3 We have heard both the parties and perused the material on record. For the sake of convenience, the details of the advances written of claimed by the assessee is reproduced hereunder: Name of the party Amount (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advance for marketing plans anddistribution of educational products. Maha Auto Works 82175 Payment of TDS on rent for Assessment Year 2001-02 now written off. Prem Associates Advertising 2638520 Advance for marketing plans and distribution of educational products. Sindh Brahma Sikhaya Samelan 12480 Advances to party not recoverable hence written off The British School Society 95000 Payment of services Tax for FY 2002-03 now written off. The Byramjee Jeejebhoy Parsee Charitable Institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so the same with the advance of Rs.26,38,520/- to Prem Associates Advertising for the purposes of marketing plans and distribution of educational products. While we concur with the view of the Ld.CIT(A) that this is clearly not a case of written off of bad debts u/s 36(1)(vii), we are of the view that the said advances qualify for the deduction u/s37(1) of the Act. Thus, we delete the disallowance/additions of Rs.25 lakhs, Rs.7.80 lakhs and Rs.26,38,520/- written off as irrecoverable from Krishan Prem Narayan, Kirti Triveni and Prem Associates Advertising respectively. In addition, we sustain the relief of Rs. 10,644/- already given by the Ld.CIT(A). We direct and order accordingly. Thus, Ground No 2 is partly allowed. 5. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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