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2009 (1) TMI 535 - AT - Income TaxRevision u/s 263 - deduction of project expenses and deduction u/s 10B, claimed by the assessee so allowed in the assessment by assessing officer is erroneous and prejudicial to the interest of revenue - project expenses are revenue in nature or not - HELD THAT:- In regard to deduction under section 10B, the only grievance of the ld. CIT is that provision contained in sub-section (5) of section 80HHE comes in the way of grant of the deduction in the subsequent year. It does appear to us that the section may require further elaboration notwithstanding the order of the Tribunal in the case of Legato Systems India (P.) Ltd.[2004 (11) TMI 294 - ITAT DELHI-E]. This is so because a particular income can be brought to tax only in one year and, therefore, the deduction under section 80HHE or 10B can be claimed only in one year. It will be inconceivable that income is taxed in one year and deduction is allowed in that year in section 80HHE; and thereafter deduction is also claimed in respect of the same income in some other year in which it has not been offered for tax. Therefore, order of the Tribunal makes the words "or in any other assessment year", used in sub-section (5), as redundant. Having considered the rival submissions, we are of the opinion that in view of the order of the Tribunal in the case of Legato Systems India (P.) Ltd. (supra), the issue is debatable. Therefore, we are also of the view that the order of AO could not have been revised on this ground by the ld. CIT as the Assessing Officer had followed one of the possible views in the matter. Capitalization of the project expenses - The case of the assessee was that these were the expenses in executing projects regarding development of packaged software. The expenses were revenue in nature. However, the case of the ld. DR is that these were ongoing expenses on projects, which lead to benefit of enduring nature on development of packaged software. We are of the view, on the basis of reasoning given in respect of deduction under section 10B, that the issue is debatable. Therefore, the order of AO in allowing this expenditure after considering the same cannot be said to be erroneous and prejudicial to the interest of the revenue. In view of the disposal of the appeal on merits, the application of the assessee become infructuous, therefore, the same is dismissed. Therefore, appeal of the assessee is allowed and the stay application is dismissed.
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