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2013 (9) TMI 113 - AT - Income TaxSoftware expenditure, a revenue in nature of capital in nature – Held that:- Considering the nature of licences purchased by the assessee, being software of MS Office and Marketing Data Management System which facilitated the operations of the company and has no enduring benefit, the expenditure can only be considered as revenue in nature - Having regard to the fact that software becomes obsolete with technological innovation and advancement and life of the software being less than two years, the expenditure is rightly treated as revenue expenditure – Also, reliance has been placed upon the judgment Amway Enterprises [2008 (2) TMI 454 - ITAT DELHI-C], wherein it has been held that for ascertaining as to whether the expenditure on computer software gives an enduring benefit to an assessee, the duration of time for which the assessee acquires right to use the software becomes relevant. Website development charges, a capital expenditure or revenue – Held that:- Reliance has been placed upon the judgment in the case of CIT vs. Indian Visit.com P. Ltd [2008 (9) TMI 8 - DELHI HIGH COURT], wherein it has been held that just because a particular expenditure may result in an enduring benefit would not make such an expenditure of a capital nature. What is to be seen is what is the real intent and purpose of the expenditure and as to whether there is any accretion to the fixed capital of the assessee. In the case of expenditure on a website, there is no change in the fixed capital of the assessee. Although the website may provide an enduring benefit to an assessee, the intent and purpose behind development of a website is not to create an asset but only to provide a means for disseminating the information about the assessee. The same could very well have been achieved and, indeed, in the past, it was achieved by printing travel brochures and other published materials and pamphlets. The advance of technology and the wide spread use of the internet has provided a very powerful medium to companies to publicize their activities to a larger spectrum of people at a much lower cost. Websites enable companies to do what the printed brochures did but, in a much more efficient manner as well as in a much shorter period of time and covering a much large set of people worldwide – Relying upon the above judgement it has been held in the present case that the expenditure in website development be a revenue expenditure – Decided in favor of Assessee.
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