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2016 (3) TMI 1320 - HC - Income TaxDisallowance towards expenses incurred for software and website development - nature of expenses - revenue or capital expenditure - Held that:- Assessee had offered a satisfactory explanation, which has been accepted by the CIT(A) as well as the ITAT, that the aforementioned expenditure did not result in a capital asset of an enduring nature. Both the CIT (A) and the ITAT accepted that the expenditure was incurred only to update the website to keep pace with the development in technology, therefore, is not of a permanent character. There are no details unearthed by the AO to support the view that said expenditure was capital in nature. No substantial question of law. Treatment of expenses incurred towards repair and maintenance - AO treated the said expenses as a capital expenditure as reversed by the CIT(A) holding it to be revenue expenditure and this was concurred with by the ITAT - Held that:- Revenue has projected a break-up of the said expenditure as including expenses towards the procurement of a server, the AO has in his order not made any reference to such break-up. Here again, the Assessee’s explanation that this was an expenditure incurred for upgrading the computer hardware, incurred to keep pace with the changing technology and, therefore, did not result in an asset of an enduring nature has been accepted both by the CIT(A) as well as the ITAT. The Court is not, therefore, persuaded to interfere with that fact.
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