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2018 (12) TMI 988 - HC - Income TaxNature of expenditure - expenditure incurred in developing/upgrading the software - revenue or capital - Held that:- The case of the assessee, not disputed by the Revenue is that the assessee incurred these expenditure for developing a existing software. This was with the reason to compete in the market and for the improvement of the existing product. Therefore, the Tribunal erred in applying the said decision and consequently, erred in allowing the appeal filed by the Revenue. The CIT-A after taking into consideration the facts of the case, in our opinion rightly held that the products are not similar to development of specific new products and it is in respect of the expenditure incurred in improving of the existing product and the work was initiated for securing the market over others in the field of business and the assessee's business is developing of software and expenditure incurred on a project which was perceived to be of great potential cannot be disallowed because such potential has not been realised. As pointed out that it is not necessary that every expenditure results in taxable income and it cannot be held that unless income is generated, expenditure cannot be allowed. - Decided in favour of the assessee.
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