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2021 (10) TMI 400 - AT - Income TaxNature of expenditure - revenue or capital expenditure - professional and legal charges to various law firms for incorporation of company, purchase of share transfer stamps for acquisition of company professional fees paid for drafting investment agreement, structuring various documents, due diligence etc. for investment agreement, sharing of employee cost and provision for equity expenses - HELD THAT:- As all these expenses were incurred after commencement of business for expanding business operations of the assessee - expenses did not result in acquisition of any asset nor did they give any enduring benefit to the assessee - expenses incurred relating to carrying on of business more effectively in the ordinary course of business even if, expenses are incurred which are related to capital account cannot be considered as capital in nature, more particularly, when the assessee has incurred said expenditure after commencement of business in the ordinary course of its business activities. This legal position is clarified by CBDT vide Circular No.10 dated 18.06.1964, where it has been clarified that professional charges incurred for running business more effectively cannot be treated as capital in nature. As regards website development expenses, we find that in the case of CIT Vs. India Visit Com Pvt. ltd. [2008 (9) TMI 8 - DELHI HIGH COURT] has held that website development expenses is revenue in nature. In this case, if you go through nature of expenses incurred by the assessee including professional fees paid for incorporation of company, purchase of share transfer stamps, consultation fees paid for drafting investment agreement, professional fees paid for structuring various documents and due diligence for investment agreement are definitely in the nature of revenue expenses, which cannot be at any stretch of imagination be considered as capital in nature. The other expenses incurred by the assessee including website expenses and sharing of employee cost are incurred in ordinary course of business and thus, same are in the nature of revenue expenditure - we reverse finding of learned CIT(A) and direct the Assessing Officer to allow deduction claimed towards legal and professional charges.- Decided in favour of assessee.
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