Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (11) TMI 526 - AT - Income TaxNature of expenditure - Treatment of Research & Dev. (R&D) expenditure - revenue or capital expenditure - AO opined that the same would be capital expenditure in the nature of intangible assets which would be eligible for depreciation - HELD THAT:- The expenditure is mostly in the nature of salaries, contribution to PF, business promotion, web services expenses, consultancy charges and training of employees etc. These are mostly revenue in nature and incurred in the area of testing, shortcuts in coding etc. The expenditure was not incurred on creation of end products being developed by the assessee but to increase expertise in technology to increase the revenue. By incurring such expenditure, the assessee may get enduring benefit in future, nevertheless, the same would not result into creation of any new capital asset. Therefore, such expenditure, in our considered opinion, would be fully allowable being revenue in nature as held by Pune Tribunal in Opus Software Solutions Pvt. Ltd [2012 (11) TMI 619 - ITAT PUNE] on similar factual matrix. We order so. The deprecation granted by Ld. AO would stand reversed - Decided in favour of assessee. Remuneration to Directors - the only reason to make impugned addition is the opinion of Ld. AO that reimbursements should have been included in salary component in Form No. 16 - HELD THAT:- Theses reimbursements are part of offer letters issued by the assessee to respective directors - Upon perusal of the same, we find that the directors were reimbursed telephone expenses, petrol/other expenses which are duly reflected in pay-slip issued by the assessee - there are no findings by lower authorities that these reimbursements were taxable. Nevertheless this fact would not jeopardize assessee's claim of expenditure u/s. 37(1) since the assessee has incurred the expenditure. Therefore, the impugned addition is not sustainable - This ground stand allowed.
|