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2022 (12) TMI 190 - HC - Income TaxNature of expenditure - expenditure in connection with the development of new products / software - revenue or capital expenditure - question of larger context of business necessity or expediency - HELD THAT:- The issue as to whether a particular expenditure incurred was of capital or revenue in nature has been the subject matter of legal debate before various Courts in the Country. As held by the Apex Court in the case of Empire Jute Co. Ltd. [1980 (5) TMI 1 - SUPREME COURT] since there does not exist an all-embracing formula which can provide a ready solution to the problem; no touchstone has been devised and that every case has to be decided on its own facts keeping in mind the broad picture of the whole operation in respect of which the expenditure has been incurred. The appellant is admittedly in the business of development of software solution and management, and therefore, it’s endeavour to develop a new software was nothing but an endeavour in its existing line of business of developing software solutions. Admittedly, the product which was sought to be developed, never came into existence and the same was abandoned. No new asset came into existence which would be of an enduring benefit to the assessee, and therefore, in these circumstances, the expenditure could only be said to be revenue in nature. We are of the view that the view already expressed by the ITAT in the order impugned requires no interference. - Decided in favour of assessee.
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