TMI Blog2011 (2) TMI 1368X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 43,75,503 by treating the same as revenue expenditure. Briefly stated the facts of this ground are that the assessee, at the material time, was engaged in the business of management consultancy, investment banker, advisory services for merger and amalgamation etc. In the expenses debited under the head `Legal and professional fees amounting to ₹ 53,00,844, the assessee had made payment of ₹ 41,24,662 as Referral fees to various persons and ₹ 2,50,841 as consultancy fees to Mr.Tadhg Crowley. On being called upon to establish the justification of this deduction, the assessee stated that it had entered into agreement with certain parties to the effect that on their introducing a client, the assessee would pay the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fees received by the assessee to Mr.Tadhg Crowley for rendering of services. It has not been found by the AO that the assessee did not pay this much amount nor any services were provided by this party. These facts prove that the payments were made by the assessee for soliciting clients, from whom business income was earned. It is only in the nature of commission paid to various parties for introducing clients, though referred to as Referral fees or Consultancy charges. A chart has been drawn on page 2 of the impugned order giving party-wise detail of the amount realized from clients vis- -vis Referral fees or Consultancy charges paid by the assessee to the intermediaries. We are unable to appreciate as to how this payment can be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for ₹ 75,257. The learned CIT(A) however deleted this addition. 5. After considering the rival submissions and perusing the relevant material on record it is seen that the said expenditure was incurred by the assessee on the upgradation of the website and has no relation with computer software. The Hon ble Delhi High Court in CIT Vs. Indian Visit.Com (P) Ltd. [(2008) 219 CTR (Del.) 603] has held that expenditure on development of website is a revenue expenditure even though it results into enduring benefit. No contrary judgement has been brought to our notice on behalf of the Revenue. It is further relevant to note that the expenditure incurred by the assessee was not in the nature of initial development of website, but only its u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 22,784 was claimed as deduction with regard to restatement of assets / liabilities other than capital accounts. The learned A.R. explained that the loss from the realization made during the year amounted to ₹ 5.30 lakhs but the amount of ₹ 22,784 represented the loss in respect of receivables from clients at the end of the year. This loss was booked on the basis of difference between the rate at which consultancy services were recorded at the time of issuance of invoices and the rate of foreign currency at the end of the year. The Hon ble Supreme Court in the case of CIT Vs. Woodward Governor India P. Ltd. [(2009) 312 ITR 254 (SC)] has held that additional liability arising out of fluctuation in the rate of exchange in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
