9911796707
TMI Blog2008 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... e order dated 23.02.2007 passed by the Income Tax Appellate Tribunal in respect of the assessment year 2001-02. 2. The only issue which arose for consideration before the Tribunal was whether the amount of Rs 20,23,317/- incurred by the assessee on development of its website was an expenditure of a capital nature or of a revenue nature. The assessee is engaged in the travel business and makes all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure was of a revenue nature and was, therefore, allowable to the assessee. In so concluding, the Tribunal compared the website to an electronic brochure available to prospective customers. The Tribunal was of the view that the website supplies information about the scope and activity and the profile of the assessee. The Tribunal also noted that expenses had to be incurred by the assessee for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upgradation of the website was of a revenue nature. 4. The Tribunal placed reliance on two decisions of the Supreme Court in the cases of Empire Jute Company Ltd v. CIT: 124 ITR 01 and Alembic Chemical Works Company Ltd v. CIT: 177 ITR 377. 5. In Empire Jute Company Ltd (supra), the Supreme Court observed that if the advantage consists merely in facilitating the assessee's trading operations o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt also observed that the 'once for all' payment test is also inconclusive. What is relevant is the purpose of the outlay and its intended object and effect, considered in a commonsense way having regard to the business realities. The Supreme Court also noted that in a given case, the test of 'enduring benefit' might break down. 7. Considered in the light of these principles enunciated by the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lets. The advance of technology and the wide spread use of the internet has provided a very powerful medium to companies to publicize their activities to a larger spectrum of people at a much lower cost. Websites enable companies to do what the printed brochures did but, in a much more efficient manner as well as in a much shorter period of time and covering a much larger set of people worldwide. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
