TaxTMI 
TaxTMI 
2010 (10) TMI 651
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.... He therefore, disallowed the deduction for Rs.5,11,170/- by treating the same as capital expenditure. 4. In appeal before the Learned Commissioner of Income Tax (Appeals) the assessee relied on the decision of Hon'ble Supreme Court in the case of Kedarnath Jute Mills Company Ltd., vs. C.I.T. 82 ITR-363 and submitted that it has been held by the Hon'ble Supreme Court tat entries made in the books of accounts of the assessee are not determinative of the nature of expenditure whether capital or revenue. Therefore, the Assessing Officer was not justified in treating the expenditure on development of websites as capital expenditure relying upon books of accounts of the assessee. The assessee also relied upon the decision of Ahmedabad Bench of the Tribunal in the case of Lubi Electricals 27 TLR 520 where it was held that expenditure incurred on purchase of software programme for computer was allowable as revenue expenses. The assessee also relied on the decision of Jaipur Bench of the Tribunal in the case of Business Information Processing Services vs. ACIT 67 TTJ 131 where it was held that software has uncertain short and unwarranted life as they require frequent changes includ....
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....eciation was not allowable on the expenditure capitalized. He further noted that in the depreciation chart provided in the Income tax Rules, there is no categorization for websites. Accordingly he dismissed the ground of appeal of the assessee. 5. The Authorised Representative submitted before us that in the case of CIT vs. Indian Visit.Com (P) Ltd., 176 Taxman 164 Hon'ble Delhi High Court held that expenditure on development of website provides an enduring benefit to an assessee, the intent and purpose behind development of a website is not to create an asset but only to provide the means for dissemination of information about the assessee among its clients... The purpose could be achieved by the assessee in the past by printing travel brochures and other published material and pamphlets. Mere enduring benefit, de hors of any accretion to fixed capital would not make expenditure a capital expenditure. Accordingly, he submitted that the disallowance made by the Assessing Officer ad confirmed by the CIT (A) should be deleted. 6. After hearing both the parties and perusing the material on record we find that in the instant case the assessee has developed three website....
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....aim for bad debt to the assessee on the ground that the assessee was not a Banking nor engaged in the business of Money Lending and therefore, bad debt is not allowable to the assessee. He further observed that the assessee has produced evidence to show that it has instituted Civil Suit or other legal actions for realization of the deposits. Accordingly, he held that the amount was not a trade debt but a deposit and on its becoming bad the same was a capital loss or loss of investment and therefore not allowable deduction as bad debt. Regarding receivable of Rs.3,40,000/- from Ficon Lease and Finance Ltd., the Assessing Officer observed that the assessee advanced Rs.3,40,000/- on 23-4-1996 for purchase of shares for trading purpose. The Assessing Officer observed that the Assessee was having substantial interest in the said Company and was holding 226200 equity shares of Rs.10 each of this company. These shares were held as investment and therefore, it was held that the advance given by the assessee company was not for the purpose of purchasing shares for trading. He also noted that the assessee has not deduced any evidence to show that the amount in question has really become bad ....
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.... also became irrecoverable and was also written off in the books of accounts and claimed as bad debt. The A.O. disallowed the claim for bad debt of these two amounts to the assessee for the reason that the assessee was not in the business of Banking or Money Lending. Further the conditions laid down in section 36(2) of the Act were not satisfied. 14. In appeal, the CIT (A) confirmed the action of the Assessing Officer. 15. The Authorised Representative submitted that the inter-corporate deposit was given by the assessee during the course of its finance business. Since the amount was advanced during the normal course of business of the assessee which had become irrecoverable, therefore, the same was claimed as bad debt after writing off the same in the books of accounts. Similarly, in the case of Ficon Lease and Finance Ltd., Rs.3,40,000/- was advanced for purchase of shares for trading purpose. Since the amount became bad and as the amount was advanced during the normal course of business of the assessee the same was written off in the books of accounts and claimed as bad debt. Therefore, the Assessing Officer was not justified in disallowing the deduction claimed b....