TaxTMI 
TaxTMI 
2010 (7) TMI 1056
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....ion made by the AO on account of disallowance of depreciation on website. 3. On this issue the AO observed that assessee had capitalized websites and claimed depreciation @ 60 per cent on written down basis. He opined that IT Act did not provide for treatment of expenses on websites. Assessee submitted vide letter dt. 3rd March, 2006 before the AO as under : "That the assessee company is engaged in the business of publication of daily English newspaper namely, 'The Pioneer' a famous daily English newspaper for the last 140 years. The company incurred an amount of Rs. 2,07,76,911 relating to the expenses of development of website, named www.dailypioneer.com in the previous year and shown WIP, which has been capitalized un....
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.... the total expenses amounting to Rs. 2,08,93,164 has incurred only Rs. 58,07,758 on portal developments and balance was incurred on personal expenses, interest and financial expenses, editorial expenses, administrative expenses and depreciation. AO found that it was seen from the details furnished that these expenses were not covered under s. 35D of the Act and hence not allowable. AO further observed that assessee vide letter dt. 13th March, 2006 had stated that development of portals was an integral part of the strategy of expansion of business of the assessee company and hence should be allowed to be treated as a plant. AO was of the opinion that the same cannot be treated as plant. AO opined that assessee had adopted two yardsticks'....
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....er software in as much as website is nothing but a computer programme recorded on a storage device and as such covered within the meaning of software and eligible deduction. He has further contended that in case the contention of the Revenue that website is not covered within the meaning of software, expenditure on website will be revenue expenditure on which 100 per cent depriciation is allowable in the very first year as per Delhi High Court order in the case of CIT vs. Indian Visit.Com (P) Ltd. (2008) 13 DTR (Del) 258. 8. We have heard both the counsel and perused the material available on record. We find that Hon'ble Delhi High Court in the decision, cited supra, has held as under : "Business expenditure'Capital or r....
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....see itself agreed during the assessment proceedings that the liability was outstanding for more than 3 years." 10. On this issue the AO observed that details of sundry creditors were called for from the assessee. He found that some creditors totalling Rs. 1,42,801 comprising 31 parties were outstanding for more than three years. AO asked the assessee as to why these credit balances should not be treated as deemed income of the assessee under s. 41(1). Assessee submitted that in the initial years of operation of the company, it suffered losses and hence was not in a position to make payments to all the clients in time. It was further submitted that assessee had also written back credit balances as and when it became clear that they had no....
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....t be paid and the same becomes income of the assessee. Decision of Hon'ble apex Court relied upon by the AO was on different facts. In that case, the claim of deposits by the customers had become barred by limitation and the assessee itself has treated the money as its own money and taken the amount to P&L a/c. In that context, Hon'ble apex Court has held that the amount was assessable as income. Here it is not the case that AO has issued summons to the creditors and has obtained information that these amounts were no longer payable. Assessee's case is that due to cash crunch, it has not been able to clear off some creditors and the assessee is evaluating the amount actually payable and writing back as and when it becomes eviden....