TaxTMI 
TaxTMI 
2018 (6) TMI 1876
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.... erred in law and on facts in deleting the addition of Rs. 88,240/- made on account of "Website Development Expenditure". (4) That the ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 1,07,21,475/- made on account of "Advertisement Expenditure". 3. The relevant facts as culled out from the materials on record in respect of ground No.1 is this that the assessee-company has purchased BMW Motor Car of Rs. 2,83,940/- in the name of Shri Abhaykumar Shah, Director of the assessee-company out of the fund of the assessee company itself. The assessee claimed depreciation of Rs. 4,22,091/- on the said asset. During the course of assessment proceedings, the Assessing Officer (AO) wanted to be satisfied as to whether the assessee-company is fulfilling the two conditions while asking for depreciation on the asset; firstly, whether the asset should be owned by the assessee-company since it is a movable asset and secondly, whether the asset is used by the assessee-company for its own business purposes. The AO issued notice under s.142(1) of the Act annexed with show-cause notice dated 09/02/2015 directing the assessee to furnish the following details:- ....
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.... dominion of the car lies with the assessee since the assessee is not the registered owner of the car. According to the AO, the assessee has further failed to prove that the vehicle was used for the business purpose since no log books were maintained for the said purpose. He further added that since the assessee-company is a separate legal entity distinct from its director, the vehicle purchased by its director in his name cannot become the property of the assessee-company unless the same is transferred/sold to the assessee-company. Providing funds to the Director for purchasing of the said vehicle will simply not confer ownership upon the assessee-company. The transaction is between the two separate entities, the purchase of asset by one will not automatically become asset of fund provider even if registration requirement is ignored as claimed by the assessee. He thus disallowed the claim of the assessee of depreciation of Rs. 4,22,091/- on the BMW motor car and added back to the total income of the assessee-company. While dealing with the appeal preferred by the assessee, the CIT(A) considered the written submission filed by the assessee before him and ultimately allowed the c....
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....stration as required in the case of transfer of immovable property is not a condition precedent for legal ownership. The same question has also been covered by several caselaws. We have considered the following judgements relied upon by the assessee-company before the CIT(A) in this respect: (i) MM Fisheries (P) Ltd. 277 ITR 204 (Del.). (ii)Tamilnadu Civil Supplies Corporation Ltd. vs. CIT 249 ITR 214(SC) (iii)Mysore Minerals Ltd. vs. CIT 239 ITR 775(SC). (iv) CIT vs. Podar Cement (P.) Ltd. (1997) 226 ITR 625. (v) SBC (P) Ltd. in ITA No.6 (Bom) 1974-75, ITAT, Bombay (vi)Mohamed BuxShokat Ali 256 ITR 355 (Raj.) (vii) CIT vs. Salkia Transport Associates (1983) 33 CTR (Cal) 198: 1983) 143 ITR 39 (Cal): TC 27R.266 (viii) Continental Construction Ltd. vs. CIT (1990) 85 CTR (Del) 116: (1990) 185 ITR 178 (Del) : TC 26R.532, CIT vs. Dilip Singh Sardarsingh Bagga (1993) 201 ITR 995 (Bom) : and CIT vs Mirza Ataullaha Baig & Anr. (1993) 202 ITR 291 (Bom): TC 27R.217. Factually, the vehicles are shown as asset in the balance-sheet of the assessee-company and running & maintenance expenses are borne by the assessee-compa....
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....iability with regard to making payment comes to an end and there is cessation of the liability under s.41(1). The AO thus added an amount of Rs.68,030/- treating the same as deemed income of the assessee under the provisions of section 41(1) of the Act. 9. The Ld. CIT(A) while dealing with the appeal had gone through the written submission submitted by the assessee. The CIT(A) has also taken into consideration of various judgements relied upon by the assessee in this respect and particularly the provisions of section 41(1) of the Act and allowed the ground of appeal by deleting the disallowance made by the AO under s.41(1) of the Act of Rs.68,030/-. 10. The Ld. DR for the Revenue strongly relied upon contention made by the AO while passing the order of addition of Rs.68,030/-. 11. We have heard the Ld. DR and perused the material available on record as well as the orders of the authorities below. The main contention raised by the assessee before the CIT(A) is this that it has not obtained any benefit in respect of the aforesaid trading liability either by way of remission or cessation thereof. The liability is still left to be settled on account of pending dispute. Neither....
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....of website development expenditure. In the instant case, the assessee has claimed an amount of Rs.88,240/- on account of website development expenses paid to G.R. Infosys. The AO issued a questionnaire dated 09/02/2015 requesting the assessee to explain why the said expenses would not be treated as capital expenditure and accordingly the same should not be disallowed. In response thereof, the assessee vide its submission dated 23.02.2015 explained that the expenses incurred for website development cannot be equated with acquisition of software or to be treated as capital expenditure. Such expenses were incurred by the assessee to promote the business interest and thus revenue in nature. Such submission was not accepted by the AO. The AO disallowed the same mainly on the basis that the expenses incurred on account of development of website is apparently of enduring benefit and thus the same falls under the category of capital expenditure and the AO made an addition a sum of Rs.88,240/- to the total income of the assessee-company. In appeal, the CIT(A) considered the submissions made by the assessee and also the judgements relied upon and allowed the expenditure amounting to Rs.88....
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....th it. A website constantly needs updating, otherwise it may become obsolete. It helps in the smooth and efficient running of the day-to-day business. The expenditure would have been allowable as revenue expenditure. In the case of Empire Jute Co. Ltd. vs. CIT (1980) 124 ITR 01, the Hon'ble Supreme Court observed that if the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. Considering the entire facts of the matter, judgements passed by various Tribunals, High Court and the ratio laid down by the Hon'ble Supreme Court in this regard, we are of the considered opinion that the expenditure incurred by the assessee on account of website development is revenue in nature and we thus upheld the decision of the Ld. CIT(A)and dismiss the said ground of appeal preferred by the revenue. 14. Ground No.4 relates to deletion of addition of Rs. 1,07,21,475/- made on account of "Advertisement Expenditur....
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....d that the expenditure should be claimed only when income has been earned as per section 37(1) of the Act, the assessee can claim any expenditure which is incurred for the purpose of business or profession (not being personal nature). It was also pointed out by the assessee that there is no concept of deferred revenue expenditure under the said Act, unless the Statute provides to defer revenue expenditure over a period, the entire amount is to be allowed in the year in which it is incurred for running the business in terms of section 37 of the Act. The ratio has been decided by the Courts in the following judgements relied upon by the assessee:- (a) CIT vs. Casio India Ltd. (2001) 335 ITGR 196 (Guj.) (b) CIT vs. Citi Financial Consumer Finance Ltd. 335 ITR 29 (c) 19 SOT 13, Situ Electro Instruments (P) Ltd. vs. ITO. Number of judgements were relied upon by the assessee in support its claim for allowing the expenditure incurred on advertisement. The Ld. CIT(A) relying upon the submissions made by the assessee-company and the judgements cited by it deleted the addition of Rs.1,07,21,475/- made on account of "advertisement expenditure" by the AO. We....