Global Tech India Private Limited Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that expenditure incurred on software project, which was sought to be developed however never came into existence and no new asset came into existence which would be of an enduring benefit to the assessee, are allowable as revenue in nature.
Facts- The assessee is a Company engaged in the business of Software Development and Maintenance. The assessee filed its Return of Income for the Asst. Year 2013-14 on 30.09.2012 declaring total income of Rs.38,825/-. The return was taken up for scrutiny assessment. The Assessing Officer disallowed Product Development expenses written off Rs.19,66,641/- and added as the income. CIT(A) dismissed the appeal of the assessee. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Bombay High Court in the case of PCIT vs Trigent has held that the appellant is admittedly in the business of development of software solution and management, and therefore, it’s endeavour to develop a new software was nothing but an endeavour in its existing line of business of developing software solutions. Admittedly, the product which was sought to be developed, never came into existence and the same was abandoned. No new asset came into existence which would be of an enduring benefit to the assessee, and therefore, in these circumstances, the expenditure could only be said to be revenue in nature.
