Case Law Details
PCIT Vs Hike Private Limited (Delhi High Court)
Introduction: The Delhi High Court’s recent judgment in the case of PCIT vs. Hike Private Limited sheds light on the classification of expenses related to technology used in business. The appellant/revenue challenged the order of the Income Tax Appellate Tribunal, questioning the re-characterization of revenue expenses as capital expenditure by the Assessing Officer (AO).
Detailed Analysis:
1. Background and Assessment: Hike Private Limited filed its Return of Income, declaring a loss. The AO, during scrutiny assessment, disallowed expenses, asserting that the company, having no revenue from its business, incurred the expenses before setting up its business.
2. Appeals and Tribunal’s View: The Commissioner of Income Tax (Appeals) initially upheld the AO’s decision. However, the Tribunal reversed this view, noting that in a previous assessment year, the AO accepted the respondent’s stand that the expenses were on the revenue account.
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