The Income Tax Appellate Tribunal (ITAT), while upholding the order of the CIT(A), ruled that deduction cannot be disallowed on the software expenditure incurred by the assessee as application software for up-gradation.
The assessee company, TV Today Network was engaged in the business of broadcasting, telecasting, relaying transmitting, distributing audio, video, and other programs of software for television, radio, and other media. The return of income was filed declaring total income. Subsequently, after taking the case under scrutiny, the assessment was completed at an income after making the additions/disallowances related to provision for interest payable to Prasar Bharti, the claim of software expenses, consumption debtors, and leave encashment.
The assessee approached the First appellate Authority who gave partial relief to the assessee by deleting the additions pertaining to consumption debtors amounting and software expenses amounting.
The respondent authority raised the issues that the CIT (A) has erred on facts and law on relying the order of his predecessors and by treating the liability as ascertained liability without appreciating the fact that the assessee has itself shown the amount as provision for discount not debited to accounts of respective parties; and by treating software expenses as revenue in nature without appreciating the fact that their benefits/utility extends beyond a year and provides enduring benefits to the assessee company.
The tribunal headed by the Vice President ruled that before the CIT (A) the assessee demonstrated by producing the copies of the deals of some of the parties and showed that it is not an asset or liability but actual expenditure. In view of this, he held that assessee is eligible for a deduction of the above expenditure. The departmental representative failed to point out infirmity in the order of the CIT (A). Therefore, the order of the learned CIT is confirmed.
The tribunal while addressing another issue, upheld the order of the CIT(A), ruled that deduction cannot be disallowed on the software expenditure incurred by the assessee as application software for up-gradation.
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