CIT Vs. SYNPASE SYSTEM PVT. LTD

JUDGEMENT

(1.) THIS Appeal under section 260A of the Income Tax Act is at the instance of the Revenue and is directed against an order dated 23rd April 2010 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'C' in Income Tax Appeal No.3874/Ahd/2008 for the Assessment Year 2006-07, by which the Tribunal dismissed the appeal preferred by the Revenue.

(2.) IN this Appeal, the Revenue has raised the following three questions before us:

(3.) IT appears that it was not a project for any customer, and as such, there was no question of any recovery from any party and the assessee could not have taken any action also against any person as the amount was not due from anybody. In such circumstances, both the authorities below came to the conclusion that the expenditure incurred by the assessee had nexus with the business activities carried out by it and it was compelled to write off the said value shown as work in process as there was no market value for the said project or the film. Both the authorities below concurrently found that the same did not result in any advantage of enduring nature so as to treat it as capital expenditure nor was any capital assets in existence and, thus, the authorities below disallowed the addition of the aforesaid amount of Rs.20,61,246=00. After going through the materials on record, we find that in the previous year relevant to the Assessment Year under the appeal, the assessee had not sold the project which was shown in the earlier year as work in process. We find that it is rightly pointed out by the Tribunal below that there is no evidence on record that any revenue was generated from the said project and there was any chance of recovery. In the previous year relevant to the Assessment Year under the appeal, the assessee-Company had written off the said amount by debiting Profit and Loss account as animation film, which was made in the year 2001, became out of date. Since it had no market value, we are of the view that in the fact and circumstances of the present case, both the authorities below rightly setaside the order of the Assessing Officer of addition of the said amount and we find no reason to interfere with such decision.