Adadyn Technologies (P.) Ltd. v. ACIT (2020) 185 ITD 426 (Bang.)(Trib.)

S. 37(1) : Business expenditure-Capital or revenue-Abandoned project-Promotion of business of company-Held to be revenue expenditure.

Assessee engaged in business of online advertisement was developing a new software platform but such new platform was abandoned during subsequent financial year due to rapid change in technology and shifting of technology from desktop to mobile platform. Product had never been put to use and no depreciation had been claimed  Tribunal held that  when product was in development stage during year under consideration and same had never been put to use even in subsequent financial year and finally abandoned, then it could not be termed that an independent product would come into existence, which gave enduring benefit to assessee to treat expenditure incurred on development of said product to be capital in nature. Similarly  marketing expenditure towards overall promotion of business of company and there was no direct nexus between marketing expenses and new software platform being developed by assessee, expenditure incurred on same would be revenue expenditure. (AY. 2015-16, 2016-17)