Expenditure incurred on Website development

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Sonal Kulshreshtha (Querist)
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16 November 2009 The expenditure has been incurred on website development of a Consultancy firm. The amount is less than Rs.50,000. How it would be treated. Is the site an asset? I think that the website is not an asset and the expenditure incurred on its development should be treated as of revenue nature.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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16 November 2009 AS 26 allowes you to capitalize the expenditure incurred to develop a website.
But for income tax purpose it can be treated as revenue expenditure.

Sunil

Sunil (Expert)
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16 November 2009 Agreed. It can be treated as a revenue expenditure since it needs to be constantly updated and revised. There are chances you may re design 2 - 3 times a year also. Moreover the life of the website is till your domain name and your hosting. Without these 2 the design is useless.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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16 November 2009 In CIT Vs. Indian Visit.com (p) Ltd (2008) 219 CTR 603, Delhi high Court had ruled that web site decelopment expenditure is revenue in nature. So for accounting purpose follow AS-26 and income tax purpose follow the above decision.

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