IN THE HIGH COURT OF DELHI AT NEW DELHI 
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         ITA 1571/2010  
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 COMMISSIONER OF INCOME TAX                          ..... Appellant 
 Through:  Mr. Sanjeev Sabharwal, Advocate. 
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 versus 
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 ESPN SOFTWARE INDIA PVT LTD                         ..... Respondent 
 Through: Mr. Prakash Kumar, Advocate. 
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 CORAM: 
 HON'BLE THE CHIEF JUSTICE 
 HON'BLE MR. JUSTICE MANMOHAN 
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 O R D E R 
                        08.10.2010 
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 In this appeal preferred under Section 260A of the Income Tax 
 Act, 1961 (for brevity, ?Act?) the following substantial question of        law 
 is sought to be raised:- 
 1. Whether ITAT/CIT(A) erred in holding that penalty under Section 271(1)(c) is 
 not leviable on disallowance of web development expenditure and disallowance of 
 excess depreciation? 
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 ITA1571/2010                                                               page 
 1 of 3. 
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 We have heard Mr. Sanjeev Sabharwal, learned counsel for the 
 revenue and Mr. Prakash Kumar, learned counsel for the respondent- 
 assessee. 
 The singular issue that emerges for consideration whether the 
 initiation of the proceedings  by the Assessing Officer under Section 
 271(1)(c) of the Act was justified and as a corollary the imposition of 
 penalty was tenable. 
 The tribunal after analyzing the facts and referring to the 
 various decisions has held as follows: 
 ?7.  From the above, it is evident that two diametrically divergent views are 
 existent on the issue as to whether software expenses are capital expenses or 
 revenue expenses.  That being so, undoubtedly, the issue has been a debatable 
 one.  In the present case, the assessee claimed expenses on ?web development?. 
 This claim was made on the basis of judicial pronouncements in favour of the 
 assessee.? 
 . 
 Mr. Sanjeev Sabharwal, learned counsel for the revenue fairly stated that 
 if the reasons given by the tribunal in paragraph 6 of the impugned order are 
 appreciated, it will be clear that the issue is a debatable one. 
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 ITA1571/2010                                                               page 
 2 of 3. 
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 It is well settled in law that once it is debatable issue, the penalty is 
 not be imposed. 
 In view of the aforesaid, we do not perceive any merit in the present 
 appeal and accordingly, the same is dismissed without any order as to costs. 
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 CHIEF JUSTICE 
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 MANMOHAN, J 
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 OCTOBER   08, 2010 
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 ITA1571/2010                                                               page 
 3 of 3. 
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