The Mumbai Income-tax Appellate Tribunal’s (ITAT) division bench passed an order for web content to be treated as non-taxable in respect of an appeal that was filed by United Healthcare India, previously known as Sedgwick Parekh Health Management, a Global Healthcare Major’s Indian Arm.

The order states that any expenditure which will be spent on any of the content on websites and the internet will be from now onwards counted as ‘revenue business expenditure’. This is good news for all Indian online media companies as they will save a lot of money spent on employing content writers and buying premium content from the market that was previously taxed. This move will benefit many Indian internet marketers as well.

It was tax lawyer Jignesh Shah who filed an appeal and argued on behalf of United Healthcare India against the assessing officer’s disparagement that the expenditure arising out of fees to writers and nutrition experts who wrote and maintained the company’s website content on ‘health and nutrition’ is capital expenditure and is taxable. Moreover, the company was involved in answering queries of their visitor’s queries on ‘health and nutrition’. Lawyer Jignesh Shah argued that the expenditure is a ‘revenue business expenditure’ as there is no capital asset coming into existence and the expenditure is not capital in nature as the website requires itself to be functioned and maintained regularly by the services of professionals.

The logic behind this move is due to the fact that a website or even blogs require to be updated with fresh content otherwise they would not be operational. The content on almost all websites and blogs keeps changing. Thus, web content is very dynamic in nature. This would also mean that the expenditure is repetitive and the main source for business to be executed and maintained within the online media industry.

Income-tax Appellate Tribunal (ITAT) is a quasi-judicial body on all tax matters and all orders by ITAT remain binding on assessing officers unless reversed by any of the higher courts or the high court.

It has been the first time that the issue of whether expenditure relating to website content is taxable or not has come up before the ITAT. This is a huge relief to the online media industry in every way possible. This will enable the online media industry to freely hire writers and other web content professionals.

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