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2021 (9) TMI 168 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - Assessee made suo moto addition - assessee earned dividend from mutual fund - HELD THAT:- CIT (A) directed the AO to recompute the disallowance u/s 14A by considering the investments from which dividend has been earned by the appellant company and relying on the order of the Special Bench of ITAT in the case of CIT Vs Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI], we hereby direct that only the investments which yielded the exempt income be considered for computation of disallowance u/s 14A r.w. Rule 8D. Disallowance of Expenses on account of sale of content - HELD THAT:- Disallowance of expenses on a presumption basis with regard to the income received on syndication services has been a repetitive issue from the years 2006-07 to 2014-15. This issue has been decided by the Hon’ble Delhi High Court in assessee’s own case in assessment years 2004-05 and 2005-06 [2016 (3) TMI 1320 - DELHI HIGH COURT] and further in assessment year 2006-07, 2007-08 and 2008-09[2017 (9) TMI 1355 - DELHI HIGH COURT], the issue has been adjudicated in favour of the assessee. Software Expenses and Depreciation claim of software - AO disallowed of the expenditure holding that the software utilized is capital in nature. The depreciation on software claimed @ 60% by the assessee has been scaled down to 25% by the Assessing Officer - HELD THAT:- CIT (A) deleted the addition based on the decision of the Hon’ble Delhi High Court in assessee’s own case in assessment years 2004-05 and 2005-06 also in subsequent years 2006-07, 2007-08, 2008-09. Since, the matter of software utilized in content production, the software embedded with hardware is an integral part of the computer equipment, the issue has been repetitively held in favour of the assessee and since the ld. CIT (A) has followed the earlier orders of the Tribunal, we decline to interfere with the order of the ld. CIT(A). Expenses of consultancy charges under the head legal and professional expenses - HELD THAT:- CIT (A) has gone through each and every item of expenditure and also the computation of income wherein an amount of ₹ 21,39,865/- spent on account of merger expenses have been suo moto disallowed by the assessee. CIT (A) held that an amount of ₹ 6,00,000/- spent towards valuation of shares for the purpose of merger of the company and ₹ 5,50,000/- paid to independent consultant are in the nature of capital expenditure. Since, the ld. CIT (A) has gone through the details of expenditure and since the assessee has already disallowed an amount of ₹ 21,39,865/-, we hereby hold that the grounds of appeal of the revenue on this issue cannot be sustained. Amortization of expenditure in case of amalgamation or demerger - HELD THAT:- We find that the Section 35DD clearly specifies amortization of expenditure in case of amalgamation and demerger. Since, the expenditure is in connection with the valuation of shares relating to merger, the same needs to be treated in accordance with the provisions of Section 35DD. Consultancy charges paid revenue swayed away by the mention of “specific project” expenses and treated them as capital expenditure in nature whereas the fact remains that the consultant has been paid for providing services in development of new products and enhancement of existing features on the website which cannot be treated as a new arena of the business operations. Hence, the amount paid should be treated as revenue expenditure.
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