Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Times Internet Ltd Versus Additional CIT, Range-16, New Delhi. and Vica-Versa

2015 (8) TMI 976 - ITAT DELHI

Website development expenditure - Revenue v/s capital expenditure - Held that:- Undisputedly the Assessing Officer while treating the claimed Revenue expenditure as capital in nature has not examined properly as to whether the expenditure brought into existence any asset/s, or the usage period of the expenditure is of enduring nature. In absence of such verification by the Assessing Officer, we fully concur with the finding of the Learned CIT(Appeals) that the Assessing Officer was not justified .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re was not for new project nor of enduring nature and it was incurred for the services rendered by the major consultant on day to day basis. In absence of rebuttal of these submissions of the assessee by the department, we are of the view that the Learned CIT(Appeals) has rightly treated the claimed expenditure as Revenue in nature on the basis that the Assessing Officer has treated the same as capital in nature without examining the material aspects of the claim as to whether the expenditure br .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted addition - Held that:- CIT(Appeals) has allowed the claimed deduction with this finding that after calling for the details required, if the Assessing Officer was satisfied that the amounts in question were offered for taxation in the earlier years and the accounts of the debtors were written off as claimed by the AR, no disallowance was called for. See TRF Ltd. vs. CIT (2010 (2) TMI 211 - SUPREME COURT) & Vijaya Bank vs. CIT [2010 (4) TMI 46 - SUPREME COURT ]. Under the facts, the issue is c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

isallowance made by the Assessing Officer - Decided in favour of the assessee

Disallowance of expenditure on marketing rights - holding the same to be prior period expenditure, hence, not allowable in the present year - Held that:- The authorities below have not disputed the genuineness of the above expenditure and their only finding is that the said expenditure pertains to previous assessment year i. E. 2004-05. We are of the view that when tax rate for the assessment years 2004-05 a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ITA No. 97/Del/2012 - Dated:- 17-8-2015 - SHRI I.C. SUDHIR AND SHRI INTURI RAMA RAO, JJ. For The Appellant : Shri Salil Agarwal, Adv. & Sh. Shailesh Gupta, CA For The Respondent : Shri J.P. Chandrakar, Sr. DR ORDER PER I.C. SUDHIR: JUDICIAL MEMBER: In the assessment years 2004-05 and 2005-06, the Revenue has questioned the First Appellate Order on some common grounds. The issues involved in these common grounds are as under: i) As to whether the Learned CIT(Appeals) was justified in holding .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the capital expenditure held by the Assessing Officer? 2. The facts in general are that the assessee is a wholly owned subsidiary of Bennett Coleman & Co. Ltd. The assessee company is engaged in the business of providing information technology services; internet related services and systems and also owns, operates and manages the web portal www. Indiatimes. Com. The company provides comprehensive information relating to news, entertainment, sports, health and astrology, life style etc. thro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

service providers across all circles in India. 3. Issue No.1: The assessee claimed ₹ 81,43,440 in assessment year 2004-05 and ₹ 1,00,69,946 in assessment year 2005-06 as expenditure in revenue nature incurred on website development. The Assessing Officer did not agree with the same and treated the claimed expenditure as capital in nature. The Learned CIT(Appeals) has, however, agreed with the assessee and has deleted the disallowance made by the Assessing Officer treating the claime .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dia - 151 ITD 722 (Delhi); vii) CIT vs. Amway India Enterprises- 346 ITR 341 (Delhi); viii) CIT vs. Asashi India Safety Glass Ltd. - 203 Taxman 277 (Del.); ix) DCIT vs. Interzing Solutions (P) Ltd. - ITA No.2646/Del/2012 (Del.); 5. Considering the above submission, we find that the Assessing Officer has treated the expenditure of ₹ 81,43,440 in the assessment year 2004-05 and ₹ 1,00,69,946 in the assessment year 2005-06 incurred on the website development as capital in nature. The Ld .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

377; 81,43,632 was also incurred for software and website development and disallowed the same being capital in nature. He, however, allowed the claimed depreciation at ₹ 33,73,776 (Rs.27,11,337 + ₹ 6,62,439). The submissions of the assessee remained that it had debited ₹ 2,47,43,627 as software development expenditure to the profit and loss account in the year, however, while filing its return of income, the assessee had added back ₹ 1,65,49,995 as capital expenditure out .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was incurred to keep the services going on as well as to keep pace with technology development in this field. The benefit of the expenditure incurred was only for a week or for a limited period. The Learned CIT(Appeals) has discussed the break up of the expenditure incurred at ₹ 81,43,632 as under: (Rs.) (a) Designing of Microsites 2,78,040 (b) Purchase of off the shelf operating software 8,49,767 (c) Payment of usage fee to Lifetree convergence limited. 27,08,256 (d) Website updation &am .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

examining the issue as to whether expenditure brought into existence any asset/s, or the usage period of the expenditure. In that year also, the details of the expenditure in question were furnished by the assessee, which have been reproduced at page No. 10 of the First Appellate Order. In these details, the nature of expenditure, amount claimed by the assessee and amount capitalized by the Assessing Officer have been given. The Assessing Officer allowed depreciation of ₹ 32,99,988 claime .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nce any asset/s, or the usage period of the expenditure is of enduring nature. In absence of such verification by the Assessing Officer, we fully concur with the finding of the Learned CIT(Appeals) that the Assessing Officer was not justified in denying the claimed expenditure incurred on software/website development as Revenue expenditure. We, thus do not find infirmity in the First Appellate Order in this regard. The issue No.1 is thus decided against the Revenue. The ground No.1 of the appeal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nsultancy claimed as revenue expenditure. The Assessing Officer was of the view that the claimed expenditure was capital expenditure. The contention of the assessee remained that the claimed expenditure was incurred for payment to the professionals for development/maintenance and improvement of website and software. 9. In support of the grounds involving the issue, Learned DR has placed reliance on the assessment order. The Learned AR on the other hand tried to justify the First Appellate Order. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ndia etc. In the arrangement with resource partner, the assessee company utilizes the resources and the website of some independent entrepreneurs on Revenue sharing models. The payment from the clients/customers for particular services is collected by the necessary company and such customer is transferred to the respective sites of the resource partners for services. In the end the Revenue thus received is apportioned between assessee and the resource partners. As per the assessee, payment of &# .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to day basis. In absence of rebuttal of these submissions of the assessee by the department, we are of the view that the Learned CIT(Appeals) has rightly treated the claimed expenditure as Revenue in nature on the basis that the Assessing Officer has treated the same as capital in nature without examining the material aspects of the claim as to whether the expenditure brought into existence any asset/s or the used period of the expenditure. The First Appellate Order in this regard is thus uphel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee had claimed these expenditure as Revenue in nature with the submission that it was incurred on computer repair/maintenance. The Learned CIT(Appeals) has deleted these disallowances with this finding that it was Revenue in nature. 12. In support of the grounds, the learned CIT(DR) has basically placed reliance on the assessment order. The Learned AR on the other hand tried to justify the First Appellate Order on the issue and reiterated similar submissions made by him in support of the issue N .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the appeal for the assessment year 2004-05 and ground No.4 of the appeal for the assessment year 2005-06 are accordingly rejected. 14. Besides the above three common issues, the Revenue has also raised two more other issues in the appeal for the assessment year 2004-05. These issues are regarding (No.1 - deletion of disallowance by Learned CIT(Appeals) on account of deduction claimed under sec. 36(1)(vii) of the Act on account of bad debts written off, and (2) deletion of disallowance by the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rs and that is the only requirement of sec. 36(1)(vii) of the Act. In support, he placed reliance on the following decisions: i) TRF Ltd. vs. CIT - 323 ITR 397 (S. C); ii) Vijaya Bank vs. CIT - 323 ITR 166 (S. C); 16. Learned CIT(DR) on the other hand placed reliance on the assessment order. 17. Having gone through the orders of the authorities below, we find that the Assessing Officer had disallowed the claimed deduction under sec. 36(1)(vii) of the Act on account of bad debts written off on th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was submitted that these amounts were not paid by the customers on account of deliverable and campaigns not being executed to the satisfaction of the customers, billing differences etc. and as such, were written off in the present year. It was submitted that since the assessee company was in the midst of shifting its registered office from Mumbai to New Delhi, it could not furnish the addresses of the parties to the Assessing Officer. However, the company during the assessment proceedings had d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

T had issued a Circular No. 551 dated 23.1.1990, wherein they had clarified and confirmed that after the amendment the claim of bad debts will be allowed in the year in which debt is written off as irrecoverable in the accounts. The Learned CIT(Appeals) has allowed the claimed deduction with this finding that after calling for the details required, if the Assessing Officer was satisfied that the amounts in question were offered for taxation in the earlier years and the accounts of the debtors we .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

& Online Association as Revenue expenditure by the assessee, treating the same as capital expenditure. The Learned CIT(Appeals) has deleted the disallowance holding it as Revenue in nature. 19. In support of the ground, the Learned DR placed reliance on the assessment order whereas the First Appellate Order, has been justified by the Learned AR. 20. We find that the issue raised in this ground No. 5 of the appeal is related to the issue raised in ground No.1 of the appeal i. E. expenditure i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n, the same is upheld. Ground No.5 of the appeal is accordingly rejected. 21. In result, the appeals preferred by the Revenue are dismissed. 22. ITA No. 381/Del/2009: The assessee has questioned First Appellate Order on the following grounds: 1. That the Learned CIT(Appeals) has grossly erred both in law and on facts in upholding the disallowance of expenditure of ₹ 1,00,48,790 incurred by the assessee on marketing rights by holding the same to be prior period expenditure and not allowable .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

., the holding company of the appellant company on behalf of the appellant company for its client and since the debit note was raised by them only on 30.4.2004 therefore, the expenditure so incurred represents the expenditure incurred in the instant assessment year. 1.3 That the upholding the disallowance, the Learned CIT(Appeals) has overlooked the judgment of the Hon ble jurisdictional High Court in the case of CIT vs. Ram Pistons & Rings Ltd. (ITR 133/1991) and the judgment of Hon ble Guj .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Gases Pvt. Ltd. wherein it has been held that the question as to the year in which a deduction is allowable may be material when the rate of tax chargeable is different in different years and therefore, the tax was levied at a uniform rate, it is material whether the deduction is allowed in one assessment year or another. 1.4 That the Learned CIT(Appeals) has further misapplied the decision of Delhi Tribunal in the case of DCIT vs. Vijay Gopal Jindal to confirm the disallowance and hence, the di .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

790 incurred by the assessee on marketing rights by holding the same to be prior period expenditure, hence, not allowable in the present year. 24. In support of the ground, the Learned AR submitted that the amount pertained to various advertisements published by Bemmett Coleman & Co. Ltd., the holding company of the assessee on behalf of the assessee company for its clients and since the debit note was raised by them only on 30.4.2004, therefore, the expenditure so incurred represents the ex .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version