TMI Blog2022 (4) TMI 1459X X X X Extracts X X X X X X X X Extracts X X X X ..... ff against the income computed under the normal provisions of the Act - HELD THAT:- After hearing rival contentions and going through the facts of the case, we noted that the CIT(A) has not at all considered this issue and hence, the matter is remanded back to the file of the CIT(A) for fresh adjudication on this very issue. Disallowance u/s 14A r.w.r. 8D - disallowing expenses relatable to exempt income - HELD THAT:- DR has not disputed that assessee has no dividend income. As the issue is covered by the Hon ble Supreme Court s decision in the case of CIT v. Chettinad Logistics (P.) Ltd. [ 2018 (7) TMI 567 - SC ORDER ] wherein it was held that once there is no exempt income, no disallowance can be made by invoking the provisions of section 14A r.w.rule 8D of the Rules. As the issue is covered, we direct the AO to delete the disallowance made. Hence, this issue of the assessee s appeals is allowed. Treatment of prior period income - - HELD THAT:- We noted that in case the prior period income has already been offered in assessment year 201213, the same should not be assessed in this year. The assessee will file these details before AO and will explain to the AO, how the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in confirming the treatment of advance received from customers amounting to Rs.32,46,007 as income of the previous year relevant to the above assessment year without considering the fact that it did not accrue to the Appellant during the relevant year. 2.2 The CIT(A) ought to have appreciated that the revenue recognition has been made by the Appellant in accordance with the method prescribed by Accounting Standard 9 issued by the Institute of Chartered Accountants of India and the same method has been regularly employed by the Appellant. 2.3 The CIT(A) ought to have appreciated that merely because the Appellant has received the entire amount in advance shall not mean that the Appellant is entitled to such income during the relevant assessment year. 2.4 The CIT(A) failed to appreciate that the advance received cannot be treated as income of the year as no corresponding services have been rendered to the clients during the year. 4. Brief facts are that the assessee runs an internet based matrimonial match making and advertisement portal called matrimony.com . The AO on perusal of accounts of the assessee noted that the assessee has shown a sum of Rs.18,59,43,115/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Before us, the ld.counsel for the assessee stated that exactly identical issue is covered in assessee s favour in assessee s own case for assessment year 2007-08 in ITA No.2560/Chny/2017, order dated 17.10.2018, vide para 7 and the relevant portion reads as under:- However we are of the considered view that the views adopted by the Ld.AO as well as the views of the Ld.CIT(A) is erroneous. As per the provisions of the Act, there is no concept with respect to deferred expenditure. Therefore the entire expenditure incurred for earning revenue for the relevant assessment year and the revenue spilled over to the succeeding assessment year is allowable as deduction for the relevant assessment year when the expenditure incurred in the relevant assessment cannot be apportioned towards the income earned in the subsequent assessment year. At this juncture we are reminded of the various decisions of the Higher Judiciary wherein it was held that expenditure incurred towards advertisement is allowable as deduction in the relevant assessment year though certain benefit arising out of the same can be attributable to subsequent years. However, as per Mercantile System of Accounting, only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds raised, the AO having arrived at assessed income of Rs.3,84,07,949 erred in not setting off the brought forward business losses against the assessed income. 5.2 The AO failed to appreciate that the Appellant had huge brought forward loss from the earlier assessment years and if the same is set off there will not be any taxable income and consequently there will not be any tax demand. Subsequently, the ld.counsel stated that these two grounds were not at all adjudicated by CIT(A) or not at all considered. He took us through the order of CIT(A) but we noted that CIT(A) has not adjudicated this issue. 11. When these facts were confronted to ld. Senior DR, he stated that the issue can be remanded back to the file of the CIT(A) afresh. 12. After hearing rival contentions and going through the facts of the case, we noted that the CIT(A) has not at all considered this issue and hence, the matter is remanded back to the file of the CIT(A) for fresh adjudication on this very issue. 13. The next common issue in ITA Nos.1391 1392/CHNY/2019 for the assessment years 2012-13 2013-14 is as regards to the order of CIT(A) confirming the action of AO in disallowing expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciate that the change in the method of accounting is necessitated to adhere to the Generally Accepted Accounting Principles and there is no violation of principles of accountancy. 2.4 The CIT(A) failed to appreciate that the revenue has been included in two financial years i.e. FY 2011-12 and 2012-13 (relevant AY 2012-13 and AY 2013-14) and only to remove the cascading effect the amount has been reversed and excluded from the profits of the above assessment year. 2.5 The CIT(A) ought to have appreciated that the amount of Rs.7,01,42,914 has been offered as income in AY 2012-13 hence there is no revenue loss. 2.6 The CIT(A) failed to consider the details of the working for Prior Period Income provided. 17. We have heard rival contentions and gone through facts and circumstances of the case. We noted that the AO noticed from the financials of the assessee that the assessee admitted prior period income of Rs.7,01,42,914/- but has not included in the computation of income. Hence, the AO noted that the assessee s revenue on day to day basis and claimed reduction of income on prior period items of Rs.7,01,42,914/- is based on change of method of accounting. But the AO has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) erred in upholding disallowance of advertisement charges of Rs.2,45,32,108 paid to Facebook Ireland Limited under section 40(a)(i) of the Income-tax Act, 1961 ( Act ). 2.2 The CIT(A) erred in concluding that tax should be deducted on any payment to non-resident without appreciating that tax is required to be deducted only if the same is chargeable to tax in India under section 195 of the Act. 2.3 The CIT(A) ought to have appreciated that the income did not accrue or arise to the non-resident in India. 2.4 The CIT(A) ought to have appreciated that the payment is for online advertisement and the services provided by the non-resident does not fall within the meaning of royalty or fee for technical services under section 9(1)(vi)/(vii) of the Act or under the India-Ireland treaty. 2.5 The CIT(A) erred in relying on the decision of the ITAT, Bangalore in the case of Google India Private Limited without appreciating that the facts of the said case is distinguishable from the facts of the Appellant. 21. Briefly stated facts are that the assessee company is engaged in the business of providing services in connection with marriage alliance and related services. The company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 to 25 as under:- 20. In the case of Engineering Analysis Centre of Excellence (P) Ltd (supra), the issue related to issuing of license to use software , i.e., the software purchased by a person shall be used by the buyer for his own business purposes. Since the license was granted without parting the copy rights attached to the software, the Hon ble Supreme Court held that the payments received by the non-resident software companies cannot be taxed as royalty under the provisions of DTAA and hence there is no requirement to deduct tax at source from the payment made to them by a resident assessee. 21. In the instant case, the recipients, i.e, M/s Facebook and Rocket Science group only allow the assessee to use their facilities for the purpose of creating advertisement content. The payment made to Amazon Web Services (AWS) is only for using the information technology facilities provided by it, that too the billing would depend upon the extent of usage of those facilities. In fact, these non-resident companies do not give any specific license for use or right to of any of the facilities (which include software) and those facilities are not going to be used for the use in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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