M/s Times Internet Ltd., New Delhi v. ACIT, New Delhi

ITA 2333/DEL/2011 | 2006-2007
Pronouncement Date: 21-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 233320114 RSA 2011
Assessee PAN AABCT1559M
Bench Delhi
Appeal Number ITA 2333/DEL/2011
Duration Of Justice 5 year(s) 5 month(s) 12 day(s)
Appellant M/s Times Internet Ltd., New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 21-10-2016
Date Of Final Hearing 19-10-2016
Next Hearing Date 19-10-2016
Assessment Year 2006-2007
Appeal Filed On 09-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE SHRI R.S. SYAL ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE JUDICIAL MEMBER ITA NO. 2333/DEL/2011 ASSESSMENT YEAR : 2006-07 TIMES INTERNET LTD. TIMES HOUSE 10 DARYAGANJ NEW DELHI. PAN: AABCT1559M VS. ACIT CIRCLE-16(1) NEW DELHI. ITA NOS.2986 4130 & 4132/DEL/2011 ASSESSMENT YEARS : 2006-07 TO 2008-09 ACIT CIRCLE-16(1) NEW DELHI. VS. TIMES INTERNET LTD. TIMES HOUSE 7 BAHADUR SHAH ZAFAR MARG NEW DELHI. PAN: AABCT1559M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL AGARWAL ADVOCATE & SHRI SHAILESH GUPTA CA DEPARTMENT BY : SHRI I.P.S. BINDRA CIT- DR ITA NOS.2333 2986 4130 & 4132/DEL/2011 2 DATE OF HEARING : 19.10.2016 DATE OF PRONOUNCEMENT : 21.10.2016 ORDER PER R.S. SYAL AM: THIS BATCH OF FOUR APPEALS COMPRISES OF TWO CROSS APPEALS FOR THE A.Y. 2006-07 AND TWO APPEALS BY THE REVENUE FOR THE AYS 2007-08 AND 2008-09. SINCE SOME OF THE ISSUES RAISED IN THESE APPEALS ARE COMMON WE ARE THEREFORE PROCEEDING TO DISPOSE THEM BY TH IS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSMENT YEAR 2006-07 2. THE FIRST GROUND OF THE ASSESSEES APPEAL IS AGA INST THE SUSTENANCE OF ADDITION OF RS.1 31 68 000/- ON ACCOUNT OF RENT. 3. BRIEFLY STATED THE FACTS OF THIS GROUND ARE THA T THE ASSESSEE VIDE LEASE DEED DATED 1.8.2005 TOOK ON LEASE CERTAIN PR EMISES FROM ITS HOLDING COMPANY NAMELY M/S BENNETT COLEMAN & CO. LTD. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERV ED THAT ALBEIT THE ITA NOS.2333 2986 4130 & 4132/DEL/2011 3 LEASE DEED WAS GIVEN EFFECT FROM 1.4.2005 AS PER AR TICLE 2.1 BUT THE DATE OF HANDING OVER THE POSSESSION AS PER ARTICLE 2.2 WAS THE DATE OF THE LEASE DEED. DRAWING AN INFERENCE IN THE LIGHT OF A RTICLE 2.2 OF THE LEASE DEED THAT THE ASSESSEE USED THE PREMISES FOR A PER IOD OF EIGHT MONTHS THE AO DISALLOWED RS.1 31 68 000/- BEING THE LEASE RENT FOR THE PERIOD OF FOUR MONTHS FROM 1.4.2005 TO 31.7.2005. THE LD. CIT(A) UPHELD THE ADDITION. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEASE DEED ENTERED INTO BET WEEN THE ASSESSEE AND ITS HOLDING COMPANY PROVIDES THE EFFECTIVE DATE AS 1.4.2005 THOUGH IT WAS EXECUTED ON 1.8.2005. IT WAS IN PURSUANCE OF T HE DATE OF THE EXECUTION OF LEASE DEED THAT THE PARTIES RECORDED I N ARTICLE 2.2 THAT THE DATE OF HANDING OVER OF THE POSSESSION WAS THE DATE OF THE LEASE DEED. THE LD. AR INVITED OUR ATTENTION TOWARDS THE COPY O F A LETTER DATED 3.3.2010 WRITTEN BY THE LESSOR HOLDING COMPANY INDI CATING THAT THE PREMISES WERE IN FACT LEASED OUT FROM 1.4.2005. THOUGH A COPY OF THIS LETTER WAS PLACED BEFORE THE LD. CIT(A) YET HE SK IPPED FROM ITA NOS.2333 2986 4130 & 4132/DEL/2011 4 CONTROVERTING THE SAME IN ANY MANNER. WHEN THE LES SOR COMPANY ADMITTED OF LEASING OUT AND ALSO SIMULTANEOUSLY HAN DING OVER THE POSSESSION OF THE PREMISES ON 1.4.2005 THE MERE F ACT THAT THE LEASE DEED WAS RECORDED A LITTLE LATER ON 1.8.2005 CANNOT PER SE LEAD TO DISALLOWANCE OF RENT FOR A PERIOD OF FOUR MONTHS AS HAS BEEN DONE BY THE AUTHORITIES BELOW. WHEN THE ASSESSEE PLACED A COPY OF THE LETTER OF THE LESSOR COMPANY TO THE EFFECT THAT THE PREMISES WERE IN FACT HANDED OVER TO THE ASSESSEE ON 1.4.2005 IT WAS INCUMBENT UPON THE AUTHORITIES EITHER TO ACCEPT THIS PROPOSITION OR REBUT THE SAME WITH S OME COGENT REASONS. NO SUCH REBUTTAL HAS BEEN DONE IN THE INSTANT CASE. IN OUR CONSIDERED OPINION THE USER OF THE PREMISES BY THE ASSESSEE F OR A FULL PERIOD OF ONE YEAR COUPLED WITH THE FACT OF HAVING MADE PAYMENT O F RENT FOR SIMILAR PERIOD CLEARLY ENTITLE THE ASSESSEE TO DEDUCTION O F THE RENT FOR THE WHOLE OF THE YEAR. THE IMPUGNED ORDER IS SET ASIDE TO TH IS EXTENT. WE ALLOW THIS GROUND OF APPEAL. 5. GROUND NO. 2 OF THE ASSESSEES APPEAL AND ALSO OF THE REVENUES APPEAL ARE AGAINST THE DISALLOWANCE U/S 14A OF THE INCOME-TAX ACT 1961 ITA NOS.2333 2986 4130 & 4132/DEL/2011 5 (HEREINAFTER ALSO CALLED `THE ACT). THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.2 06 0 2 786/-. ON BEING CALLED UPON TO EXPLAIN AS TO WHY NO DISALLOWANCE U/ S 14A WAS OFFERED THE ASSESSEE SUBMITTED THAT IT HAD NOT INCURRED ANY DIRECT EXPENDITURE TO EARN THE TAX FREE DIVIDEND INCOME. THE AO NOTICED T HAT THE ASSESSEE DID NOT MAINTAIN ANY SEPARATE DETAILS OF EXPENSES INCUR RED FOR INVESTING IN THE UNITS OF VARIOUS MUTUAL FUNDS AND IT WAS THERE FORE NOT POSSIBLE FOR THE DEPARTMENT TO ASCERTAIN THE ACTUAL QUANTUM OF E XPENDITURE INCURRED FOR EARNING THE TAX FREE INCOME. FOLLOWING HIS VIE W TAKEN FOR THE AYS 2004-05 AND 2005-06 IN WHICH THE DISALLOWANCE WAS M ADE AT 10% OF THE TAX FREE INCOME THE AO INVOKED THE PROVISIONS OF R ULE 8D FOR MAKING DISALLOWANCE AT RS.36 43 000/-. THE LD. CIT(A) CAM E TO HOLD THAT THE PROVISIONS OF RULE 8D WERE NOT APPLICABLE TO THE AS SESSMENT YEAR UNDER CONSIDERATION. HE THEREFORE REMANDED THE MATTER TO THE AO FOR COMPUTING FRESH DISALLOWANCE OF EXPENDITURE UNDER T HIS PROVISION AS PER LAW. BOTH THE SIDES ARE IN APPEAL ON THEIR RESPECT IVE STANDS. WHEREAS THE CASE OF THE ASSESSEE IS THAT NO DISALLOWANCE WA S CALLED FOR THE ITA NOS.2333 2986 4130 & 4132/DEL/2011 6 REVENUE IS CONTENDING THAT THE LD. CIT(A) OUGHT NOT TO HAVE REMAND THE MATTER AS THERE WAS NO SUCH POWER VESTED IN HIM. 6. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD IT IS NOTICED FROM PARA 4.1 OF THE ASSESSMENT ORDER THAT THE AO COMPUTED DISALLOWANCE AS PER RULE 8D. THE FIRST ARGUMENT OF THE LD. AR THAT NO PROPER SATISFACTION WAS RECOR DED BY THE AO BEFORE MAKING SUCH DISALLOWANCE IN OUR CONSIDERED OPINION IS SANS MERIT. PARA 4.1 OF THE ASSESSMENT ORDER CLEARLY BRINGS OUT THE RECORDING OF SATISFACTION BY THE AO IN TERMS OF SECTION 14A. 7. FURTHER THE LD. CIT(A) VIDE PARA 7.6 HAS ALSO NOTICED THAT THERE WERE NO DETAILS OF DIRECT OR INDIRECT EXPENDITURE INCURR ED BY THE ASSESSEE FOR THE PURPOSES OF MAKING INVESTMENT WHICH IS NOTHING BUT RECORDING OF SATISFACTION. THE HONBLE SUPREME COURT IN CIT VS. KANPUR COAL SYNDICATE (1964) 53 ITR 225 (SC) WHILE DEALING WITH THE SCOPE OF POWERS OF THE FIRST APPELLATE AUTHORITY VIS--VIS THE ASSESSING OFFICER HAS HELD THAT THE POWERS OF THE CIT(A) ARE CO-TERMINUS WITH THOSE OF THE ASSESSING OFFICER INASMUCH AS HE CAN ALSO DO WHAT T HE ASSESSING ITA NOS.2333 2986 4130 & 4132/DEL/2011 7 OFFICER COULD HAVE DONE BUT FAILED TO DO. SIMILAR V IEW HAS BEEN REITERATED BY THE HONBLE APEX COURT IN JUTE CORPORATION OF INDIA LTD. VS. CIT (1991) 187 ITR 688 (SC) BY HOLDING THAT POWER OF THE AAC IS CO-TERMINUS WITH THAT OF THE ITO. IN VIEW OF THESE PRECEDENTS IT IS MANIFEST THAT IF SOME DEFICIENCY IS LEFT BY THE ASS ESSING OFFICER IN MAKING AN ASSESSMENT THAT CAN BE MADE GOOD BY THE CIT(A). 8. COMING TO THE CONTEXT OF SECTION 14A AND THE R EQUIREMENT OF RECORDING SATISFACTION BEFORE INVOKING THE MANDATE OF RULE 8D WE HAVE NO HESITATION IN HOLDING THAT THE AO PROPERLY RECOR DED THE SATISFACTION IN TERMS OF SUB-SECTIONS (2) AND (3) OF SECTION 14A. O N A HYPOTHETICAL BASIS AND FOR A MINUTE PRESUMABLY ACCEPTING THE ARGUMENT OF THE LD. AR THAT THE AO DID NOT RECORD ANY SATISFACTION WE FIND TH AT THE LD. CIT(A) REPEATED SUCH SATISFACTION AND MADE GOOD THE DEFICI ENCY. IN THIS VIEW OF THE MATTER THERE CANNOT BE ANY EMBARGO ON THE MAKI NG OF DISALLOWANCE U/S 14A OF THE ACT. 9. IN SO FAR AS THE CONTENTION OF THE LD. AR ABOUT THE DEPARTMENT NOT FILING ANY APPEAL AGAINST THE DELETION OF SIMILAR D ISALLOWANCE FOR THE ITA NOS.2333 2986 4130 & 4132/DEL/2011 8 ASSESSMENT YEAR 2005-06 BEFORE THE TRIBUNAL AND HE NCE THE ENTIRE DISALLOWANCE BE DELETED IN OUR CONSIDERED OPINION IS NO MORE A VALID PROPOSITION IN VIEW OF THE INSERTION OF SECTION 268 A BY THE FINANCE ACT 2008 WITH RETROSPECTIVE EFFECT FROM 1.4.1999. SUB- SECTIONS (2) AND (3) OF THIS SECTION READ AS UNDER :- `(2) WHERE IN PURSUANCE OF THE ORDERS INSTRUCTION S OR DIRECTIONS ISSUED UNDER SUB-SECTION (1) AN INCOME-TAX AUTHORITY HAS NOT FI LED ANY APPEAL OR APPLICATION FOR REFERENCE ON ANY ISSUE IN THE CASE OF AN ASSESS EE FOR ANY ASSESSMENT YEAR IT SHALL NOT PRECLUDE SUCH AUTHORITY FROM FILING AN AP PEAL OR APPLICATION FOR REFERENCE ON THE SAME ISSUE IN THE CASE OF ( A ) THE SAME ASSESSEE FOR ANY OTHER ASSESSMENT YEAR; OR ( B ) ANY OTHER ASSESSEE FOR THE SAME OR ANY OTHER ASSE SSMENT YEAR. (3) NOTWITHSTANDING THAT NO APPEAL OR APPLICATION F OR REFERENCE HAS BEEN FILED BY AN INCOME-TAX AUTHORITY PURSUANT TO THE ORDERS O R INSTRUCTIONS OR DIRECTIONS ISSUED UNDER SUB-SECTION (1) IT SHALL NOT BE LAWFU L FOR AN ASSESSEE BEING A PARTY IN ANY APPEAL OR REFERENCE TO CONTEND THAT T HE INCOME-TAX AUTHORITY HAS ACQUIESCED IN THE DECISION ON THE DISPUTED ISSUE BY NOT FILING AN APPEAL OR APPLICATION FOR REFERENCE IN ANY CASE. 10. A BARE PERUSAL OF SUB-SECTION (2) OF SECTION 2 68A CLEARLY DIVULGES THAT EVEN IF THE REVENUE FAILS TO FILE ANY APPEAL O N AN ISSUE FOR AN EARLIER YEAR THERE CAN BE NO EMBARGO ON ITS POWER TO FILE AN APPEAL ON THE SAID ISSUE IN A SUBSEQUENT YEAR. SUB-SECTION (3) MANIFE STLY DEBARS THE ASSESSEE FROM CONTENDING BEFORE THE APPELLATE AUTHO RITIES THAT SINCE THE ITA NOS.2333 2986 4130 & 4132/DEL/2011 9 INCOME-TAX AUTHORITY QUIETLY ACCEPTED THE DECISION ON THE DISPUTED ISSUE BY NOT FILING AN APPEAL FOR AN EARLIER YEAR HENCE NO APPEAL IS MAINTAINABLE FOR A LATER YEAR. IN VIEW OF THIS COM PREHENSIBLE STATUTORY PROVISION WE ARE NOT INCLINED TO UPHOLD THE CONTEN TION OF THE LD. AR ON THIS ISSUE WHICH IS HEREBY REPELLED. 11. INSOFAR AS THE GRIEVANCE OF THE REVENUE THAT TH E LD. CIT(A) COULD NOT HAVE REMANDED THE MATTER TO THE AO WE FIND THA T THERE IS A MERIT IN THE SAME BECAUSE OF THE LANGUAGE OF SUB-SECTION (1) OF SECTION 251 DEALING WITH THE POWERS OF THE CIT(A). SUB-SECTION (1)(A) OF SECTION 251 PROVIDES THAT : `(1) IN DISPOSING OF AN APPEAL THE COMMISSIONER (APPEALS) SHALL HAVE THE FOLLOWING POWERS (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT HE MAY CONFIRM REDUCE ENH ANCE OR ANNUL THE ASSESSMENT: IT IS VIVID FROM THE LANGUAGE OF THE PROVISION TH AT THE CIT(A) IN AN APPEAL AGAINST THE ASSESSMENT HAS THE POWER TO CONFIRM REDUCE ENHANCE OR ANNUL THE ASSESSMENT. HOWEVER T HE POWER OF REMAND HAS BEEN STATUTORILY WITHDRAWN BY THE FINANCE ACT 2001 W.E.F. 1.6.2001. ITA NOS.2333 2986 4130 & 4132/DEL/2011 10 IN THE PERIOD POSTERIOR TO 1.6.2001 THE CIT(A) CAN NOT EXERCISE THE POWER OF REMAND TO THE AO. 12. NOW TURNING TO THE APPLICATION OF RULE 8D B Y THE AO WE FIND THAT THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2006-07. THE HONBLE JURISDICTIONAL HIGH COURT IN MAXOPP INVESTMENTS LTD. VS. CIT (2012) 347 ITR 272 (DEL) HAS HELD THAT THE PROVISIONS OF RULE 8D ARE APPLICABLE ONLY FROM THE ASSESSMENT YEAR 2008-09. IT HAS FURTHER BEEN HELD THAT IN THE PERIOD ANTERIOR TO THAT THE DISAL LOWANCE IS REQUIRED TO BE MADE ON SOME `REASONABLE BASIS. IN VIEW OF THE JU DGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT ON THE POINT WE CANNOT APPROVE THE VIEW TAKEN BY THE AO IN COMPUTING THE DISALLOWANCE U/S 14A AS PER THE MANDATE OF RULE 8D OF THE INCOME-TAX RULES. 13. IN THE NORMAL CIRCUMSTANCES WE WOULD HAVE S ET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND RESTORED THE MATTE R TO THE FILE OF THE AO FOR MAKING DISALLOWANCE U/S 14A ON SOME `REASONA BLE BASIS AS HAS BEEN HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE AFORE NOTED CASE. HOWEVER IN THIS CASE THE LD. AR HAS PLACE D ON RECORD A COPY OF ITA NOS.2333 2986 4130 & 4132/DEL/2011 11 THE CONSEQUENTIAL ORDER PASSED BY THE AO PURSUANT T O THE RESTORATION OF THE MATTER BY THE LD. CIT(A) FOR COMPUTING DISALLOW ANCE U/S 14A ON SOME REASONABLE BASIS. AS PER THIS ORDER DATED 30. 3.2013 THE AO HAS COMPUTED THE FRESH DISALLOWANCE AT RS.2 LAC. IN OU R CONSIDERED OPINION THE SUSTENANCE OF DISALLOWANCE AT THIS LEVEL IS QUI TE REASONABLE WHICH DOES NOT REQUIRE ANY FURTHER INTERFERENCE. 14. GROUND NO. 1 OF THE REVENUES APPEAL IS AGAINS T THE DELETION OF DISALLOWANCE OF RS.16 12 31 000/-. THE FACTS APROP OS THIS GROUND ARE THAT THE AO OBSERVED THAT THE ASSESSEE DECLARED REV ENUE RECEIPTS OF RS.112.97 CRORE FOR THE CURRENT YEAR AS AGAINST THE REVENUE RECEIPTS OF RS.124.67 CRORE FOR THE IMMEDIATELY PRECEDING YEAR. THE ASSESSEE WAS FOUND TO HAVE INCURRED EXPENDITURE DURING THE INSTA NT YEAR AT RS.130.02 CRORE AS AGAINST THE EXPENDITURE OF RS.94.80 CRORE IN THE PRECEDING YEAR. ON THE PERUSAL OF DETAILS IT WAS OBSERVED THAT THE ASSESSEE HAD NOT SHOWN ANY INCOME DURING THE YEAR IN RESPECT OF: (I) MEDIANET; (II) CONTENT SELLING; AND (III) SALE OF STANDALONE PUBLI CATION. ON BEING CALLED UPON TO EXPLAIN THE REASONS FOR NOT SHOWING INCOME FROM THESE ITA NOS.2333 2986 4130 & 4132/DEL/2011 12 SOURCES THE ASSESSEE STATED THAT THE MEDIANET BUS INESS CONSISTED OF A PR BRAND WHICH WAS MANAGED BY THE ASSESSEE COMPANY ON BEHALF OF ITS HOLDING COMPANY BENNETT COLEMAN & CO. LTD. TILL 30 .9.2004. THE HOLDING COMPANY WITHDREW THIS RIGHT FROM THE ASSESS EE COMPANY FROM 30.9.2004 AND HANDED OVER THIS BUSINESS TO A NEW GR OUP COMPANY CALLED OPTIMAL MEDIA SOLUTIONS LTD. AFTER THE TERMINATION OF THIS LINE OF BUSINESS IN THE IMMEDIATELY PRECEDING YEAR THE ASS ESSEE CLAIMED NOT TO HAVE BEEN ENGAGED IN RENDERING ANY SERVICES RELATIN G TO MEDIANET BUSINESS. THE ASSESSEE ALSO FURNISHED PARTICULARS OF INCOME EARNED BY THE NEW COMPANY M/S OPTIMAL MEDIA SOLUTIONS LTD. FROM THE BUSINESS. SIMILARLY REGARDING THE SALE OF CONTENTS THE ASSE SSEE SUBMITTED THAT THIS BUSINESS HITHERTO ENTRUSTED TO THE ASSESSEE BY ITS HOLDING COMPANY WAS WITHDRAWN W.E.F. 1.10.2004. NECESSARY COMMUNICATIO NS WITHDRAWING THE ABOVE BUSINESSES FROM THE ASSESSEE WERE ALSO FU RNISHED TO THE AO. IN THIS BACKDROP OF THE FACTS THE AO NOTICED THAT ALBEIT SUCH BUSINESSES WERE NOT CARRIED ON BY THE ASSESSEE DURING THE YEAR THE OVERALL EXPENSES OF THE ASSESSEE WERE STILL ON NORTHWARDS SOJOURN. T HIS WAS HELD ON THE STRENGTH OF THE PERCENTAGE OF THE EXPENSES TO REVEN UE AT 62.8% FOR THE ITA NOS.2333 2986 4130 & 4132/DEL/2011 13 ASSESSMENT YEAR 2004-05 WHEN THE ASSESSEE WAS HAVIN G THESE BUSINESSES; DURING THE ASSESSMENT YEAR 2005-06 WHEN THESE BUSINESSES REMAINED WITH THE ASSESSEE FOR A PART OF THE YEAR THE PERCENTAGE OF EXPENSES WENT UP TO 73.5%; AND DURING THE YEAR UNDE R CONSIDERATION WHEN THESE BUSINESSES WERE NOT AT ALL CARRIED ON B Y THE ASSESSEE THE PERCENTAGE OF EXPENSES INCREASED TO 107.8%. THE AO INFERRED THAT THOUGH: THERE IS NO INCOME ON ACCOUNT OF THESE TWO BUSINESSES TO THE ASSESSEE BUT STILL IT IS INCURRING EXPENSES FOR THESE TWO BUSINESSES. APPLYING THE PERCENTAGE OF EXPENSE AT 62.8% AS RELE VANT FOR THE A.Y. 2004-05 THE AO MADE DISALLOWANCE FOR THE REMAINING EXPENSES OF RS.16 12 31 000/-. THIS DISALLOWANCE WAS DELETED I N THE FIRST APPEAL. THE REVENUE IS AGGRIEVED AGAINST SUCH DELETION. 15. HAVING HEARD THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD IT IS OBSERVED THAT THE AO MADE T HE DISALLOWANCE BY RETAINING THE PERCENTAGE OF EXPENSES TO THE REVENUE AT 62.8%. THIS WAS DONE IN ACCORDANCE WITH THE PERCENTAGE OF EXPENSES INCURRED BY THE ASSESSEE FOR THE A.Y. 2004-05 WHEN THE ASSESSEE WA S HAVING THESE ITA NOS.2333 2986 4130 & 4132/DEL/2011 14 BUSINESSES FROM ITS HOLDING COMPANY. SUCH BUSINESS ES WERE WITHDRAWN BY THE HOLDING COMPANY FROM THE ASSESSEE W.E.F. 1.1 0.2004. THE OPINION OF THE AO THAT THOUGH THERE WAS NO INCOME T O THE ASSESSEE FROM THESE BUSINESSES STILL IT WAS INCURRING EXPENSES FOR THEM IS UNFOUNDED. ON A SPECIFIC QUERY THE LD. DR FAILED TO DRAW OUR ATTENTION TOWARDS ANY SPECIFIC EXPENDITURE INCURRED BY THE ASSESSEE QUA THESE BUSINESSES WITHDRAWN BY THE HOLDING COMPANY. THE AO MADE DISA LLOWANCE OF RS.16.12 CRORE SIMPLY BY MEANS OF A MATHEMATICAL EX ERCISE CARRIED OUT BY HIM. IF HE FOUND THE EXPENDITURE INCURRED BY TH E ASSESSEE TO BE ON HIGHER SIDE IT WAS INCUMBENT UPON HIM TO SPECIFICA LLY POINT OUT AS TO WHICH EXPENSES WERE NOT INCURRED FOR THE PURPOSES O F BUSINESS. NO SUCH EXERCISE WORTH THE NAME HAS BEEN CARRIED OUT. IN O UR CONSIDERED OPINION THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELE TING THIS ADDITION MADE BY THE AO ON AD HOC BASIS. THIS GROUND IS THEREFORE NOT ALLOWED. 16. GROUND NO. 3 OF THE REVENUES APPEAL IS AGAINS T THE DELETION OF DISALLOWANCE OF RS.31 48 079/- BEING CONSULTANCY EXPENSES TREATED BY ITA NOS.2333 2986 4130 & 4132/DEL/2011 15 THE AO AS CAPITAL IN NATURE. THE LD. CIT(A) DELETE D THIS ADDITION BY RELYING ON HIS ORDER PASSED FOR THE A.Y. 2005-06. 17. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ORDER PASSED B Y THE LD. CIT(A) FOR A.Y. 2005-06 CAME UP FOR CONSIDERATION BEFORE THE T RIBUNAL. VIDE ITS ORDER DATED 17.8.2015 THE TRIBUNAL IN ITA NO. 381/ DEL/2009 ETC. DELETED SIMILAR DISALLOWANCE MADE BY THE AO. RELEV ANT DISCUSSION HAS BEEN MADE ON PAGE 7 PARA 8 OF THE ORDER. THE LD. D R WAS FAIR ENOUGH TO CANDIDLY ADMIT THE SIMILARITY OF FACTS FOR THE INST ANT YEAR WITH THOSE FOR THE PRECEDING YEAR. RESPECTFULLY FOLLOWING THE PRE CEDENT WE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. 18. GROUND NO. 4 IS AGAINST DELETING THE DISALLOWAN CE OF RS.32 79 872/- BY HOLDING THAT THE DEPRECIATION WAS ALLOWABLE ON L ICENCE TO USE SOFTWARE @ 60% AND NOT AT 25% AS HELD BY THE AO. D URING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE INCURRED SOFTWARE CHARGES IN RESPECT OF THE FOLLOWING SOFTWA RE WHICH IN HIS OPINION OF THE CAPITAL NATURE : - ITA NOS.2333 2986 4130 & 4132/DEL/2011 16 A) TIVOLI LICENSE 8X TSM FOR SAP 8XERP 25X TSM FOR EXT EDITION OF EXT RS.5 70 285/-. B) WINDOWS SERVER EXTRNCONN 2003 ENGLISH MVL-1 NO. SQL SERVER 2000 ENTERPRISE ENGLISH MVL 1 PROCESSOR 6 NOS. & MSDN OS WIN 32 ALL LANGUAGES LIC/SA PACK-1 NO. OF RS.35 62 577/- C) SOFTWARE DEVELOPMENT FIR VERSION 5 OF TII. WEB BASED E MAIL SYSTEM OF RS.12 00 000/- D) 10 SQL SERVER 2000 SERVER ENTP EDTN CPU LIC FOR CMS SYSTEM OF RS.59 00 000/- TOTAL RS.1 12 32 862/- 19. ON BEING CALLED UPON TO EXPLAIN AS TO WHY DEPRE CIATION BE NOT ALLOWED @ 25% AS AGAINST 60% CLAIMED BY THE ASSESSE E ON THE GROUND THAT SUCH EXPENDITURE WAS FOR ACQUISITION OF LICENC E THE ASSESSEE CONTENDED THAT THESE WERE STANDARD SOFTWARE MEANT F OR USE IN THE COMPUTER HARDWARE. NOT CONVINCED THE AO RESTRICTE D DEPRECIATION ON SUCH SOFTWARE AT 25% PER ANNUM. THIS RESULTED INTO DISALLOWANCE AT RS.32 79 872/-. THE LD. CIT(A) DELETED THIS ADDITI ON. 20. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ASSESSEE EXPLA INED TO THE LD. CIT(A) VIDE ITS WRITTEN SUBMISSION WHOSE COPY IS AVAILABL E ON RECORD THAT THE ITA NOS.2333 2986 4130 & 4132/DEL/2011 17 SOFTWARE USED BY THE ASSESSEE WERE OF STANDARD NATU RE MEANT FOR USE IN THE COMPUTER HARDWARE AND HAD NO INDEPENDENT UTILIT Y OR USAGE. THE LD. DR HAS NOT CONTROVERTED THE REASONING BY THE LD. CI T(A) IN DELETING THE ADDITION. ONCE IT IS FOUND THAT THE SOFTWARE USED BY THE ASSESSEE WERE OF STANDARD NATURE TO BE USED IN COMPUTER HARDWARE AND NOT MEANT FOR ANY INDEPENDENT USAGE SUCH SOFTWARE QUALIFY FOR DEPREC IATION @ 60%. APPENDIX I TO THE INCOME-TAX RULES UNDER THE BROADE R HEAD III MACHINERY AND PLANT AT SL. NO. (5) PROVIDES : CO MPUTERS INCLUDING COMPUTER SOFTWARE. RATE OF DEPRECIATION AT 60% HA S BEEN PRESCRIBED AGAINST THIS ITEM. WHEN WE CONSIDER APPENDIX I TO THE INCOME-TAX RULES CONTAINING RATES OF DEPRECIATION AVAILABLE FO R THE PURPOSES OF INCOME-TAX IT BECOMES MANIFEST THAT THE COMPUTER S OFTWARE WHICH ARE NECESSARY AND INTEGRAL FOR THE WORKING OF HARDWARE ARE ELIGIBLE FOR DEPRECIATION @ 60% AS WAS CLAIMED BY THE ASSESSEE . WE THEREFORE APPROVE THE VIEW TAKEN BY THE LD. CIT(A) IN DELETIN G THIS DISALLOWANCE. THIS GROUND IS NOT ALLOWED. ITA NOS.2333 2986 4130 & 4132/DEL/2011 18 21. GROUND NO. 5 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.1 02 28 174/- TREATING EXPENSES ON SOFTWARE AS C APITAL EXPENDITURE. THE AO CAPITALIZED CERTAIN EXPENSES CLAIMED AS REVE NUE BY THE ASSESSEE ON COMPUTER SOFTWARE. THE LD. CIT(A) DELETED THIS ADDITION BY RELYING ON THE VIEW CANVASSED BY HIM IN HIS ORDER FOR THE A .Y. 2005-06. 22. HAVING HEARD BOTH THE SIDES ON THIS ISSUE AND P ERUSED THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE SIMILAR DISALL OWANCE DELETED BY THE LD. CIT(A) IN HIS ORDER FOR THE A.Y. 2005-06 CAME U P FOR CONSIDERATION BEFORE THE TRIBUNAL. VIDE THE AFORE-NOTED ORDER T HE TRIBUNAL HAS SUSTAINED THE ACTION OF THE LD. CIT(A) VIDE PARA 7 OF ITS ORDER. RESPECTFULLY FOLLOWING THE PRECEDENT WE COUNTENANC E THE VIEW TAKEN BY THE LD. CIT(A) ON THIS ISSUE IN THE IMPUGNED ORDER. THIS GROUND IS NOT ALLOWED. 23. GROUND NO. 6 IS AGAINST THE DELETION OF DISALL OWANCE OF RS.1 44 000/- WHICH WAS MADE BY THE AO BY CAPITALIZ ING THE EXPENDITURE INCURRED ON WEBSITE LAUNCH. THE ASSESS EE CLAIMED DEDUCTION ON ACCOUNT OF WEBSITE CREATION CHARGES. THE AO ALLOWED ITA NOS.2333 2986 4130 & 4132/DEL/2011 19 DEPRECIATION @ 60% AND MADE ADDITION FOR THE REMAIN ING AMOUNT AT RS.1 44 000/-. THE LD. CIT(A) ORDERED FOR THE DELE TION OF THE ADDITION. 24. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THIS ISSUE IS NO M ORE RES INTEGRA IN VIEW OF THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. INDIAN VISIT.COM (P) LTD. (2008) 219 CTR 603 (DEL) IN WHICH IT HAS BEEN HELD THAT THE EXPENDITURE ON DEVELOPMENT OF WEBSITE IS A REVENUE EXPENDITURE. SIMILAR VIEW HAS BEEN TAKEN BY THE TR IBUNAL IN THE ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING Y EAR. RESPECTFULLY FOLLOWING THE PRECEDENT WE UPHOLD THE IMPUGNED ORD ER ON THIS ISSUE. THIS GROUND FAILS. 25. GROUND NO. 7 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.5 67 55 443/- ON ACCOUNT OF EXPENSES TOWARDS TEL ECOM WEB SUPPORT. THE ASSESSEE CLAIMED EXPENDITURE ON TELECOM WEB SUP PORT AT RS.1.16 CRORE TOWARDS PROVISION FOR COPYRIGHT RTS MADE TO M /S VIRTUAL MARKETING PVT. LTD. AND RS.5.31 CRORE TOWARDS PROVI SION FOR COPYRIGHT RTS TO SOUND BUZZ INDIA PVT. LTD. WHICH AMOUNT WAS TREATED AS ITA NOS.2333 2986 4130 & 4132/DEL/2011 20 REVENUE. THE AO CAPITALIZED SUCH EXPENDITURE TOTAL ING TO RS.6.48 CRORE. AFTER ALLOWING DEPRECIATION @ 12.5% HE MADE DISALL OWANCE FOR THE REMAINING SUM OF RS.5.67 CRORE. THE LD. CIT(A) DELE TED THE ADDITION. THE REVENUE IS IN APPEAL AGAINST SUCH DELETION. 26. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL ON RECORD IT IS NOTICED THAT THE AO TREAT ED THE EXPENDITURE OF RS.6.48 CRORE AS CAPITAL BY NOTING THAT IT WAS A PR OVISION FOR COPYRIGHT. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) WHOSE COPY IS AVAILABLE ON RECORD THAT IT STARTED A NEW BUSINESS BY THE NA ME OF TELECOM WEB SERVICE DURING THE PRECEDING YEAR. RECEIPTS FROM T HIS BUSINESS WERE CLASSIFIED UNDER THE HEAD REVENUE FROM SMS SERVICE S. THE REVENUE FROM THIS SERVICE WAS EARNED TO THE TUNE OF RS.22.3 3 CRORE FOR THE YEAR UNDER CONSIDERATION. THIS TELECOM WEB SERVICE BUSI NESS CONSISTED OF PROVIDING THE SERVICES TO CELL PHONE USERS THROUGH AN ARRANGEMENT WITH VARIOUS TELECOM OPERATORS SUCH AS AIRTEL VODAFO NE ETC. IN RESPECT OF PROVIDING RING TONES WALL PAPERS POSTERS CALLER TUNES MUSIC MESSAGING ETC. THIS REVENUE WAS EARNED BY THE ASS ESSEE FROM THE ITA NOS.2333 2986 4130 & 4132/DEL/2011 21 TELECOM COMPANIES BASED ON ACTUAL NUMBERS. THE COR RESPONDING SERVICES WERE PROCURED BY THE ASSESSEE FROM VARIOUS CONTENT PROVIDERS BY ENTERING INTO AGREEMENTS WITH THEM ALONG WITH TH E LICENCE TO USE THEIR INTELLECTUAL PROPERTY RIGHTS ON VARIOUS CONTENTS M USIC OR OTHER LIKE SERVICES UTILIZED BY THE ASSESSEE. IT WAS THIS AMO UNT OF RS.6.48 CRORE PAID BY THE ASSESSEE TO THE CONTENT PROVIDERS AGAIN ST WHICH REVENUE FROM SMS SERVICES WAS EARNED. THIS NATURE OF EXPENSES A S RECORDED IN THE WRITTEN SUBMISSIONS MADE TO THE LD. CIT(A) DISALLO WED BY THE AO BY TREATING IT AS CAPITAL HAS NOT BEEN CONTROVERTED B Y THE LD. DR. IT THUS BECOMES VIVID THAT THE PAYMENT MADE BY THE ASSESSEE TO SOUND BUZZ INDIA PVT. LTD. AND VIRTUAL MARKETING INDIA PVT. LT D. IS NOTHING BUT A REVENUE EXPENDITURE. FURTHER THERE IS SOME CALCUL ATION MISTAKE IN THE ASSESSMENT ORDER IN RESPECT OF THE AMOUNT PAID BY T HE ASSESSEE TO THESE TWO PARTIES. SINCE THE VERY NATURE OF THE EXPENDIT URE IS THAT OF REVENUE THERE IS NO NEED TO GO DEEP INTO SUCH A CALCULATION MISTAKE AS THE ENTIRE AMOUNT ON THIS SCORE IS DEDUCTIBLE AS REVENUE EXPEN DITURE. IN OUR CONSIDERED OPINION THE LD. CIT(A) WAS JUSTIFIED IN DELETING THIS DISALLOWANCE. ITA NOS.2333 2986 4130 & 4132/DEL/2011 22 27. GROUND NO. 8 IS AGAINST THE DELETION OF ADDITIO N OF RS.2 60 000/- BEING WEB PAGE UPDATION CHARGES. THE ASSESSEE INCU RRED A SUM OF RS.6 50 000/- FOR WEB PAGE UPDATION. AFTER ALLOWIN G DEPRECIATION @ 60% THE AO MADE DISALLOWANCE FOR THE REMAINING SUM OF RS.2 60 000/-. THE LD. CIT(A) DELETED THIS ADDITION. 28. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL ON RECORD WE FIND IT AS AN UNDISPUTED FAC T THAT THIS EXPENDITURE WAS INCURRED BY THE ASSESSEE ON WEB PAGE UPDATION. WHEN THE HONBLE JURISDICTIONAL HIGH COURT IN INDIAN VISIT.COM (P) LTD. (SUPRA) HAS HELD THE EXPENDITURE INCURRED ON DEVELOPMENT OF WEBSITE AS REVENUE IT IS BUT NATURAL THAT THE EXPENDITURE INCURRED ON WEBSITE UP DATION CANNOT ASSUME THE CHARACTER OF A CAPITAL EXPENDITURE. WE THEREF ORE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. THIS GROUND FAILS. 29. GROUND NO. 9 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.20 82 501/- COMPRISING OF CAPITAL EXPENDITURE IN RELATION TO COMPUTERS FURNITURE FIXTURES ETC. THE FACTUAL MA TRIX OF THIS GROUND IS THAT THE ASSESSEE INTER ALIA INCURRED EXPENDITURE OF RS.6 51 000/- IN ITA NOS.2333 2986 4130 & 4132/DEL/2011 23 RELATION TO COMPUTERS. THE AO CAPITALIZED SUCH EXP ENDITURE AND AFTER ALLOWING DEPRECIATION @ 60% MADE ADDITION OF RS.4 55 700/-. SIMILARLY THE ASSESSEE CLAIMED REPAIRS OF FURNITUR E AND FIXTURES TO THE TUNE OF RS.17 12 422/-. AFTER ALLOWING DEPRECIATION THE AO MADE DISALLOWANCE FOR A SUM OF RS.16 26 801/-. THIS RES ULTED INTO TOTAL DISALLOWANCE OF RS.20 82 501/-. THE LD. CIT(A) DEL ETED THIS ADDITION. 30. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE FIRST COMPONEN T OF THE DISALLOWANCE MADE BY THE AO IS A SUM OF RS.4 55 700/- WHICH IS T HE EXPENDITURE CLAIMED BY THE ASSESSEE UNDER THE HEAD COMPUTER RE PAIRS. A DETAIL OF SUCH EXPENDITURE IS AVAILABLE ON PAGE 562 OF THE PA PER BOOK FROM WHICH IT CAN BE SEEN THAT THIS AMOUNT REPRESENTS AMC CHAR GES OF COMPUTERS. ANNUAL MAINTENANCE COST IS UNDOUBTEDLY REVENUE EXPE NDITURE AND QUALIFIES FOR DEDUCTION IN ENTIRETY. WE THEREFORE UPHOLD THE IMPUGNED ORDER TO THIS EXTENT. 31. THE SECOND COMPONENT OF THE DISALLOWANCE IS A S UM OF RS.16 26 801/-. THE ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF REPAIRS ITA NOS.2333 2986 4130 & 4132/DEL/2011 24 TO FURNITURE AND FIXTURES. THE AO CAPITALIZED SUCH EXPENDITURE WHICH THE LD. CIT(A) DELETED BY TREATING IT AS REVENUE EX PENDITURE. A DETAIL OF SUCH EXPENDITURE IS AVAILABLE AT PAGE 500 OF THE PA PER BOOK. FROM THE DETAILS OF SUCH REPAIR AND MAINTENANCE OF FURNITURE AND FIXTURES IT CAN BE SEEN THAT THERE ARE CERTAIN ITEMS OF THE CAPITAL NA TURE SUCH AS PAYMENT TOWARDS PURCHASE OF LCD TV FRAME ETC. SUCH EXPEND ITURE CANNOT BE CONSIDERED AS A REVENUE EXPENDITURE. IN VIEW OF T HE FACT THAT THE AO HAS NOT SPECIFICALLY DEALT WITH THE DETAILS OF EXPE NSES FOR WHICH HE MADE DISALLOWANCE WE CONSIDER IT EXPEDIENT TO SET ASIDE THE IMPUGNED ORDER ON THIS SCORE AND REMIT THE MATTER TO THE FILE OF A O FOR MAKING AN ITEM- WISE ANALYSIS OF THE NATURE OF EXPENSES CLAIMED BY THE ASSESSEE UNDER THIS HEAD AND THEREAFTER MAKE DISALLOWANCE TO TH E EXTENT PERMISSIBLE AS PER LAW. 32. THE LAST GROUND OF THE REVENUES APPEAL IS AGAI NST THE DELETION OF DISALLOWANCE OF RS.1 55 59 504/- SHOWN BY THE ASSES SEE AS RECEIPT OF ADVANCES. THE ASSESSEE DECLARED UNEARNED INCOME A T A SUM OF RS.1 55 59 504/- WHICH WAS SHOWN AS A LIABILITY IN THE BALANCE SHEET. ON ITA NOS.2333 2986 4130 & 4132/DEL/2011 25 BEING CALLED UPON TO EXPLAIN AS TO WHY THIS AMOUNT WAS TAKEN TO BALANCE SHEET INSTEAD OF SHOWING IT AS INCOME FOR THE YEAR THE ASSESSEE CONTENDED THAT THE ASSESSEE BILLED THE PARTIES FOR A LARGER SUM AND THE AMOUNT OF INCOME PERTAINING TO THE PERIOD AFTER 31 ST MARCH 2006 WAS TAKEN AS DEFERRED REVENUE AND HENCE UNEARNED INCO ME. NOT CONVINCED THE AO MADE ADDITION OF A SUM OF RS.1 55 59 504/- WHICH CAME TO BE DELETED IN THE FIRST APPEAL. 33. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ASSESSEE WAS F OLLOWING MATCHING PRINCIPLE IN RECORDING INCOME AS WELL AS EXPENSES U NDER THE MERCANTILE SYSTEM OF ACCOUNTING. PAGE 572 OF THE PAPER BOOK I NDICATES THAT NOT ONLY THE INCOME PERTAINING TO THE SUCCEEDING YEAR BUT RECEIVED IN THE YEAR UNDER CONSIDERATION WAS TAKEN AS DEFERRED REVE NUE INCOME BUT THE EXPENDITURE INCURRED DURING THE YEAR NOT PERTAINING TO THE YEAR UNDER CONSIDERATION WAS ALSO SIMILARLY ACCOUNTED FOR. T HIS UNEARNED INCOME OF RS.1.55 CRORE WAS TAKEN AS INCOME FOR THE SUCCEE DING YEAR AND ACCEPTED BY THE REVENUE AS SUCH IN THE ASSESSMENT U /S 143(3) OF THE ACT. ITA NOS.2333 2986 4130 & 4132/DEL/2011 26 IN VIEW OF THE FACT THAT THIS INCOME DID NOT PERTAI N TO THE YEAR UNDER CONSIDERATION WE HOLD THAT THE LD. CIT(A) WAS JUST IFIED IN DELETING THIS DISALLOWANCE. 34. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THAT OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPO SES. ASSESSMENT YEAR 2007-08 35. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AG AINST THE ORDER PASSED BY THE CIT(A) ON 6.6.2011. THE APPEAL OF THE REVENUE FOR THE A.Y. 2006-07 WAS EXTENSIVELY ARGUED BY BOTH THE SID ES AND IT WAS FAIRLY ADMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE IN STANT APPEAL ARE MUTATIS MUTANDIS SIMILAR TO THOSE FOR THE A.Y. 2006-07. IN FACT NO SEPARATE ARGUMENTS WERE ADVANCED IN RESPECT OF THE GROUNDS TAKEN FOR THE YEAR IN QUESTION AND THE ARGUMENTS SO MADE FOR THE A.Y. 2006-07 WERE ADOPTED BY THE RESPECTIVE SIDES. WE HAVE PASS ED OUR ORDER FOR THE A.Y. 2006-07 IN EARLIER PARAS. FOLLOWING THE VIEW TAKEN FOR THE IMMEDIATELY PRECEDING YEAR THE GROUNDS OF THE REVE NUE ARE DISPOSED OF AS UNDER :- ITA NOS.2333 2986 4130 & 4132/DEL/2011 27 36. GROUND NO. 1 AGAINST THE DELETION OF DISALLOWAN CE OF RS.21 59 50 568/- PERTAINING TO EXPENDITURE RELATIN G TO MEDIANET AND CONTENT SELLING IS SIMILAR TO GROUND NO. 1 OF THE A PPEAL FOR THE A.Y. 2006-07. FOLLOWING THE VIEW TAKEN HEREINABOVE WE DISMISS THIS GROUND OF APPEAL. 37. GROUND NO. 2 IS AGAINST THE DECISION TAKEN BY THE LD. CIT(A) IN SETTING ASIDE THE ADDITION OF RS.28 95 387/- MADE B Y THE AO U/S 14A AND REMITTING THE MATTER TO THE AO FOR A FRESH ADJUDICA TION. WHILE DEALING WITH SIMILAR GROUND FOR THE A.Y. 2006-07 WE HAVE S USTAINED THE DISALLOWANCE AT RS.2 LAC BEING THE AMOUNT DISALLOW ED BY THE AO HIMSELF IN THE CONSEQUENTIAL PROCEEDINGS. CONSEQUE NTIAL ORDER PASSED BY THE AO FOR THIS YEAR HAS NOT BEEN BROUGHT ON REC ORD. FOLLOWING THE VIEW TAKEN FOR THE A.Y. 2006-07 WE SUSTAIN THE DIS ALLOWANCE U/S 14A AT RS.2 LAC FOR THIS YEAR AS WELL. 38. GROUND NO. 3 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.5 01 200/- BEING THE LEGAL AND PROFESSIONAL CH ARGES CAPITALIZED BY THE AO. THIS GROUND IS SIMILAR TO GROUND NO. 3 OF THE REVENUES APPEAL ITA NOS.2333 2986 4130 & 4132/DEL/2011 28 FOR THE A.Y. 2006-07. FOLLOWING THE VIEW TAKEN HER EINABOVE WE DISMISS THIS GROUND OF APPEAL. 39. GROUND NO. 4 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.29 36 247/- BY HOLDING THAT THE DEPRECIATION ON LICENCE TO USE SOFTWARE SHOULD HAVE BEEN ALLOWED AT 25% AND NOT AT 60%. THIS GROUND IS SIMILAR TO GROUND NO. 4 OF THE REVENUES APPEAL FOR THE A.Y. 2006-07. FOLLOWING THE VIEW WE DISMISS THIS GROUND OF APPEA L. 40. GROUND NO. 5 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.12 64 688/- BEING EXPENSES ON SOFTWARE TREATED BY THE AO AS CAPITAL IN NATURE. THIS GROUND IS SIMILAR TO GROUND NO. 5 O F THE REVENUES APPEAL FOR THE A.Y. 2006-07. FOLLOWING OUR VIEW FOR THE P RECEDING YEAR WE DISMISS THIS GROUND OF APPEAL. 41. GROUND NO. 6 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.2 22 146/- COMPRISING OF EXPENDITURE ON REPAIRS AND MAINTENANCE OF COMPUTERS FURNITURE AND FIXTURES. THIS GROUND IS SIMILAR TO GROUND NO. 9 OF THE REVENUES APPEAL FOR THE A.Y. 2006-07. FOLL OWING THE VIEW TAKEN HEREINABOVE FOR THE PRECEDING YEAR THE DISALLOWANC E PERTAINING TO AMC ITA NOS.2333 2986 4130 & 4132/DEL/2011 29 OF COMPUTERS IS HELD TO HAVE BEEN RIGHTLY ALLOWED A S DEDUCTION. IN SO FAR AS THE EXPENDITURE RELATING TO REPAIRS OF FURNITURE AND FIXTURES IS CONCERNED THE SAME IS RESTORED TO THE FILE OF AO T O BE DECIDED IN ACCORDANCE WITH THE VIEW TAKEN BY US FOR THE A.Y. 2 006-07 42. GROUND NO. 7 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.80 140/. THIS GROUND IS SIMILAR TO GROUND NOS. 6 7 AND 8 OF THE REVENUES APPEAL FOR THE A.Y. 2006-07. FOLLOWING OUR VIEW ON THESE GROUNDS IN THE EARLIER YEAR WE DISMISS THIS GROUND OF APPEAL. 43. IN THE RESULT THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ASSESSMENT YEAR 2008-09 44. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AG AINST THE ORDER PASSED BY THE CIT(A) ON 13.6.2011. THE APPEAL OF TH E REVENUE FOR THE A.Y. 2006-07 WAS THOROUGHLY ARGUED BY BOTH THE SIDE S AND IT WAS FAIRLY ADMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE IN STANT APPEAL ARE MUTATIS MUTANDIS SIMILAR TO THOSE FOR THE A.Y. 2006-07. IN FACT NO SEPARATE ARGUMENTS WERE ADVANCED IN RESPECT OF THE GROUNDS TAKEN FOR THE YEAR IN QUESTION AND THE ARGUMENTS SO MADE FOR THE A.Y. 2006-07 ITA NOS.2333 2986 4130 & 4132/DEL/2011 30 WERE ADOPTED BY THE RESPECTIVE SIDES. WE HAVE PASS ED OUR ORDER FOR THE A.Y. 2006-07 IN EARLIER PARAS. FOLLOWING THE VIEW TAKEN FOR THE IMMEDIATELY PRECEDING YEAR THE GROUNDS OF THE REVE NUE FOR THE EXTANT YEAR ARE DISPOSED OF AS UNDER :- 45. GROUND NO. 1 AGAINST THE DELETION OF DISALLOWAN CE OF RS.28 41 30 727/- PERTAINING TO EXPENDITURE RELATIN G TO MEDIANET AND CONTENT SELLING IS SIMILAR TO GROUND NO. 1 OF THE APPEAL FOR THE A.Y. 2006-07. FOLLOWING THE VIEW TAKEN ABOVE WE DISMIS S THIS GROUND OF APPEAL. 46. GROUND NO. 2 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.34 60 688/- BEING THE LEGAL AND PROFESSIONAL C HARGES CAPITALIZED BY THE AO. THIS GROUND IS SIMILAR TO GROUND NO. 3 OF T HE REVENUES APPEAL FOR THE A.Y. 2006-07. FOLLOWING OUR VIEW FOR THE E ARLIER YEAR WE DISMISS THIS GROUND OF APPEAL. 47. GROUND NO. 3 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.1 16 16 134/- BY HOLDING THAT THE DEPRECIATION O N LICENCE TO USE SOFTWARE SHOULD HAVE BEEN ALLOWED AT 25% AND NOT AT 60%. THIS GROUND ITA NOS.2333 2986 4130 & 4132/DEL/2011 31 IS SIMILAR TO GROUND NO. 4 OF THE REVENUES APPEAL FOR THE A.Y. 2006-07. FOLLOWING THE VIEW TAKEN HEREINABOVE WE DISMISS TH IS GROUND OF APPEAL. 48. GROUND NO. 4 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.33 64 530/- BEING EXPENSES ON SOFTWARE TREATED BY THE AO AS CAPITAL IN NATURE. THIS GROUND IS SIMILAR TO GROUND NO. 5 OF THE REVENUES APPEAL FOR THE A.Y. 2006-07. FOLLOWING OUR VIEW FO R SUCH EARLIER YEAR WE DISMISS THIS GROUND OF APPEAL. 49. GROUND NO. 5 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.16 38 636/- BEING DISALLOWANCE OUT OF CONTENT P ROCUREMENT AND MAINTENANCE EXPENSES BY TREATING IT AS CAPITAL EXPE NDITURE. THIS GROUND IS SIMILAR TO GROUND NO. 8 OF THE REVENUES APPEAL FOR THE A.Y. 2006-07. FOLLOWING OUR VIEW TAKEN HEREINABOVE WE DISMISS TH IS GROUND OF APPEAL. 50. GROUND NO. 6 IS AGAINST THE DELETION OF DISALLO WANCE OF RS.1 28 700/- COMPRISING CAPITAL EXPENDITURE ON REP AIR & MAINTENANCE CHARGES OF COMPUTER. THIS GROUND IS SIMILAR TO GROU ND NO. 9 OF THE ITA NOS.2333 2986 4130 & 4132/DEL/2011 32 REVENUES APPEAL FOR THE A.Y. 2006-07. FOLLOWING O UR VIEW WE DISMISS THIS GROUND OF APPEAL. 51. IN THE RESULT THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.10.201 6. SD/- SD/- [SUCHITRA KAMBLE] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 21 ST OCTOBER 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT AR ITAT NEW DELHI.