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TMI Blog2017 (7) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... at albeit the lease deed was given effect from 1.4.2005 as per Article 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 Article 2.2 of the lease deed that the assessee used the premises for a period 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 between 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 the date of the execution of lease deed that the parties recorded in 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 of a letter dated 3.3.2010 written by the lessor holding company indicating 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 skipped from controverting the same in any manner. When the lessor c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer vested in him. 6. Having heard the rival submissions and perused the 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 recorded 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 incurred by the assessee for the purposes of making investment, which is nothing but recording of satisfaction. The Hon'ble 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-à-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 the Assessing Officer could have done but failed to do. Similar view has been reiterated by the Hon'ble Apex Court in Jute Corporation of India Ltd. Vs. CIT, (1991) 187 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to file an appeal on the said issue in a subsequent year. Sub-section (3) manifestly debars the assessee from contending before the appellate authorities that since the 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 comprehensible statutory provision, we are not inclined to uphold the contention of the ld. AR on this issue, which is hereby repelled. 11. Insofar as the grievance of the Revenue that the ld. CIT(A) could not have remanded the matter to the AO, we find that 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, enhance or annul the assessment:' It is vivid from the language of the provision that the CIT(A) in an appeal against the assessment has the power to confirm, reduce, enhance or annul the assessment. However, the power of remand has been statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee company from 30.9.2004 and handed over this business to a new group company called Optimal Media Solutions Ltd. After the termination of this line of business in the immediately preceding year, the assessee claimed not to have been engaged in rendering any services relating 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 assessee submitted that this business hitherto entrusted to the assessee by its holding company was withdrawn w.e.f. 1.10.2004. Necessary communications withdrawing the above businesses from the assessee were also furnished 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. This was held on the strength of the percentage of the expenses to revenue at 62.8% for the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusing the relevant material on record, we find that the order passed by the ld. CIT(A) for A.Y. 2005-06 came up for consideration before the Tribunal. Vide its order dated 17.8.2015, the Tribunal in ITA no. 381/Del/2009 etc., deleted similar disallowance made by the AO. Relevant discussion has been made on page 7 para 8 of the order. The ld. DR was fair enough to candidly admit the similarity of facts for the instant year with those for the preceding year. Respectfully following the precedent, we uphold the impugned order on this issue. 18. Ground no. 4 is against deleting the disallowance of Rs. 32,79,872/- by holding that the depreciation was allowable on licence to use software @ 60% and not at 25% as held by the AO. During the course of assessment proceedings, the AO observed that the assessee incurred software charges in respect of the following software, which in his opinion of the capital nature : - 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) So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A) in his order for the A.Y. 2005-06 came up for consideration before the Tribunal. Vide the afore-noted order, the Tribunal has sustained the action of the ld. CIT(A) vide para 7 of its order. Respectfully following the precedent, we countenance 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 disallowance of Rs. 1,44,000/- which was made by the AO by capitalizing the expenditure incurred on website launch. The assessee claimed deduction on account of website creation charges. The AO allowed depreciation @ 60% and made addition for the remaining amount at Rs. 1,44,000/-. The ld. CIT(A) ordered for the deletion of the addition. 24. After considering the rival submissions and perusing the relevant material on record, we find that this issue is no more res integra in view of the judgment of the Hon'ble 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 Tribunal in the assessee's own case for the immediately pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marketing India Pvt. Ltd., is nothing, but, a revenue expenditure. Further, there is some calculation mistake in the assessment order in respect of the amount paid by the assessee to these two parties. Since the very nature of the expenditure 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 expenditure. In our considered opinion, the ld. CIT(A) was justified in deleting this disallowance. 27. Ground no. 8 is against the deletion of addition of Rs. 2,60,000/-, being Web page updation charges. The assessee incurred a sum of Rs. 6,50,000/- for web page updation. After allowing 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 perusing the relevant material on record, we find it as an undisputed fact that this expenditure was incurred by the assessee on web page updation. When the Hon'ble 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. 32. The last ground of the revenue's appeal is against the deletion of disallowance of Rs. 1,55,59,504/- shown by the assessee as receipt of advances. The assessee declared 'Unearned income' at a sum of Rs. 1,55,59,504/-, which was shown as a liability in the balance sheet. On 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 31March, 2006 was taken as deferred revenue and, hence, unearned income. 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 perusing the relevant material on record, we find that the assessee was following matching principle in recording income as well as expenses under the mercantile system of accounting. Page 572 of the paper book indicates that not only the income pertaining to the succeeding year, but, received in the year under consideration was taken as deferred revenue income, but, the expenditure incurred during the year not pertaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal. 39. Ground no. 4 is against the deletion of disallowance 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 Revenue's appeal for the A.Y. 2006-07. Following the view, we dismiss this ground of appeal. 40. Ground no. 5 is against the deletion of disallowance 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 of the Revenue's appeal for the A.Y. 2006-07. Following our view for the preceding year, we dismiss this ground of appeal. 41. Ground no. 6 is against the deletion of disallowance 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 Revenue's appeal for the A.Y. 2006-07. Following the view taken hereinabove for the preceding year, the disallowance pertaining to AMC of computers is held to have been rightly allowed as 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 to be decided in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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