Ita/178/2016 Of Dy. Commissioner Of Income Tax v. Times Internet Ltd

1. Allowed, subject to alljust exceptions. 2. The application stands disposed of. CM Nb.7761/2016in ITA 178/2016CM No.9224/2016in ITA 188/2016 3. For the reasons stated in the applications,the delay in filing the appeals is Signature Not Verified condoned. 4. The apphcations are disposed of. ITA 178/2016ITA 188/2016 5. These are two appeals by the Revenue under Section 260A of the IncomeTax Act againstthe impugnedcommonorder dated 17*^ August, 2015 passedby the Income Tax Appellate Tribunal ('ITAT')in ITA Nos. 381 &864/Del/2009 and ITA No. 97/Del/2012 for the Assessment Years ('AYs')2005-06 and 2004-05. There are three issues urged by the Revenue in theseappeals. 6. The first issue concerns the deletion of the disallowance made by theAssessing Officer ('AO') towards expenses incurred for software and websitedevelopment which the Commissioner of Income Tax ['CIT(A)'] held asrevenue expenditure and was concurred with by the ITAT. 7. Having heard the submission of Mr. Shivpuri, learned Senior StandingCounsel for the Revenue, the Court observes that the Assessee had offered asatisfactory explanation,which has been accepted by the CIT(A) as well as theITAT,that the aforementionedexpendituredid not result in a capitalassetof anenduringnature.Boththe CIT (A) and the ITAT acceptedthat the expenditurewas incurredonly to updatethe websiteto keep pace with the developmentintechnology, therefore, is not of a permanent character. There are no detailsunearthed by the AO to support the view that said expenditurewas capital innature. 8. Consequently,the Courtdeclinesto frame any questionon this aspect. 9. The second issue pertains to treatment of expenses incurred towards repairand maintenance.While, the AO treated the said expensesas a capitalexpenditure,this was reversedby the CIT(A)holdingit to be revenueexpenditure and this was concurred with by the ITAT. Although, the Revenuehas projected a break-up of the said expenditure as including expenses towardsthe procurement of a server, the AO has in his order not made any reference tosuchbreak-up. Here again, the Assessee'sexplanation that this was anexpenditure incurred for upgrading the computer hardware, incurred to keeppace with the changing technology and, therefore, did not result in an asset ofan enduring nature has been accepted both by the CIT(A) as well as the ITAT.The Court is not, therefore, persuaded to interfere with that fact. 10. The third issue pertains to the incurring of an expense towards a one-timepayment for online membership subscription. Considering that the Court hasalready rejected the plea of the Revenue to frame a question in theaforementionedtwo issues, the tax effect as far the third issue is concernedbeing less than Rs, 10 lakhs does not justify framing a question and, therefore,this is issue left open for considerationin an appropriate case. 11. Accordingly, the appeals are dismissed. S.MURALIDHAR, J MARCH14,2016 MK ' uVIBHU BAKHRtJ, J/