Itta/718/2014 Of Commissioner Of Income Tax-Iii v. M/S Social Media India Limited

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.718 of 2014 DATED:23.12.2014 Between:Commissioner of Income Tax-III,Hyderabad. And … Appellant M/s.Social Media India Ltd.,Hyderabad. ….Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.718 of 2014 Judgment:(per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be preferred and admitted against the judgmentand order of the learned Tribunal dated 28.5.2014 by the Revenue in relation tothe assessment year 2009-2010 on the following suggested questions of law: 1. In the facts and circumstances of the case, whether the Hon’bleTribunal (ITAT) is correct in law in directing the AssessingOfficer to allow the Security Deposits and earnest moneydeposits for obtaining the advertisement business which wassubsequently written off treating the same as RevenueExpenditure, when the said amounts are liable to be disallowed?Tribunal (ITAT) is correct in law in directing the AssessingOfficer to allow the Security Deposits and earnest moneydeposits for obtaining the advertisement business which wassubsequently written off treating the same as RevenueExpenditure, when the said amounts are liable to be disallowed? 2. In the facts and circumstances of the case, whether the Hon’bleTribunal (ITAT) is correct in law in holding that no asset hasbeen created without appreciating that the amount utilized forspace for advertisement is for ‘profit making asset’ which isenduring in nature and thereby the expenditure thereon iscapital expenditure ?Tribunal (ITAT) is correct in law in holding that no asset hasbeen created without appreciating that the amount utilized forspace for advertisement is for ‘profit making asset’ which isenduring in nature and thereby the expenditure thereon iscapital expenditure ? 3. In the facts and circumstances of the case, whether the Hon’bleTribunal (ITAT) is correct in law in treating the rental depositsmade for setting of ‘Study Abroad Centres’ as revenueexpenditure without appreciating that the advances are towardsacquiring business asset, the benefit from which is enduring innature ?Tribunal (ITAT) is correct in law in treating the rental depositsmade for setting of ‘Study Abroad Centres’ as revenueexpenditure without appreciating that the advances are towardsacquiring business asset, the benefit from which is enduring innature ? 4. In the facts and circumstances of the case, whether the Hon’bleTribunal (ITAT) is correct in law in setting aside the issue ofallowability of advance paid to M/s. Shreya BroadcastingCorporation towards advertising contract, although itconstitutes a Capital loss ?Tribunal (ITAT) is correct in law in setting aside the issue ofallowability of advance paid to M/s. Shreya BroadcastingCorporation towards advertising contract, although itconstitutes a Capital loss ? 5. In the facts and circumstances of the case, whether the Hon’bleTribunal (ITAT) is correct in law in directing the AssessingOfficer to treat the loss of advance as revenue in nature, whilethe same constitutes a capital loss ?Tribunal (ITAT) is correct in law in directing the AssessingOfficer to treat the loss of advance as revenue in nature, whilethe same constitutes a capital loss ? Out of five (5) questions, the last two questions, namely, questions 4 and5 are not pressed by Mr. B. Narasimha Sarma. He would only argue in relation to question Nos. 1,2 and 3. So far as question Nos. 1 and 2 are concerned, they can be dealt with byus. After reading the judgment of the learned Tribunal, it appears, onappreciation of fact, the learned Tribunal found that the revenue loss incurred inconnection with carrying on business, cannot be termed to be capital. Thelearned Tribunal, on appreciation of fact, has granted the relief. We do not wantto interfere with the same as no question of law is involved. Out of five (5) questions, the last two questions, namely, questions 4 and5 are not pressed by Mr. B. Narasimha Sarma. He would only argue in relation to question Nos. 1,2 and 3. So far as question Nos. 1 and 2 are concerned, they can be dealt with byus. After reading the judgment of the learned Tribunal, it appears, onappreciation of fact, the learned Tribunal found that the revenue loss incurred inconnection with carrying on business, cannot be termed to be capital. Thelearned Tribunal, on appreciation of fact, has granted the relief. We do not wantto interfere with the same as no question of law is involved. As far as question No.3 is concerned, nothing has been decided by thelearned Tribunal as it has only remitted the matter for fresh decision. Hence, we dismiss the appeal. No order as to costs. __________________ K.J. SENGUPTA, CJ 23[rd] December, 2014 _________________SANJAY KUMAR, J Pnb