M/S TIMES INTERNET LTD.,NEW DELHI vs. ACIT, NEW DELHI

per law.

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

ITA Nos.2333, 2986, 4130 & 4132/Del/2011

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 31st March, 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.

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 pertaining to the year under

consideration, was also similarly accounted for. This unearned income

of Rs.1.55 crore was taken as income for the succeeding 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

In view of the fact that this income did not pertain to the year under

consideration, we hold that the ld. CIT(A) was justified in deleting this

disallowance.

the Revenue is partly allowed for statistical purposes.

Assessment Year 2007-08

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 sides and it was fairly

admitted that the facts and circumstances of the instant 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 passed our order for the

A.Y. 2006-07 in earlier paras. Following the view taken for the

immediately preceding year, the grounds of the Revenue are disposed of

as under :-

ITA Nos.2333, 2986, 4130 & 4132/Del/2011

Rs.21,59,50,568/- pertaining to expenditure relating to Medianet and

Content selling is similar to ground no. 1 of the appeal for the A.Y.

2006-07. Following the view taken hereinabove, we dismiss this ground

of appeal.

setting aside the addition of Rs.28,95,387/- made by the AO u/s 14A and

remitting the matter to the AO for a fresh adjudication. While dealing

with similar ground for the A.Y. 2006-07, we have sustained the

disallowance at Rs.2 lac, being the amount disallowed by the AO

himself in the consequential proceedings. Consequential order passed

by the AO for this year has not been brought on record. Following the

view taken for the A.Y. 2006-07, we sustain the disallowance u/s 14A at

Rs.2 lac for this year as well.

Rs.5,01,200/-, being the legal and professional charges capitalized by

the AO. This ground is similar to ground no. 3 of the Revenue’s appeal

ITA Nos.2333, 2986, 4130 & 4132/Del/2011

for the A.Y. 2006-07. Following the view taken hereinabove, we

dismiss this ground of appeal.

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.

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.

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

ITA Nos.2333, 2986, 4130 & 4132/Del/2011

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

accordance with the view taken by us for the A.Y. 2006-07

This ground is similar to ground nos. 6, 7 and 8 of the Revenue’s appeal

for the A.Y. 2006-07. Following our view on these grounds in the

earlier year, we dismiss this ground of appeal.

Assessment Year 2008-09

passed by the CIT(A) on 13.6.2011. The appeal of the Revenue for the

A.Y. 2006-07 was thoroughly argued by both the sides and it was fairly

admitted that the facts and circumstances of the instant 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 29

ITA Nos.2333, 2986, 4130 & 4132/Del/2011

were adopted by the respective sides. We have passed our order for the

A.Y. 2006-07 in earlier paras. Following the view taken for the

immediately preceding year, the grounds of the Revenue for the extant

year are disposed of as under :-

Rs.28,41,30,727/- pertaining to expenditure relating 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 dismiss this ground of

appeal.

Rs.34,60,688/-, being the legal and professional charges capitalized by

the AO. This ground is similar to ground no. 3 of the Revenue’s appeal

for the A.Y. 2006-07. Following our view for the earlier year, we

dismiss this ground of appeal.

Rs.1,16,16,134/- by holding that the depreciation on licence to use

software should have been allowed at 25% and not at 60%. This ground

ITA Nos.2333, 2986, 4130 & 4132/Del/2011

is similar to ground no. 4 of the Revenue’s appeal for the A.Y. 2006-07.

Following the view taken hereinabove, we dismiss this ground of appeal.

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 Revenue’s

appeal for the A.Y. 2006-07. Following our view for such earlier year,

we dismiss this ground of appeal.

Rs.16,38,636/-, being disallowance out of Content procurement and

maintenance expenses by treating it as capital expenditure. This ground

is similar to ground no. 8 of the Revenue’s appeal for the A.Y. 2006-07.

Following our view taken hereinabove, we dismiss this ground of

appeal.

Rs.1,28,700/- comprising capital expenditure on Repair & Maintenance

charges of computer. This ground is similar to ground no. 9 of the

ITA Nos.2333, 2986, 4130 & 4132/Del/2011

Revenue’s appeal for the A.Y. 2006-07. Following our view, we

dismiss this ground of appeal.

The order pronounced in the open court on 21.10.2016.

Sd/- Sd/-

[SUCHITRA KAMBLE] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated, 21st October, 2016. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.