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$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI 1. + ITA178/2016 DY. COMMISSIONEROF INCOME TAX Appellant Through: Mr Dileep Shivpuri, Senior Standing Counsel and Mr Sanjay Kumar, Advocate. versus TIMES INTERNET LTD. Respondent Through: Mr Gautam Jain and Piyush Kumar, Advocates. AND 37. + ITA 188/2016 DY. COMMISSIONER OF INCOMETAX Appellant Through: Mr Dileep Shivpuri, Senior Standing Counsel and Mr Sanjay Kumar, Advocate. versus TIMES INTERNETLTD., ..... Respondent Through: Mr Gautam Jain and Mr Piyush Kumar, Advocates. CORAM: JUSTICE S.MURALIDHAR JUSTICE VIBHU BAKHRU ORDER % 14.03.2016 CM No.7762/2016 in ITA 178/2016 1. Allowed, subject to alljust exceptions. 2. The application stands disposed of. CM Nb.7761/2016 in ITA 178/2016 CM No.9224/2016 in ITA 188/2016 3. For the reasons stated in the applications, the delay in filing the appeals is ITANos. 178 and 188 of 2016 Page 1 of 3 Digitally Signed By:AMULYA Signature Not Verified
I, ; condoned. 4. The apphcations are disposed of. ITA 178/2016 ITA 188/2016 5. These are two appeals by the Revenue under Section 260A of the Income Tax Act against the impugned common order dated 17*^ August, 2015 passed by 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 these appeals. 6. The first issue concerns the deletion of the disallowance made by the Assessing Officer ('AO') towards expenses incurred for software and website development which the Commissioner of Income Tax ['CIT(A)'] held as revenue expenditure and was concurred with by the ITAT. 7. Having heard the submission of Mr. Shivpuri, learned Senior Standing Counsel for the Revenue, the Court observes that the Assessee had offered a satisfactory explanation, which has been accepted by the CIT(A) as well as the ITAT,that the aforementioned expenditure did not result in a capital assetof an enduring nature. Boththe CIT (A) and the ITAT accepted that the expenditure was incurred only to update the website to keep pace with the development in technology, therefore, is not of a permanent character. There are no details unearthed by the AO to support the view that said expenditure was capital in nature. 8. Consequently, the Courtdeclines to frame any questionon this aspect. ITANos. 178 and 188 of 2016 Page2 of 3
The second issue pertains to treatment of expenses incurred towards repair and maintenance. While, the AO treated the said expenses as a capital expenditure, this was reversed by the CIT(A) holding it to be revenue expenditure and this was concurred with by the ITAT. Although, the Revenue has projected a break-up ofthe said expenditure as including expenses towards the procurement of a server, the AO has in his order not made any reference to such break-up. Here again, the Assessee's explanation that this was an expenditure incurred for upgrading the computer hardware, incurred to keep pace with the changing technology and, therefore, did not result in an asset of an 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-time payment for online membership subscription. Considering that the Court has already rejected the plea of the Revenue to frame a question in the aforementioned two issues, the tax effect as far the third issue is concerned being 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 ' u VIBHU BAKHRtJ, J MARCH 14,2016 / MK ITANos. 178 and 188 of2016 Page 3 of3