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Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI H.S.SIDHU & SHRI PRASHANT MAHARISHI
Assessee by :Sh.Rakesh Gupta, Adv Sh. Tarun Kumar, Adv Respondent by: Sh. Trajanthan, Sr. DR Date of Hearing 23/12/2015 Date of pronouncement 08/03/2016 O R D E R PER PRASHANT MAHARISHI, A. M. This appeal has been preferred by the assessee against the order dated 1. 29.07.2005 of learned Commissioner of Income-tax (Appeals)-XV, New Delhi for the Assessment Year 2001-02. The following grounds have been raised:-
“1. That having regard to facts & circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld AO in reopening the impugned assessment more so when statutory conditions were not complied with.
2. In any view of the matter and in any case, reopening of the impugned assessment and consequent framing of the impugned order is bad in law and against the facts and circumstances of the case.
That having regard to facts & circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld AO in passing the impugned assessment order more so when notice u/s, 143(2) was not served upon the assessee within the statutory allowable period.
That having regard to facts & circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs.16,1l,836/- out of the expenses incurred on development of website on the ground that such expenses were incurred prior to the commencement of business of the appellant.
In any view of the matter and in any case, action of Ld CIT(A) in confirming the disallowance of deferred revenue expenditure is bad in law and against the facts and circumstances of the case.
Page 2 of 4 6. That having regard to facts & circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in disallowing Web Site development and software expenses amounting to Rs.41,50,981/- on the ground that it was capital expenditure.
That having regard to facts & circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the disallowance of Rs.163,084/- being the amount of salary/wages /bonus/Travelling and conveyance/ Rent etc. on the ground that the same were incurred prior to the commencement of business of the appellant.
That having regard to facts & circumstances of the case, Ld. CIT(A) has erred in law and) on facts in confirming the action of Ld. AO in sustaining the disallowance out of total! disallowance of Rs.20,461/- u/s. 14A.
That having regard to facts & circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming in charging interest u/s. 234B & 234D and such interest was not liable to be demanded, more so when there was no order for charging of interest in the body of the assessment order.”
First ground of appeal
of assessee is against the reopening of the assessment.
3. Brief facts of the case are that the assessee is a private limited company engaged in the business of providing of e-commerce based services to its customers in India and abroad. It filed its return of income declaring a loss of Rs.4386719/- on 31.10.2001 and the return was processed u/s 143(1) on 27.03.2002. Notice u/s 148 was issued on 20.02.2004 and the reasons recorded are as under:- “Return of income declaring a loss of Rs.43,86,858/- has been filed on 31.10.2001. The business of the assessee is provision of E-Commerce hosed services to Us customers in India and abroad. This business is essentially carried on website. In the audited P&L ac has debited a sum of Rs.4,50,981/-on account of website development. The same is a capital expenditure and hence not an allowable deduction. Secondly, the assessee has also claimed l he deferred revenue expense of Rs.23,37,043/-, which is not an allowable deduction under the FT Act. I have reasons to believe that income to the tune of Rs.64,88,024/- has escaped assessment. Issue notice u/s 148 of the IT Act, 1961.”
4. According to the reasons recorded the assessee has a. debited a sum of Rs.4150981/- on account of website development and the same is said to be capital in expenditure and hence not allowable deduction and