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Income Tax Appellate Tribunal, DELHI
Before: SH. G.S.PANNU, HON’BLE & SH. ANUBHAV SHARMA
The appeal has been preferred by the Revenue against the order dated 11.04.2014 of CIT(A)-VIII, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeal no. 0655/2008-09, A.Y. 2001-02 arising out of an appeal before it against the order dated 29.03.2004 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the ACIT, Range-18, New Delhi (hereinafter referred as the Ld. AO).
The brief facts of the case are that the Assesee Company was incorporated on 29 June, 1999 and Certificate of Commencement of Business was issued on M/s. Zipahead.com Ltd. 2 21st July, 1999. The objects of the Company was running youth portal in the name of Zipahead, Com Ltd. This portal was commercially launched on 17 May, 2000. The Company had incurred marketing, administrative, technical, content, human resources and other resources expenses to run the portal. The Company is also engaged in site designing and development.
2.1 In the assessment order Ld. Assessing Officer in various paragraphs has alleged that the assessee has not filed complete information, including confirmation of expenses claimed and supporting evidence, vouchers or bills and Books of Accounts. He accordingly, proceeded to make assessment against the returned loss of Rs. 3,50,71,847/- and made assessment at a loss of Rs.2.30,834/.
2.2 Ld. AO proceeded to make the assessment u/s 143(3) of the Income Tax Act, 1961 and made various additions and disallowances, which are subject matter of appeal, as discussed here in below:- a) Expenses of Rs. 71,92,981/- relating to site development, server costing and acquisition of portal were disallowed. This included the write off of the portal amounting to Rs.50 lakhs disallowed for the reason that the same was launched during the year. The other expenses were disallowed for alleged absence of details, evidence or justification on record. Further all expenses were sought to be capitalized and the depreciation allowable on intangible assets was not allowed. b) The Assessing Officer disallowed entire expenses of Rs. 12,24,661/- claimed as site launch expenses. c) The office of the Company was functioning from the office at the holding Company M/s. Webneuron Services Ltd. In accordance with the agreement between two Companies communication charges, computer rental, printing and stationery and salaries were reimbursed to them. Management fees were also paid in terms of the said agreement. The aggregate payment amounted to Rs.80,86,116/-. The Assessing Officer disallowed these expenses on the ground that from the impounded Books of Accounts of Webneuron Services Ltd. such payments are not verifiable. f) The Assessing Officer further disallowed an amount of Rs.1,63,72,614/- towards content, advertisement and retainership fees etc.
However, before the Ld. CIT(A) the AR produced computerized books of a/cs and Ld. CIT(A) had tried to collect books of a/cs from AO, DCIT-Circle- 18(1), Delhi, but the AO could not produce the books of a/cs. The CIT(A)-21, Delhi asked for remand report from AO on 07.02.2005, but no report from AO was received. Assessee was, therefore, required to produce Books of Accounts, vouchers and supporting evidence in relation to various expenses. Assessee had filed a paper book containing 103 pages, in which assessee had filed copies of the requisitions made by the Assessing Officer, reply given by it and the details furnished along with various letters filed by the assessee. Satisfied the Ld. CIT(A) had allowed the appeal.
Revenue has come before the Tribunal raising following grounds;
"1. Ld. CIT(A) had erred in deleting addition amounting to Rs. 71,92,981/- made by the AO being expenses on website development in two years @ 50% without considering Hon'ble ITAT Delhi's Order in the case Make MY Trip (1) Pvt. Ltd." 2. "Ld. CIT(A) had erred in deleting addition amounting to Rs. 12,26,661/- being expanses of head sit launch without appreciating the assessee did not produce any supporting evidence during assessment proceedings." 3. "Ld. CIT(A) had erred in deleting addition amounting to Rs. 80,86,116/- being payment to holding Co. wiz M/s. Webneuron Services Ltd. which fact is not verifiable from the said parties Books." 4. "Ld. CIT(A) had erred in deleting addition amounting to Rs. 81,86,307/-(50% of Rs.1,63,72,614/-) being expenses towards content advertisement & retainership, without appreciating that these were not produced during assessment proceedings and jurisdictional ITAT's decision in the case of Make My Trip (1) Pvt. Ltd." 5. "The appellant craves, leave or reserving the right to amend, modify, alter, add, or forego any grounds(s) of appeal at any time before or during the hearing of this appeal."
Heard and perused the record. None appeared for the assessee at the time of final hearing. Notices repeatedly issued are received with report of assessee having left the address. No fresh address is available with Reveune/appellant.Accordingly arguments of Ld. DR were heard and the primarily the grounds raised is non-consideration of judgment of the Tribunal in the case of Make My Trip (India) Pvt. Ltd. and ITA No. 4087/Del/2009 for A.Y. 2004-05 wherein by order dated 09.03.2012, coordinate bench has held that Website as such are not to be treated as Software. The same fall under the definition of ‘intangible asset’ on which depreciation @ 25% is allowable.
It can be appreciated from the record that the Revenue had filed the appeal initially impleading M/s. Zip Ahead.Com Pvt. Ltd. as the assessee-respondent. Thereafter during pendency of the appeal, an application was moved by Rama Investment Company Pvt. Ltd. that by the order of NCLT, Chennai Bench, assessee Zip Ahead.Com Pvt. Ltd. has been amalgamated into Rama Investment Company Pvt. Ltd. with effect from 1.4.2016. The PAN Account Rama Investment Company Pvt. Ltd. and the communication address was provided with request to be impleaded as party.
On the basis of this application dated 1st January, 2019 the Revenue 6.1 amended Form 36 and filed it in the name of amalgamated Rama Investment Company Pvt. Ltd. The record shows on 08.03.2022 revised Form 36 was filed.
The record also shows that there is another application dated 01.11.2021 on record from Rama Investment Company Pvt. Ltd. which mentions that amalgamation order was challenged by the share holders and the Appellate Tribunal by order dated 29.11.2019 had quashed and set aside the scheme of amalgamation approved by the Chennai Bench, NCLT. The applicant Rama Investment Company Pvt. Ltd. had approached NCLAT with a miscellaneous petition which also stood dismissed on 17.09.2021. Meantime Registrar of Companies (ROC) on the basis of order dated 12.04.2018 of NCLT Chennai has struck off name of company Zip Ahead.Com Pvt. Ltd. and which is yet to be restored. It also comes up that thereafter no appearance is being put on behalf of Rama Investment Company or Zip Ahead. Com Pvt. Ltd.
The aforesaid discussion would show that the existence of Zipahead.com Pvt. Ltd. (i.e. Respondent-Assessee) is in doubt in as much as its name has been struck off by the Registrar of Companies, following the order of the Ld. NCLT, Chennai dated 12.04.2018 (supra).
Be that as it may, neither the Appellant-Revenue or the Respondent- Assessee have been unable to assist the Bench in ascertaining the current status of the existence of Respondent-Assessee. Therefore, we deem it fit and proper to allow an opportunity to the Revenue to take suitable steps with regard to existence of the Respondent Company and effect the appropriate service thereof. In the meantime, the Registry is directed to consign this Appeal to the records. The Revenue shall be at liberty to approach the Tribunal for re-institution of the said Appeal as and when it is able to establish the existence of the Respondent- Assessee and effect service of Appeal Memo to the Respondent-Assessee.
9. Resultantly, without going into the merits of the Grounds of Appeal, in view of the aforesaid discussions, the appeal is treated as dismissed for statistical purposes.
Order pronounced in the open court on 31st October, 2023.