M/S. REDIFF. COM INDIA LTD, MUMBAI V. THE ACIT RG 7(2), MUMBAI

ITA 1121/MUM/2008

• Counselvise Citation: 112119914 RSA 2008
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: L
• Next Hearing Date: 12-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 14-02-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MALATHI SHRIDHARAN
• Assessee Lawyers: PANKAJ JAIN
• Keywords: Opportunity of being heard; Additional evidence; Non-deduction of tax; Revenue expenditure; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L, MUMBAI BEFORE SHRI D. MANMOHAN, V.P. AND SHRI R.K. PANDA, A.M. ITA NO.1121/MUM /2008 ASSESSMENT YEAR : 2003-04 M/S REDIFF.COM INDIA PVT. LTD., IST FLOOR, MAHALAXMI ENGG. ESTATE, LADY JAMSHEDJI, IST CROSS ROAD, MAHIM (W), MUMBAI-400 016 P.A. NO.: AAACR 2762 F VS. ASST. COMMISSIONER OF INCOME TAX 7(2), ROOM NO. 624, 6 TH FLOOR, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI 20. (APPELLANT) (RESPONDENT) APPELLANT BY : MR.PANKAJ JAIN RESPONDENT BY : SMT. MALATHI SHRIDHARAN O R D E R PER R.K. PANDA. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 14.11.2007 OF THE CIT(A)- VII, MUMBAI RELATING TO A SSESSMENT YEAR 2003-04. 2. IN GROUND NO. 1, THE ASSESSEE HAS CHALLENGED THE ORDER OF CIT(A) IN TREATING THE SOFTWARE AND PRODUCT DEVELOPMENT EXPEN SES OF ` 2,67,46,806/- AS CAPITAL IN NATURE AS AGAINST REVENUE EXPENDITURE CLAIMED BY THE ASSESSEE. IN THE ALTERNATE CONTENTION, THE ASSESSEE HAS ALSO RAISED A GROUND THAT IN CASE THE SAME IS TREATED AS CAPITAL IN NATURE, DEPR ECIATION IS TO BE ALLOWED @ 60% AS AGAINST 25% HELD BY THE A.O. AND UPHELD BY T HE CIT(A). 3. BOTH THE PARTIES FAIRLY AGREED THAT THE ISSUE HA S TO GO BACK TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION IN THE LIGHT OF THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF AMWAY ENTERPRISES VS. DCIT 301 ITR [AT] 1 (DEL) (SB). IN ITA 1121 /M/08, REDIFF.COM INDIA LIMITED 2 VIEW OF THE ABOVE SUBMISSION MADE BY BOTH THE SIDES , WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO THE FILE OF TH E A.O. WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISIO N OF THE SPECIAL BENCH OF ITAT CITED SUPRA AND IN ACCORDANCE WITH LAW AFTER G IVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT AC CORDINGLY. GROUND NO. 1 OF ASSESSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 4. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF ` 56,61,425/- FOR NON-DEDUCTION OF TAX U/S 40(A)(I) OF THE ACT. 4.1 AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT OF ` 56,61,425/- WAS PAID TO REDIFF.COM INC, NEW YORK F OR OBTAINING CERTAIN SERVICES WHICH WERE PAID OUTSIDE INDIA AND WERE NOT IN THE NATURE OF ROYALTY, FEES FOR TECHNICAL SERVICES OR OTHER SUM C HARGEABLE UNDER THE ACT. HE SUBMITTED THAT THE MATTER SHOULD GO BACK TO THE FIL E OF THE A.O. FOR FRESH ADJUDICATION IN THE LIGHT OF THE DECISION OF HONBL E SUPREME COURT IN THE CASE OF G.E. TECHNOLOGY CENTRE (P) LTD. VS. CIT & ANOT HER 327 ITR 456 (SC) SINCE THE PROVISIONS OF SECTION 40(A)(I) ARE NOT APPLICAB LE TO THE FACTS OF THE PRESENT CASE. 4.2 THE LD. D.R., ON THE OTHER HAND, STRONGLY SUPPO RTED THE ORDER OF A.O. AND LD. CIT(A) AND SUBMITTED THAT THE DECISION CITE D ABOVE BY THE LD. COUNSEL FOR THE ASSESSEE IS DISTINGUISHABLE ON FACTS AND NO T APPLICABLE TO THE FACTS OF THE PRESENT CASE. 4.3 AFTER HEARING BOTH THE SIDES, WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2002-0 3 AND WE HAVE ALREADY DECIDED THE ISSUE BY RESTORING THE MATTER TO THE FI LE OF THE LD. CIT(A) FOR FRESH ADJUDICATION SINCE VARIOUS DOCUMENTS FILED BY THE A SSESSEE BEFORE THE LD. CIT(A) WERE NOT CONSIDERED BY HIM. HOWEVER, ALTHOU GH THE ASSESSEE HAS ADMITTED THAT DURING THIS YEAR IT HAS NOT FILED ANY ADDITIONAL EVIDENCE BEFORE ITA 1121 /M/08, REDIFF.COM INDIA LIMITED 3 THE LD. CIT(A) STILL, CONSIDERING THE FACT THAT IDE NTICAL ISSUE IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR H AS BEEN RESTORED TO THE FILE OF THE CIT(A) BY US, THEREFORE, THIS ISSUE ALS O, IN OUR OPINION, SHOULD GO BACK TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION. WHILE DECIDING THE ISSUE, THE CIT(A) SHALL KEEP IN MIND THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF G.E. TECHNOLOGY CENTRE (P) LTD. (SUPRA) AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. GROUND OF APPEAL NO. 2 IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 27 TH DAY OF MAY, 2011. SD/- (D. MANMOHAN) VICE PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED : 27.05.2011. COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. (A) VII, MUMBAI 4. CIT CITY -VII, MUMBAI 5. THE DR, L - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI R.K. ITA 1121 /M/08, REDIFF.COM INDIA LIMITED 4 DATE INITIALS DRAFT DICTATED ON 23.5.11 DRAFT PLACED BEFORE THE AUTHOR 24.5.11 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER AM/JM DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM APPROVED DRAFT COMES TO THE SR. PS KEPT FOR PRONOUNCEMENT ON. FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK DATE ON WHICH FILE GOES TO THE AR DATE OF DISPATCH