ACIT, New Delhi V. M/s. Usha International Ltd., New Delhi

ITA 278/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3634 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 23-06-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 17-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Search and seizure
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH H DELHI ] BEFORE SHRI A. D. JAIN, JM AND SHRI SHAMIM YAHYA, AM I. T. APPEAL NO. 278 (DEL) OF 2011 ASSESSMENT YEAR : 2002-03. ASSTT. COMMISSIONER OF INCOME-TAX, M/S. USHA INTERNATIONAL LTD., C I R C L E : 18 (1), VS. SURYA KIRAN BUILDING, N E W D E L H I. 19K.G. MARG, NEW D ELHI110 001. P A N / G I R NO. AAA CU 0032 B. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI BASANT KUMAR, ADV.; DEPARTMENT BY : MS. MONA MOHANTY, SR. D. R. ; O R D E R. PER SHAMIM YAHYA, AM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT (APPEALS) DATED 12 TH NOVEMBER, 2010 AND PERTAINS TO ASSESSMENT YEAR 200 2-03. 2. THE ISSUE RAISED IS THAT THE LD. CIT (APPEALS) E RRED IN ALLOWING DEDUCTION OF RS.10,00,000/- AS BUSINESS RELATED EXPENSES. 3.1 IN THIS CASE THE ASSESSING OFFICER ADDED AN AMO UNT OF RS.10,00,000/- TO THE INCOME OF THE ASSESSEE, WHICH WAS CLAIMED BY THE ASSESSEE AS PERTAINING TO THE WEBSITE OF THE COMPANY. THE REASONING ATTRIBUTED BY THE ASSESSING OFFICER W AS AS UNDER :- 2 I. T. APPEAL NO. 278 (DEL) OF 2011 1. THE ASSESSEE IN ITS REPLY DATED 3/09/2009 CLAIMED THAT M/S. BT TECHNET WERE ENGAGED TO MANAGE AND UPDATE ITS WEBSIDE, AS P ER A CONTRACT. HOWEVER, NO COPY OF THIS CONTRACT COULD BE PRODUCED BY THE ASSE SSEE; 2. SH. S. K. GUPTA, MANAGING DIRECTOR OF M/S. BT TECHNET HAD ADMITTED THAT INVOICES WERE PROVIDED AND ONLY ACCOMMODATION BILLS WERE RAISED. IN FACT, IT HAS BEEN THE FINDING OF THE INVESTIGATION WING OF T HE DEPARTMENT THAT M/S. BT TECHNET WAS A PAPER ENTITY HAVING NO SUPPORTIVE INF RASTRUCTURE TO RENDER THE TYPE OF SERVICES FOR WHICH BILLS WERE RAISED; 3. IT WAS SEEN FROM THE ASSESSEES WEBSITE THAT AS OF TODAY THE HOSTS ARE ONE M/S. VHIRE4U. THIS POINT WAS RAISED WITH THE ASSES SEE WHO HAS FILED COPY OF AGREEMENT WITH THIS COMPANY WHICH TOOK EFFECT FROM 10/06/2007. IT WAS, THEREFORE, CLAIMED BY THE ASSESSEE THAT BEFORE THAT DATE THE SITE WAS BEING MANAGED BY M/S. BT TECHNET. THE SEARCH AND SEIZURE OPERATION OF THE DEPARTMENT ON SH. S. K. GUPTA GROUP OF CASES TOOK P LACE ON 12 TH DEC., 2006; 4. M/S. VHIRE4U, 37A, GOLF LINK, LODI ROAD, NEW DELHI WAS CONTACTED OVER TELEPHONE NO. APPEARING ON THEIR WEBSITE. IT WAS INFORMED BY THEM THAT BEFORE THEY TOOK UP THE ASSIGNMENT OF M/S. USHA INT ERNATIONAL LTD. ONE M/S. UBICS WAS HOSTING THEIR SITE. IT IS SEEN FROM THE ASSESSEES LEDGER OF ADVERTISEMENT AND PUBLICITY THAT ONE M/S. UBICS ENT ERPRISE SOLUTIONS HAVE BEEN PAID RS.2,07,000/- FOR THE WHOLE YEAR WHICH SEEMS L IKE A MORE LIKELY AMOUNT FOR MAINTENANCE OF WEBSITE. AS PER BILLS OF M/S. B T TECHNET, IT HAS BEEN PAID @ RS.2,00,000/- PER MONTH FOR 5 MONTHS FROM AP RIL, 2001 TO AUGUST, 2001 WHICH SEEM EXHORBITANTLY HIGH RATE. MOREOVER, BILL S HAE BEEN RAISED FOR WEB ADVERTISEMENT WHICH IS CONTRARY THE ASSESSEE S CLAIM THAT PAYMENT WAS FOR WEBSITE MAINTENANCE. 3.2 ON THE ASSESSEES APPEAL, THE LD. CIT (APPEALS) CONSIDERED THE ISSUE AND HELD AS UNDER :- 4.2 FROM THE REPLY OF THE APPELLANT COMPANY, I AM CONVINCED THAT NATURE OF PAYMENT OF EXPENDITURE DOES NOT ATTRACT SECTION 68 OF THE IT ACT. THE EXPENDITURE RELATES TO MAINTENANCE OF WEBSITE AND E XISTENCE OF THE WEBSITE IS EVIDENT FROM THE ANNUAL ACCOUNT OF THE COMPANY AND APPELLANT COMPANY HAD AVAILED SERVICES OF M/. BT TECHNET FOR MAINTENANCE AND UPDATION OF WEBSITE. THE APPELLANT COMPANY HAS ALSO SUBMITTED COPIES OF BILLS RECEIVED FROM M/S. BT TECHNET LTD. AND CERTIFICATE CONFIRMING RENDERIN G OF SERVICES BY THEM AND RECEIPT OF PAYMENT. THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER GETS DEFEATED BY THE FACT THAT M/S. BT TECHNET LTD. , WAS PROVIDING SUCH SERVICES UPTO AUGUST, 2001 AND M/S. UBICS ENTERPRIS ES SOLUTIONS PVT. LTD. 3 I. T. APPEAL NO. 278 (DEL) OF 2011 HAD PROVIDED SERVICES IN THE SUBSEQUENT PERIOD. FU RTHER, SERVICE PROVIDED BY THE BT TECHNET RELATES TO WEB ADVERTISEMENT WHEREAS SERVICE PROVIDED BY UBICS RELATES TO MAINTENANCE, HOSTING ETC. OF WEBSI TE. SO THE CONCLUSION DRAWN BY THE AO IS TOTALLY MISCONCEIVED. IT IS NOT EWORTHY TO MENTION HERE THAT VIDE LETTER DATED 27 TH NOVEMBER, 2009 M/S. BT TECHNET HAS CONFIRMED THAT TRANSACTION DONE BY THE COMPANY WITH THE APPEL LANT COMPANY WAS A GENUINE BUSINESS TRANSACTION. THE SAID LETTER WAS MADE AVAILABLE TO THE AO VIDE LETTER DATED 4/12/2009, BUT THE AO DID NOT TAK E COGNIZANCE OF THESE LETTERS. THESE LETTERS ARE AVAILABLE AT PAGE 137 A ND 138 OF THE PAPER BOOK SUBMITTED BY THE APPELLANT DURING THE APPELLATE PRO CEEDINGS; 4.3 IN VIEW OF THE ABOVE DISCUSSION, THERE IS NO CASE OF TREATING THE EXPENDITURE OF RS.10 LACS INCURRED ON ACCOUNT OF MA INTENANCE OF WEBSITE TO BE ADDED UNDER SECTION 68 OF THE IT ACT. THE ADDIT ION MADE BY THE AO IS DELETED AND GROUND NO. 2 TO 4 IS ALLOWED IN FAVOUR OF THE APPELLANT. 3.3 AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPE AL BEFORE US. 4.1 WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGH T OF MATERIAL PRODUCED. WE FIND THAT THE LD. CIT (APPEALS) HAS GIVEN CATEGORICAL FINDING THAT THE ASSESSEE HAS PRODUCED NECESSARY EVIDENCE OF EXPENDITURE INCURRED WHICH ARE AS RELAT ING TO THE MAINTENANCE AND UPDATION OF WEBSITE. THE LD. CIT (APPEALS) HAS GIVEN FURTHER F INDING THAT M/S. BT TECHNET WAS PROVIDING SERVICES FOR MAINTENANCE AND UPDATION OF THE WEBSIT E. HE HAS FURTHER FOUND THAT THE SERVICES PROVIDED BY M/S. UBICS RELATING TO WEB ADVERTISEMEN T WERE SERVICES OF MAINTENANCE, HOSTING, UPDATION ETC. OF WEBSITE. IN THE LIGHT OF THE EVIDENCES SUBMITTED IN THIS REGARD, THE LD. CIT (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE. T HE LD. SR. DR COULD NOT CONTROVERT THE FINDINGS OF THE LD. CIT (APPEALS). 4.2 IN OUR CONSIDERED OPINION, THERE IS NO ILLEGALI TY AND INFIRMITY IN THE ORDER OF THE LD. CIT (APPEALS) AND WE UPHOLD THE SAME. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. 4 I. T. APPEAL NO. 278 (DEL) OF 2011 THE ORDER PRONOUNCED IN THE OPEN COURT ON : 23 RD JUNE, 2011. SD/- SD/- [ A. D. JAIN ] [ S HAMIM YAHYA ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD JUNE, 2011. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.