ITO, WD-2(3), KOLKATA, Kolkata V. M/s Globsyn Technologies Ltd., Kolkata

ITA 618/KOL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2104 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH
• Assessee Lawyers: MANISH TIWARI
• Keywords: Revenue expenditure
• Section: 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, KOLKATA BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO.618/KOL/2016 (ASSESSMENT YEAR: 2008-09) ITO, WARD-2(3), KOLKATA............... APPELLANT VS. M/S. GLOBSYN TECHNOLOGIES LTD................. ..........................................RESPONDENT [PAN : AAACG3401C ] APPEARANCES BY: SHRI C. J. SINGH, JCIT, SR. DR, APPEARING ON BEHALF OF THE APPELLANT. SHRI MANISH TIWARI, FCA, APPEARING ON BEHALF OF THE RESPONDENT. DATE OF CONCLUDING THE HEARING : MAY 15 TH , 2019 DATE OF PRONOUNCING THE ORDER : JUNE 19 TH ,2019 O R D E R PER J. SUDHAKAR REDDY :- THIS APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 23, KOLKATA (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DATED 19.01.2016 ON THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,95,42,039/- OF MISC. EXPENSES, CLAIMED BY THE ASSESSEE AS DEFERRED REVENUE EXPENDITURE. 2. THE REVENUE SHALL CRAVE TO ADD AND ALTER THE GROUND ON OR BEFORE THE DATE OF HEARING. 2. WE HAVE HEARD SHRI C.J. SINGH, THE LD. DEPARTMENTAL REPRESENTATIVE ON BEHALF OF THE REVENUE AND SHRI MANISH TIWARI, THE LD. COUNSEL FOR THE ASSESSEE. 3. THE LD. CIT(A) AT PARA 6.2 AT PAGE 4 OF HIS ORDER STATED AS FOLLOWS: 6.2 I HAVE EXAMINED THE VARIOUS CONTENTIONS RAISED BY LD. A/R AND THE RELEVANT LEDGER A/C AND OTHER PARTICULARS RELIED UPON IN THIS RESPECT. I HAVE ALSO DEALT WITH THE SAME DISPUTE RAISED IN 2 I.T.A. NO.618/KOL/2016 M/S. GLOBSYN TECHNOLOGIES LTD ASSESSMENT YEAR 2003-04, BY GIVING DETAILED FINDINGS IN APPEAL NO.186/CIT(A)-23/C-2(1)/2014- 15/KOL. DATED 19.01.2016. 4. WE FIND THAT THE KOLKATA A BENCH OF THE TRIBUNAL IN ITA NO.615,616,617/KOL/2016 IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2002-03, 2003- 04 & 2004-05 BY ORDER DATED 03.05.2019 HAD CONSIDERED THIS ISSUE AT PAGES 7 TO 9 HAD HELD AS FOLLOWS: 7. NOW WE SHALL TAKE UP ITA NO.616/KOL/2016 FOR ASSESSMENT YEAR 2003-04. 8. HEARD BOTH PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ONLY ISSUE IS TO BE DECIDED IS AS TO WHETHER THE CIT(A) IS JUSTIFIED IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF MISCELLANEOUS EXPENDITURE IN THE FACT AND CIRCUMSTANCES OF THE CASE. IT IS NOTED THAT THE MISCELLANEOUS EXPENSES INCLUDING THE PRELIMINARY EXPENSES AND PRE-OPERATIVE EXPENSES, DEFERRED REVENUE EXPENSES AND PORTAL WEBSITE DEVELOPMENT EXPENSES. THESE EXPENSES RELATE TO EARLIER YEARS WHICH HAVE BEEN WRITTEN OFF IN ACCORDANCE WITH STATUTORY PROVISIONS. THE CIT(A) EXAMINED THE RECORD AND BY REFERRING TO THE PRACTICE BEING FOLLOWED ON A REGULAR BASIS FROM YEAR TO YEAR BY THE ASSESSEE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE RELEVANT PORTION OF CIT(A) IS REPRODUCED HEREINBELOW: (I) AMORTIZATION OF PRELIMINARY EXPENSES: - PRELIMINARY EXPENSES IS BEING WRITTEN OFF AS PRESCRIBED IN SECTION 35D OF INCOME TAX ACT. (II) PORTAL WEBSITE DEVELOPMENT EXPENSES: - THE COMPANY HAD INCURRED THE AFORESAID COST IN EARLIER YEARS. THIS SUM WAS SPENT ON DEVELOPMENT AND COMMISSIONING OF ITS EDUCATIONAL & TRAINING PORTAL, WHICH IS GENERATING REVENUE TO THE COMPANY. THE SAID COST IS TREATED AS DEFERRED DEVELOPMENT COST TO BE WRITTEN OFF OVER A PERIOD OF 10 YEARS, ON PRO-RATA BASIS. THE AMOUNT WRITTEN OFF IS RELATABLE TO THE REVENUES EARNED BY THE COMPANY FOR THE RELEVANT ASSESSMENT YEAR. (III) DEFERRED REVENUE EXPENDITURE (OTHER THAN PORTAL): - IN VIEW OF THE BENEFITS LIKELY TO BE DERIVED OVER THE YEARS, EXPENDITURE ON MARKETING AND BRAND BUILDING ARE TREATED AS DEFERRED REVENUE EXPENDITURE AND WRITTEN OFF OVER A PERIOD OF 5 YEARS.' 5. THEREFORE, AFTER EXAMINING THE MATTER AND THE REPLY OF THE AO, I FIND THAT THE ASSESSING OFFICER HAS DRAWN CERTAIN ADVERSE INFERENCES WHERE THERE WAS, ACCORDING TO THE AO NON-COMPLIANCE / NON-SATISFACTORY COMPLIANCE TO HIS SHOW-CAUSE LETTER. I HAVE ALSO CAREFULLY CONSIDERED THE SUBMISSIONS OF THE A.R. I FIND THAT THE AO HAS MADE THE DISALLOWANCE WITHOUT RECORDING ANY SPECIFIC FINDING, AND THEREFORE THE BASIS FOR SUCH DISALLOWANCE IS NOT SUPPORTED. IN SO FAR AS THE CLAIM FOR WRITING OFF DEFERRED EXPENDITURE ON PORTAL DEVELOPMENT, I AGREE WITH THE CONTENTION THAT THIS PRACTICE IS BEING FOLLOWED ON A REGULAR BASIS FROM YEAR TO YEAR, AND HAS ALSO BEEN ACCEPTED. 9. IN VIEW OF THE REASONS RECORDED BY THE CIT(A) IN HIS ORDER AT PAGE NO.5 AS MENTIONED HEREINABOVE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) AND IT IS JUSTIFIED. GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 3 I.T.A. NO.618/KOL/2016 M/S. GLOBSYN TECHNOLOGIES LTD 5. AS THE LD. CIT(A) HAS FOLLOWED HIS ORDER PASSED FOR ASSESSMENT YEAR 2003-04 WHILE GIVING RELIEF TO THE ASSESSEE AND AS THE TRIBUNAL HAD UPHELD THIS PARTICULAR ORDER OF THE LD. CIT(A), WE FIND NO REASON TO INTERFERE IN THIS ORDER OF THE LD. CIT(A). HENCE WE UPHOLD THE SAME. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. KOLKATA, THE 19 TH JUNE, 2019. SD/- SD/- [ S.S. GODARA ] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 19.06.2019 (RS, SR. PS) COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-2(3), KOLKATA. 2. M/S. GLOBSYN TECHNOLOGIES LTD., XI-11&12, BLOCK-EP, SEC-V, SALT LAKE CITY, KOLKATA 700091. 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES