TaxTMI 
TaxTMI 
2026 (3) TMI 1343
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....x Act, 1961 pertaining to Assessment Year 2015-16. The word 'Act' herein this order would mean Income Tax Act, 1961. 2. The assessee has raised following grounds of appeal:- 1 That the Ld. CIT (Appeals) erred on facts and in law in dismissing the appeal against the assessment order u/s 143(3), by sustaining the addition of Rs. 2,12,05,483/-. 2 That the Ld. CIT (Appeals) has erred in law and on facts in disallowing the depreciation expenses of Rs. 1,01,982 - on vehicles by wrongly treating depreciation to be a volitional expense allowed on actual usage. 3 That the Ld. CIT (Appeals) has erred in law and on facts in disallowing the interest on car loan of Rs. 18,110/- continuing from preceding years. 4 Th....
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....t. The assessment of the same was completed under section 143(3) on 22.12.2017 at an income of Rs. 5,84,61,653 after making an addition of Rs. 2,12,05,483. The assessee is engaged in the business of providing internet advertising and affiliate marketing services. The assessee provides services as a global affiliate marketing network providing performance-based advertising model where payment is made only when a specific action is successfully completed, making it a cost-effective and results-driven strategy. During the relevant assessment year, the assessee had subcontracted email marketing to its holding company, Adways VC India Private Limited vide Release order VC/2014-15/1000 dt. 01.04.2014 to provide 3,00,00,000 impressions at the rate....
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....sions of the ld. AO and the ld. First Appellate Authority explaining the modalities of the business it was argued that there are two type of services and pricing modules available in this area of activity. Thus, it was submitted that Email services are of 2 types. Firstly, where buyer uses its own database and ESP (email service provider) provided its SMTP server & technology. This type of services generally cost between Re 0.10 to 30 paisa per email and secondly where buyer does not have any database of its own and uses other party's database as well as technology to send emails. This type of services generally cost between Rs. 1 to 2 per email. The ld. Counsel submitted that the service of the latter type was availed by the assessee w....
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....her argued that the ld. AO in the instant case, incorrectly invoked the provisions of section 40A(2)(a) of the Act to hold the payment made by the assessee as unreasonable and by keeping the assessee in the dark, picked up some comparable providing different services of the 1st type, that is, email marketing without the database or with very insignificant database. It was submitted that the pricing page of the comparable selected by the Id. AO clearly provide that database will have to be provided by the user. The ld. Counsel argued that the comparison of the case of "Pro-Marketer' was untenable as it was having a small/insignificant database of only 2000 subscribers and was charging 0.92 paise/per email. It is the case of the appellant....
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....istinguished on facts. We have also noted the conclusion drawn by the ld. CIT(A) are also bereft of any independent analysis and is merely dependent upon the order of the ld. AO. We are therefore are of the considered view that the addition made by the ld. AO is not supported by facts on records. We therefore set-aside the order of the ld. CIT(A) and direct the ld. AO to delete the impugned addition of Rs. 2,10,00,000/- made invoking provisions of section 40A(2)(a) of the Act. The ground of the appeal raised by the assessee no.6 to 8 are therefore allowed. 8. The next issue raised by the assessee through ground of appeal no.3 to 4 is regarding disallowance of depreciation of Rs. 1,01,982/-, and interest on car loan of Rs. 18,110/-. The l....