ACIT Vs Makemy Trip India Pvt. Ltd. (ITAT Delhi)
Delhi ITAT Upholds MakeMyTrip’s Claims on Website Depreciation, Payment Gateway Charges, AMP Expenses & Reimbursements to US Entity
The Delhi ITAT dismissed the Revenue’s appeal and upheld the relief granted to MakeMyTrip India Pvt. Ltd. on multiple recurring issues. The Tribunal held that website development costs are eligible for 60% depreciation, following the Delhi High Court’s decision in Amway India Enterprises and earlier orders in the assessee’s own case.
The Tribunal further held that payment gateway charges paid to banks do not constitute commission under section 194H, but are fees for banking services. Consequently, no tax was deductible at source and the disallowance under section 40(a)(ia) was rightly deleted. It also upheld the deletion of the disallowance relating to advertisement, marketing and publicity (AMP) expenses, reiterating that such expenditure is revenue in nature and not an international transaction or capital expenditure.
On payments made to MakeMyTrip Inc., USA, the Tribunal affirmed that reimbursements of ticket costs and other expenses made on a cost-to-cost basis did not attract tax deduction under section 195. Since the amounts represented pure reimbursements without any income element chargeable to tax in India, the disallowance under section 40(a)(ia) was unsustainable. Following the earlier decisions in the assessee’s own case, the Tribunal dismissed all the grounds raised by the Revenue.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the Revenue is directed against the order dated 07.07.2017 of the Commissioner of Income-Tax (Appeals)-38, Delhi-110092, [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the Assessment Order dated 30.03.2014 passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the DCIT, Circle-6(1), New Delhi (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (A.Y.) 2010-11.
