ACIT, New Delhi V. M/s. Turner International India Pvt. Ltd., New Delhi

ITA 2125/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61806 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V K SINGH
• Assessee Lawyers: VIKAS BAN SAL CAS
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H NEW DELHI BEFORE SHRI G.D.AGARWAL, HONBLE VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A .NO-2125/DELHI-2012 ASSESSMENT YEAR -2007-08 ACIT VS. M/S TURNER INTERNATIONAL INDIA PVT. LTD. CIRCLE 16(1), 5 TH FLOOR, RADISSON COMMERCIAL PLAZA, NEW DELHI. NH-8, MAHIPAL PUR, DELHI-110037. PAN : AAACT3821H (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. K.V.K. SINGH, SR. DR RESPONDENT BY: MS. KANCHUN KAUSHAL & SHRI VIKAS BAN SAL, CAS ORDER PER RAJPAL YADAV, JM THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LD. CIT(A) DATED 06- 02-2012 PASSED FOR AY 2007-08. THE REVENUE HAS TAK EN THREE GROUNDS OF APPEAL, BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE, W HEREBY IT HAS CHALLENGED DELETION OF ` 10,80,000/- FROM THE VALUE OF TOTAL FRINGE BENEFIT S. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED ITS RETURN OF FRINGE BENEFITS, DECLARING THE VALUE OF FRINGE BENEFITS AT ` 1,58,41,527/-. THE LD. ASSESSING OFFICER HAS ISSUED NOTICE U/S 115WE(2) OF THE INCOME TAX ACT, WHICH I.T.A .NO-2125/DELHI-2012 2 WAS SERVED ON THE ASSESSEE ON 30-09-2008. THE ASSE SSING OFFICER, THEREAFTER, ISSUED A DETAILED QUESTIONNAIRE. 3. IT EMERGES AROUND FROM THE RECORD THAT ASSESSEE COMPANY WAS SET UP WITH A VIEW TO CARRY OUT, INTER ALIA, FOLLOWING BUSINESS A CTIVITIES:- TO CARRY ON THE BUSINESS OF PRODUCERS, DISTRIBUTORS OF FILMS, RENTING OF FILM TAPES, ADVERTISERS AND FRANCHISEES OF THE PROG RAMS AND BROADCASTS OF THE TIME WARNER AND TURNER GROUP OF COMPANIES. TO CARRY ON THE BUSINESS OF ENTERING INTO AGREEMENT S FOR PRESENTATION OF FILMS, TELEVISION PRODUCTION INSIDE INDIA AND AB ROAD. TO CARRY OUT THE BUSINESS OF SUB-LICENSING AND LETT ING OUT THE PRODUCTS OF TIME WARNER AND TURNER GROUP OF COMPANIES. 4. IN THE ACCOUNTING PERIOD, RELATING TO AY 2007-08 , IT WAS ENGAGED IN THE DISTRIBUTION OF VARIOUS PRODUCTS, NAMELY TELEVISION CHANNELS AND TELEVISION PROGRAMMES OF TIME WARNER GROUP COMPANIES. IT ENTE RED INTO A DISTRIBUTION AGREEMENT, WHEREIN, TBSAP LICENSED FOR A FEE, SUB-D ISTRIBUTION RIGHTS OF TV CHANNELS LIKE CNN, CARTOON NETWORK, POGO ETC. TO TI IPL. AS PER THE DISTRIBUTION AGREEMENT, TIIPL WAS RESPONSIBLE FOR IMPORTING, PRO MOTING, MARKETING, DISTRIBUTING AND PROVIDING SUB-DISTRIBUTION RIGHTS IN RESPECT OF THE TV CHANNELS TO VARIOUS CABLE AND BROADCAST ENTITIES. IN ORDER TO DISTRIBUTE ONE OF THE TELEVISION CHANNELS OF THE TIME WARNER GROUP AND TO EARN ADVER TISEMENT INCOME, THE I.T.A .NO-2125/DELHI-2012 3 ASSESSEE ENTERED INTO TELECASTING AGREEMENT IN THE FINANCIAL YEAR 2006-07 WITH PRASAR BHARTI, FOR TELECASTING A PROGRAMME IN HINDI LANGUAGE ENTITLED CARTOON NETWORK DUNIYA. THIS PROGRAMME COMPRISES EPISODE S FROM THE TELEVISION SERIALS ENTITLED GALI GALI SIM SIM, M.A.D (MUSIC ART DANC E), KIDS NEXT DOOR ETC. ACCORDING TO THE AGREEMENT, PRASAR BHARTI HAD PERMI TTED TELECAST OF TWO EPISODES PER HOUR. EACH EPISODE HAVING DURATION OF 30 MINUT ES. THE PAYMENTS HAVE BEEN DEFINED IN THE AGREEMENT. THE ASSESSEE HAD INCURRE D CARRIAGE FEE EXPENSES AMOUNTING TO ` 54,00,000/-. LD. ASSESSING OFFICER HAS OBSERVED T HAT THE EXPENSES INCURRED BY THE ASSESSEE WERE FOR THE ADVERTISEMENT S AND THEREFORE, THEY ARE IN THE NATURE OF SALES PROMOTIONS, INVOLVING FRINGE BENEFI TS IN THEM. HE ESTIMATED THE FRINGE BENEFITS INVOLVED IN THIS EXPENDITURE AT 20 % AND WORKED OUT THE VALUE AT ` 10,80,000/-. THE ASSESSING OFFICER IN THIS WAY, D ETERMINED THE VALUE OF FRINGE BENEFITS AT ` 1,69,21,530/- AS AGAINST ` 1,58,41,527/- DISCLOSED BY THE ASSESSEE. 5. ON APPEAL, LD. CIT(A) HAS HELD THAT EXPENSES WER E NOT INCURRED FOR SALES PROMOTION, RATHER IT IS CONTRACTUAL OBLIGATION FOR TELECASTING A PROGRAMME NAMELY CARTOON NETWORK DUNIYA. THIS PAYMENT MADE BY THE ASSESSEE DOES NOT FALL WITHIN THE AMBIT OF SALES PROMOTION IN WHICH VALUE OF FRINGE BENEFITS IS INVOLVED. LD. CIT(A) IN THIS WAY DELETED THE ADDITION. 6. BEFORE US, LD. DR RELIED UPON THE ORDER OF ASSES SING OFFICER AND CONTENTED THAT THIS TELE-SERIAL WAS TELECASTED IN ORDER TO PR OMOTE VIEWER-SHIP OF VARIOUS I.T.A .NO-2125/DELHI-2012 4 PROGRAMMES OF TIME WARNER GROUP COMPANIES. HENCE L D. ASSESSING OFFICER HAS RIGHTLY TREATED THE EXPENSES INCURRED BY THE ASSESS EE IN THE NATURE OF SALES PROMOTION. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAS EARNED ADVERTISEMENT REVENUE OF ` 19,94,277/- ON THE TELECAST OF THESE PROGRAMMES. IT WAS A BUSINESS EXPENDITURE FOR AVAI LING A SPACE FROM THE PRASAR BHARTI FOR TELECASTING ITS PROGRAMME. HE TOOK US T HROUGH THE WRITTEN SUBMISSION FILED BEFORE THE CIT(A), WHICH IS REPRODUCED IN PAR AGRAPH NO. 4.2. HE RELIED UPON THE SUBMISSION MADE BEFORE THE CIT(A). 7. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. THE CASE OF THE ASSESSING OFFICER IS TH AT PAYMENT MADE BY THE ASSESSEE TO PRASAR BHARTI FOR TELECASTING A PROGRAMME IN HIN DI LANGUAGE ENTITLED CARTOON NETWORK DUNIYA, WAS BASICALLY MADE TOWARDS SALES P ROMOTION. IT WOULD INCREASE THE VIEWER-SHIP OF TIME WARNER GROUP PROGRAMME AND THEREFORE, IT HAS DEBITED THE EXPENSES UNDER THE HEAD OF CARRIAGE FEE. HE TREATE D 20% OF SUCH PAYMENT AS FRINGE BENEFITS AND MADE THE DISALLOWANCE. HOWEVER , ON ANALYSIS OF THE FINDING RECORDED BY THE CIT(A) AND THE SUBMISSIONS OF THE A SSESSEE, WE ARE OF THE VIEW THAT LD. ASSESSING OFFICER HAS MIS-READ AND MIS-CON STRUED THE BUSINESS TRANSACTION CARRIED OUT BY THE ASSESSEE FOR TELECASTING ITS TEL E-SERIALS. IT HAS NOT MADE THE PAYMENT FOR SHOWING ITS ADVERTISEMENT IN OTHER PROG RAMMES, RATHER IT HAS TELECASTED ITS OWN TELE-SERIALS WHICH HAS RESULTED ADVERTISEMENT REVENUE ALSO. HAD I.T.A .NO-2125/DELHI-2012 5 THE ASSESSEE PUT ADVERTISEMENT IN BETWEEN OTHER SER IALS ON DIFFERENT CHANNELS AND THEN PAID THE MONEY TO THE PRASAR BHARTI FOR DISPLA YING ITS ADVERTISEMENTS THAN ONLY ONE CAN SAY THAT ASSESSING OFFICER HAS RIGHTLY TREA TED INVOLVEMENT OF FRINGE BENEFITS. BUT HERE THE FACTS ARE OTHERWISE. 8. TAKING INTO CONSIDERATION, THE WELL REASONED ORD ER OF LD. CIT(A), WE DO NOT FIND ANY MERIT IN THIS APPEAL OF REVENUE, IT IS DIS MISSED. SD/ SD/ (G.D.AGARWAL) (RAJPAL YADAV) HONBLE VICE PRESIDENT JUDICIAL MEMBER DATED: 27/07/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR ITAT ASSISTANT REGISTRAR ITAT NEW DELHI