ITO, New Delhi V. M/s. Airtime Marketing & Sales India Pvt. Ltd., New Delhi

ITA 2311/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65291 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-07-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI U.B.S.BEDI, JUDICIAL MEMBER AND SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER I.T.A .NO.2311/DEL/2012 (ASSESSMENT YEAR-2008-09) ITO, VS AIRTIME MARKETING & SALES INDIA PVT . LTD. COY.WARD-1(3), C-763, NEW FRIENDS COLONY, ROOM NO.-380-B, NEW DELH I 3 RD FLOOR, C.R.BUILDING, PAN-AACCA9627Q I.P.ESTATE, NEW DELHI-02. ( APPELLANT) (RESPONDENT) APPELLANT BY: MRS. ANUSHA KHURANA, SR. DR RESPONDENT BY: SH. SANJIV SAPRA, CA ORDER PER S.V.MEHROTRA, AM THIS APPEAL FILED ON 28-05-2012 BY THE REVENUE IS A GAINST THE ORDER DATED 24-02-2012 OF THE LD. CIT(A), NEW DELHI FOR AY 2008 -09. THE ASSESSEE COMPANY, A SUBSIDIARY OF A FOREIGN COM PANY, IN THE RELEVANT ASSESSMENT YEAR, PROVIDED CONSULTANCY IN SPORTS SER VICES AND STUDIO FACILITIES IN THE MEDIA SECTOR. THE ASSESSEE FURNISHED A RETURN DECLARING NIL INCOME. THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD CLAIMED INTEREST EXPENSES OF RS.1,23,52,057/- ON LOAN TAKEN FROM ITS HOLDING COM PANY I.E FOREIGN I.T.A .NO.2311/DEL/2012 2 SHAREHOLDER. FOLLOWING THE ASSESSMENT ORDERS FOR A SSESSMENT YEARS 2003- 04,2004-05 AND 2007-08, THE ASSESSING OFFICER DISAL LOWED THE ASSESSEES CLAIM. LD. CIT(A) FOLLOWING THE ORDER OF ITAT IN ASSESSEE S CASE FOR ASSESSMENT YEARS 2003-04 & 2004-05 DATED 29.10.2010 IN ITA NO. 3957 & 3958/DEL./2010, DELETED THE DISALLOWANCE. 3. HAVING HEARD BOTH THE PARTIES, WE FIND THAT THIS ISSUE IS COVERED BY THE DECISION OF TRIBUNAL CITED SUPRA. THE TRIBUNAL IN PARA 9 & 10 HAS OBSERVED AS UNDER :- 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE ASSESSEE HAS PLACED COPIES OF THE AGREEMENT ENTERED INTO BY IT IN THE PAPER BOOK AT PAGES 85 TO 156. THE ASSESSEE IN THOSE AGREEMENTS HAS BEEN STATED AS CONSULTANT. ACCORDING TO CLAUSE $, THE CONSULTANT IS REQUIRED T O PROVIDE THE SERVICES IN A PROFESSIONAL MANNER AND TO EMPLOY AND ENGAGE AND SUPERVISE ALL THE PERSONS NECESSARY TO BE EMPLOYED FOR THE PERFORMANCE OF THE SERVICES. IT WAS TO SEEK THE AD VICE AND VIEW OF THE COMMITTEE ON MATTERS RELATING TO ADVERTISEMENT AND PROGRAMMING CONTENTS OF OTHER PARTY, PARTICULARLY THOSE RELATIN G TO LOCAL CULTURE, RELIGION, POLITICS, CUSTOMS AND PRACTICES IN THE CO URSE OF PERFORMING THE SERVICES. IT IS TO PROVIDE THE OTHER PARTY TH E ACCESS, INFORMATION AND DOCUMENTS IN CONNECTION WITH THE PERFORMANCE OF SERVICES AND TO ACT IN THE BEST INTEREST OF OTHER PARTY TO MAXIMIZE THE REVENUE OF THE OTHER PARTY. IN CONSIDERATION OF ALL THESE SERVICE S IT HAS TO RECEIVE, IN PURSUANCE OF CLAUSE6, THE CONSULTANCY FEES AND PERF ORMANCE FEES WHICH IS CALLED FEE. THE CONSULTANT ALSO IS REQU IRED TO PROCURE AND SECURE BANK GUARANTEE ON BEHALF OF OTHER PARTY IN A DVANCE OF THE SALE ON ADVERTISING AIR TIME OF IFMR IN ACCORDANCE WITH THE FIRST SCHEDULE AND IN THE EVENT OF CHANGE IN SUCH AMOUNT, METHOD O F CALCULATION OR THE PAYMENT STRUCTURE OF THE LICENSE FEE PAYABLE BY THE OTHER PARTY WHICH RESULTS IN LOWER LICENSE FEE PAYABLE OR A CHA NGE IN LICENCE CONDITIONS OR THE LAW GOVERNING THE RADIO BROADCAST ING WHICH AFFECTS THE REVENUE ORIGINALLY FROM GENERATING AIR TIME OF EVERY PARTY, THEN I.T.A .NO.2311/DEL/2012 3 THE AIR TIME PROCEEDS WILL BE REVISED, DOWNWARDS TO TAKE INTO ACCOUNT THE AFOREMENTIONED CHANGES. FOR THE SAKE OF CONVEN IENCE CLAUSE 6 OF THE AGREEMENT IS REPRODUCED BELOW: 6. FEES AND AIRTIME PROCEEDS: 6.1 IN CONSIDERATION OF THE CONSULTANT PROVIDING THE SE RVICES, IFMR SHALL PAY THE CONSULTANT WITHOUT DEMAND, DEDUCTION OR SET OFF:- 6.1.1 THE CONSULTANCY FEE; AND 6.1.2 THE PERFORMANCE FEE; (HEREAFTER COLLECTIVELY REFERRED TO AS FEES) 6.2 IN CONSIDERATION OF IFMR APPOINTING THE CONSULT ANT TO PROVIDE THE SERVICES, THE CONSULTANT SHALL:- 6.2.1 PROCURE AND SECURE THE BANK GUARANTEE ON BEHA LF OF IFMR ON TERMS TO BE AGREED; AND 6.2.2 MAKE PAYMENTS OF THE ADVANCE AIRTIME PROCEEDS TO IFMR IN ADVANCE OF THE SALE OF THE ADVERTISING AIRTIME OF I FMR IN ACCORDANCE WITH THE FIRST SCHEDULE PROVIDED ALWAYS THAT IN THE EVENT OF A CHANGE IN THE AMOUNT, METHOD OF CALCULAT ION OR THE PAYMENT STRUCTURE OF THE LICENCE FEES PAYABLE BY IF MR WHICH RESULTS IN A LOWER LICENCE FEE PAYABLE OR A CHANGE IN THE LICENCE CONDITIONS OR THE LAW GOVERNING RADIO BROADCASTING WHICH AFFECTS THE REVENUE GENERATED FROM THE SALE OF THE ADVERTISING AIRTIME OF IFMR, THE PARTIES AGREE THAT THE ADVANCE AIRTIME PROCEEDS SHALL BE REVISED DOWNWARDS TO TAKE INTO AC COUNT THE AFORESAID CHANGES. 10. THUS, IT IS A CASE WHERE THE ASSESSEE WAS TO M AKE PAYMENT TO THE OTHER PARTY OF THE ADVANCE AIR TIME PROCEEDS AN D THEY WERE TO BE REDUCED IF THE CIRCUMSTANCES DESCRIBED IN CLAUSE 6. 2.2 ARE CHANGED. IN THE PRESENT CASE, THESE ADVANCES HAVE GONE UP AN D THEY ARE SUPPORTED BY THE AFOREMENTIONED LETTER DATED 4 TH APRIL 2003. THE RELATIONSHIP OF THE ASSESSEE IN THOSE CONCERNS IS O F CLIENT AND THEY ARE NOT THE ASSOCIATE CONCERNS OF THE ASSESSEE. THOUGH IT HAS BEEN MENTIONED IN THE ORDER OF THE CIT(A) THAT THEY ARE ASSOCIATE CONCERNS BUT THERE IS NO MATERIAL ON RECORD TO SUPPORT SUCH FINDINGS. DURING THE COURSE OF HEARING, LD. DR WAS REQUIRED TO POINT OUT ANY SUCH MATERIAL BUT HE WAS UNABLE TO STATE ABOUT SUCH MATE RIAL. RATHER, LD. DR POINTED OUT THAT IT WAS NOT EVEN THE CASE OF ASS ESSING OFFICER THAT THAT THOSE CONCERNS ARE THE ASSOCIATE CONCERNS OF T HE ASSESSEE. IF IT IS SO, THEN, THE PAYMENT MADE BY THE ASSESSEE, WHICH W AS ENTIRELY I.T.A .NO.2311/DEL/2012 4 ADJUSTABLE AGAINST THE SALE PROCEEDS OF AIR TIME, T HEN, THE AMOUNT CANNOT BE SAID TO BE ADVANCED BY THE ASSESSEE FOR N ON-BUSINESS PURPOSE. IT WAS VERY MUCH PART OF THE BUSINESS OF THE ASSESSEE. IT WAS PAID BY THE ASSESSEE. IT IS NOT THE CASE OF ASSESS ING OFFICER THAT THOSE PARTIES ARE UNKNOWN. RATHER, THE ASSESSING OFFICER IS ASSESSING THE CONSULTANCY FEE RECEIVED FROM THOSE TWO PARTIES AS THE INCOME OF THE ASSESSEE. KEEPING IN VIEW THE ENTIRELY OF FACTS AN D THE TERMS OF AGREEMENT, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER HAD NO MATERIAL TO SAY THAT THE ADVANCES WERE MADE BY THE ASSESSEE TO THOSE TWO CONCERNS FOR NON-BUSINESS PURPOSES. THE AMOUNT S HAVING BEEN ADVANCED IN THE COURSE OF BUSINESS, THERE WAS NO SC OPE FOR DISALLOWANCE TO BE MADE ON ACCOUNT OF UTILIZATION O F INTEREST BEARING FUNDS FOR NON-BUSINESS PURPOSES. THE DISALLOWANCE IS DIRECTED TO BE DELETED. RESPECTFULLY FOLLOWING THE DECISION OF TRIBUNAL, T HE DEPARTMENTS APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/08/2012. SD/ SD/ (U.B.S.BEDI) (S.V.MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24/08/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI I.T.A .NO.2311/DEL/2012 5 I.T.A .NO.2311/DEL/2012 6