DCIT, New Delhi V. M/s. Diamond Magazines Pvt. Ltd., New Delhi

ITA 5649/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2440 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 05-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARAMITA M BISWAS
• Keywords: Deemed dividend
• Section: 194C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI E BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE , JUDICIAL MEMBER ITA NO. 5649 /DEL/20 15 [A.Y 20 11 - 12 ] THE DY . C.I.T VS. DIAMOND MAGAZINES PVT LTD CIRCLE - 7(2) X 30, OKHLA INDUSTRIAL AREA NEW DELHI PHASE II, NEW DELHI PAN : A ABCD 9548 E [APPELLANT] [RESPONDENT] DATE OF HEARING : 13 . 1 1 .201 8 DATE OF PRONOUNCEMENT : 1 4 . 1 1 .2018 ASSESSEE BY : SHRI SOMIL AGGARWAL, ADV REVENUE BY : MS. PARAMITA M BISWAS , CIT - DR ORDER PER N.K. BILLAIYA , ACCOUNTANT MEMBER, THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A) - 3, NEW DELHI DATED 09 .0 7 . 201 5 PERTAINING TO A.Y 20 11 - 12 . 2 2. THE SUBSTANTIVE GRIEVANCES RAISED BY THE ASSESSEE READ AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW THE CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) OF RS. 94,93,000/ - MADE BY THE ASSESSING OFFICER. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF DISALLOWANCE ON ACCOUNT OF U/S 2(22)(E) OF RS. 72,95,697/ - MADE BY THE ASSESSING OFFICER. 3. AT THE VERY OUTSET, THE LD. AR STATED THAT THE GRIEVANCE RAISED VIDE GROUND NO. 1 WAS CONSIDERED BY THE TRIBUNAL IN A.YS 2009 - 10 AND 2010 - 11 IN ITA NOS. 5236/DEL/2012 AND 5006/DEL/2014 AND HAS RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH SPECIFIC DIRECTIONS. 4. THE LD. DR COULD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 3 5. W E HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISION OF THE CO - ORDINATE BENCH IN ITA NO. 5236/DEL/2012. I FIND FORCE IN THE CONTENTION OF THE LD. AR. A SIMILAR ISSUE WAS CONSIDERED BY THE COORDINATE BENCH. THE RELEVANT FINDING OF THE COORDINATE BENCH RE ADS AS UNDER: 7. SO FAR THE EXPENDITURE INCURRED ON ADVERTISEMENTS WITH PRATIVOGITA DARPAN AND MEGNA PU BLISHING PVT. LTD. ARE CONCERNED THE CONTENTIONS OF THE ASSESSEE REMAINED THAT WITH THEM THE UNDERSTANDING OF THE ASSESSEE WAS OF CROSS - ADVERTISEMENTS WHICH AS PER THE ASSESSEE DO NO T FALL IN THE CATEGORY OF JOB W ORK OR SERVICES RENDERED WITHIN THE MEANING OF SEC. 194C OF THE ACT. LEARNE D CIT(APPEALS) HAS UPHELD THE ACTION OF THE ASSESSING OFFICER IN THIS REGARD ON THE BASIS THAT THE WORK OF ADVERTISEMENT WAS QUANTIFIED IN TERMS OF MONEY EVERY TIME WHICH HAS BEEN SHOWN AS SALE IN THE ACCOUNT OF THOSE PARTIES WHEREAS IN THE BARTER TRANSACT ION THE AMOUNT IS NOT QUANTIFIED AND THERE IS SIMPLY EXCHANGE OF THINGS. LEARNED CTT(APPEALS) HAS IGNORED THE COPY OF BARTER AGREEMENT BETWEEN THE ASSESSEE AND PRATIYOGITA DARPAN SUBMITTED BY THE ASSESSEE ON THE BASIS THAT IT IS ON A 4 PLAIN PAPER AND THE SA ME WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER. CONSIDERING THE SUBMISSIONS OF THE PARTIES, WE ARE OF THE VIEW THAT THE AGREEMENT BETWEEN THE PARTIES CAN ALSO BE INFERRED BY THEIR ACTIONS IN THE TRANSACTION. WE ALSO CONCUR WITH THE SUBMISSIONS OF THE LEA RNED AR THAT AFTER QUANTIFICATION OF THE WORK OF ADVERTISEMENT IN TERMS OF MONEY, THE ADJUSTMENT IN THE CROSS - ADVERTISEMENT BY WAY OF BARTER SYSTEM WAS POSSIBLE. THE ASSESSEE HAS FILED THE DETAILS OF BARTER TRANSACTION AT PAGE NOS. 19 TO 24 OF THE PAPER BO OK, BUT IT IS NOT CLEAR THAT THESE DETAILS WERE MADE AVAILABLE BEFORE THE ASSESSING OFFICER. WE, THUS, IN THE INTEREST OF JUSTICE SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER AFFORDING OPPORTUNITY TO THE ASSESSEE TO FURNISH THE NEXUS BETWEEN T HE CROSS - ADVERTISEMENTS UNDER THE CLAIMED BARTER TRANSACTION BETWEEN THE ASSESSEE AND THE SAID TWO PARTIES I.E. PRATIYOGITA DARPAN AND MEGHNA PUBLISHING PVT. LTD. WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH AFTER HEARING THE ASSESSEE . 6. RESPECTFULLY F OLLOWING THE FINDINGS OF THE CO - ORDINATE BENCH, WE DIRECT ACCORDINGLY. 5 7. GRIEVANCE RAISED VIDE GROUND NO. 2 IS ALSO COVERED BY THE DECISION OF THE CO - ORDINATE BENCH IN ITA NO. 5006/DEL/2014. THE RELEVANT FINDING OF THE COORDINATE BENCH READS AS UNDER: GROUND NO. 3 OF THE APPEAL IS WITH RESPECT TO THE ADDITION OF RS. 2052195/ - U/S 2(22)(E) OF THE ACT. THE ASSESSEE HAS RECEIVED EXCESS PAYMENT OF THE ABOVE SUM FROM M/S. DIAMOND POCKET BOOKS PVT LTD. THERE WERE COMMON SHARE HOLDERS IN THE ASSESSEE AS WELL A S THE PAYER COMPANY. THEREFORE, THE LD AO HELD THAT THE ABOVE SUM IS DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE. THE LD CIT(A) DELETED THE ABOVE ADDITION FOR THE REASON THAT AFTER COMPLETE EXAMINATION OF COPY OF ACCOUNT OF THE DIAMOND POCKET BOOKS PVT. L TD IT WAS CLEAR THAT THE TRANSACTIONS ARE CONSISTING OF PURCHASE AND SALES. HE THEREFORE, HELD THAT IT CANNOT BE A CASE OF DEEMED DIVIDEND. 11. THE LD DR RELIED UPON THE ORDERS OF THE LD AO WHEREAS, THE LD AR RELIED UPON THE ORDER OF THE LD CIT(A). HE FURT HER SUBMITTED THE CIRCULAR OF CBDT WHICH ACCEPTS THE VIEW THAT IN THE BUSINESS TRANSACTION PROVISION OF SECTION 2(22)(E) DOES NOT APPLY. 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE COPY OF THE ACCOUNT OF THE DIAMOND POCKET BOOKS PVT. LTD FR OM THE BOOKS OF ASSESSEE HAVE BEEN TABULATED BY THE LD AO IN 6 PARA NO. 7.1 OF THE ORDER. THE ABOVE TRANSACTION SHOWS THAT ALL THE TRANSACTIONS ARE WITH RESPECT TO THE ADVERTISEMENT, SALES, SUBSCRIPTION AND PURCHASES ONLY. THE LD ASSESSING OFFICER HAS FURTHE R STATED THAT APPROXIMATELY 30% OF THE TOTAL ENTRIES ARE ONLY FUND TRANSFER ENTRIES AND THEREFORE, THE ADDITION WAS MADE. THE PAGE DCIT VS. DIAMOND MAGAZINES PVT. LTD, ITA NO. 5006/DEL/2014 (ASSESSMENT YEAR: 2010 - 11) PAGE | 5 NO. 8 TO 22 OF THE PAPER BOOK SHOWS THE DETAILED ACCOUNT OF THE DIAMOND POCKET BOOKS PVT. LTD. FROM THE EXAMINATION OF THE ABOVE ACCOUNT IT IS APPARENT THAT THE ASSESSEE PURCHASES THE MATERIAL AS WELL AS SALES MATERIAL TO THIS PARTY. IT IS ALSO EVIDENT THAT THERE ARE TRANSACTION OF REC EIPT OF THE FUNDS AS WELL AS PAYMENT OF THE FUNDS. THE ABOVE TRANSACTION IS A MIXED ACCOUNT SHOWS THAT PAYMENTS ARE FOR THE PURCHASES AND RECEIPTS ARE FOR THE SALE OF THE GOODS. MERELY BECAUSE THERE ARE PAYMENT AND RECEIPT IN A MIXED TRANSACTION OF PURCHAS E AND SALE OF GOODS IT MAY ALSO PARTAKE THE CHARACTER OF TRADE ADVANCES WHICH ARE OF THE COMMERCIAL NATURE. THE CBDT ISSUED A CIRCULAR NO. 19/2017 DATED 12.06.2017 WHEREIN, IT HAS BEEN STATED THAT IT IS A SETTLED POSITION THAT TRADE ADVANCES WHICH ARE IN T HE NATURE OF COMMERCIAL TRANSACTIONS WOULD NOT FALL WITHIN THE AMBIT OF THE WORD ADVANCE 7 IN SECTION 2(22)(E) OF THE ACT. IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN DELETING THE ABOVE ADDITION. IN THE RESULT GROUND NO. 3 OF THE APPEAL IS DISMISSED. 8. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO - ORDINATE BENCH, WE DISMISS GROUND NO. 2. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 5649 /DEL/201 5 IS ALLOWED IN PART FOR STATISTICAL PURPO SES . THE ORDER IS PRON OUNCED IN THE OPEN COURT ON 1 4 . 1 1 .2018. S D / - S D / - [ SUCHITRA KAMBLE ] [ N.K. BILLAIYA ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 4 T H NOVEMBER , 2018 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 8 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER