DCIT, Cir-16(1), Hyderabad V. M/s. News Today Pvt.Ltd., Hyderabad

ITA 586/HYD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53744 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 08-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T DEWAKAR PRASAD
• Assessee Lawyers: C N PRASAD
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.586/HYD/2011 ASSESSMENT YEAR 2003-04 THE DCIT, CIRCLE 16(1), HYDERABAD VS M/S NEWS TODAY (P) LTD., HYDERABAD (PAN AAACN 7323G) APPELLANT RESPONDENT APPELLANT BY : SHRI T. DEWAKAR PRASAD RESPONDENT BY : SHRI C.N. PRASAD DATE OF HEARING : 12.10.2011 DATE OF PRONOUNCEMENT : 31.10.2011 ORDER PER ASHA VIJAYA RAGHAVAN, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE/REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) V DATED 24.1.2011 AND PERTAINS TO THE ASSESSMENT YEAR 2003- 04. 2. AGGRIEVED BY THE ORDER OF THE CIT(A), THE DEPAR TMENT IS IN APPEAL BEFORE US. THE LEARNED DEPARTMENTAL REPR ESENTATIVE SHRI T. DIWAKAR PRASAD SUBMITTED THAT THE CIT OUGHT TO HAVE HELD THAT SOME OF RS.50,86,707/- SHOULD BE BROUGHT TO TAX FOR THE ASSESSMENT YEAR 2003-04 AND NOT IN THE ASSESSME NT YEAR 2004-05 SINCE IT IS FOR THE ASSESSEE TO PROVE THAT IT HAS BEEN ADMITTED IN THE ASSESSMENT YEAR 2004-05. THE LEARN ED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE CIT(A) IS NOT CORRECT IN HOLDING THAT CREDIT FOR TDS FOR RS.1 ,10,760/- IS TO BE ALLOWED TO THE ASSESSEE. ITA NO.586/H/2011 M/S NEWS TODAY (P) LTD., HYDERABAD 3. THE COUNSEL FOR THE ASSESSEE SHRI C.N. PRASAD SUBMITTED A COPY OF THE ORDER U/S 143(3) R.W.S. 147 OF THE ACT FOR THE ASSESSMENT YEAR 2004-05 AND CONTENDED THAT A SUM OF RS.49,79,886/- HAS BEEN ADMITTED AS INCOME LEAVING OUT A BALANCE OF RS.1,06,821/-. 4. WE HAVE PERUSED THE ORDER SUBMITTED BY THE LEAR NED COUNSEL FOR THE ASSESSEE FOR THE ASSESSMENT YEAR 20 04-05 AT PARA 4 OF THE ORDER IT HAS BEEN STATED AS FOLLOWS: THE FACTS ARE THAT THE ASSESSEE IS A PRIVATE LIMITE D COMPANY ENGAGED IN THE BUSINESS OF NEWS GATHERING A ND SUPPLY OF NEWS TO PUBLISHERS. DURING THE FINANCIAL YEAR 2002-03, THE COMPANY DECLARES A LOSS. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY AND IT WAS FOUND THA T THE RECEIPTS AS PER TDS CERTIFICATES WERE RS.27,33,61,0 00/- WHEREAS THE ASSESSEE HAD ACCOUNTED FOR ONLY RS.26,30,00,000/-. REGARDING THE DIFFERENCE OF RS.1,03,65,000/- THE ASSESSEE STATED THAT IT HAD ADMITTED RS.50,86,707/- AS INCOME IN THE ASSESSMENT YEAR 2004-05 WHEREAS THE BALANCE WAS ONLY REIMBURSEMENT OF EXPENSES BY M/S USHODAYA ENTERPRISES LTD. DURING ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER AGREED TO THE CONTENTION REGARDIN G REIMBURSEMENT OF EXPENSES BUT ADDED RS.50,86,707/- BY GIVING THE FOLLOWING REASONS AND THE ASSESSING O FFICER HELD IN HIS ASSESSMENT ORDER AS FOLLOWS: 5. NORMAL INCOME ON THE BASIS OF RECONCILIATION O F GROSS RECEIPTS: ITA NO.586/H/2011 M/S NEWS TODAY (P) LTD., HYDERABAD THE ASSESSEE HAS ADMITTED GROSS RECEIPTS AT RS.26,30,00,000/- AS AGAINST RECEIPTS OF RS.27,33,6 1,000/- IN TDS CERTIFICATES WHICH IS AS UNDER: CERTIFICATE DATE SERVICE CONTRACTS (AMOUNTS) (RS.) ( IN RS.) (IN RS.) 7.5.2002 80,00,000 1,68,000 2.10% 5.8.02 2,98,50,000 6,26,850 2.10% 4.2.2003 5,51,00,000 11,57,100 2.10% 7.4.2003 1,20,50,000 2,53,050 2.10% TV 12.4.03 2,40,00,000 5,04,000 2.10% 30.4.03 14,43,61,000 30,31,581 2.10% TOTALS 27,33,61,000 57,40,581 ADMITTED IN P&L A/C 26,30,00,000 DIFFERENCE 1,03,61,000 6. THE QUESTION IS WHY THE SUM OF RS.1,03,61,000/- SHOULD NOT BE BROUGHT TO TAX. IT HAS BEEN EXPLAINED BY THE ASSESSEE THAT A SUM OF RS.26,30,000/- HAS BEEN ADMITTED. THE BALANCE OF RS.1,03,61,000/- CONSISTS OF TWO ITEMS AS FOLLOWS: I) REIMBURSEMENT OF EXPENSES BY USHODAYA RS.52,7 4,293/- ENTERPRISES LIMITED II) AMOUNT RECEIVED IN ADVANCE RS.50,86,707 /- 6.1. IT IS STATED THAT M/S USHODAYA ENTERPRISES LT D. HAS TO PAY ADDITIONAL CHARGES TO M/S NEWS TODAY (P) LTD. I N CASE OF ANY SPECIAL ASSIGNMENTS OR INTENSIVE COVERAGE OF EV ENTS LIKE ELECTRONICS ETC. IT IS ALSO STATED THAT THE ASSESS EE ALSO HAS AN ACCOUNT FOR ADDITIONAL SUBSCRIPTION RECEIVED OF RS. 20 LAKHS FOR ITA NO.586/H/2011 M/S NEWS TODAY (P) LTD., HYDERABAD COVERAGE OF SPECIAL EVENTS LIKE ELECTIONS AND INTEN SIVE ASSIGNMENTS FOR WHICH THE EXPENDITURE OF RS.52,74,2 93/- HAS BEEN RECEIVED AS PER CONTRACT WITH M/S USHODAYA ENT ERPRISES LTD ON WHICH TAX HAS BEEN DEDUCTED AT SOURCE. THIS EXPENDITURE PERTAIN TO THE FOLLOWING ITEMS WHICH AH S NOT BEEN DEBITED TO PROFIT AND LOSS ACCOUNT. I) ELECTION EXPENSES RS.51,96,147/- II) OTHER EXPENSES RS.78,146/- 6.2. THE ABOVE EXPENSES HAVE BEEN DEBITED TO M/S U SHODAYA ENTERPRISES LTD. THIS ASPECT HAS BEEN VERIFIED FRO M THE ACCOUNT COPY OF THE ACCOUNT M/S USHODAYA ENTERPRISES LTD. I N THE BOOKS OF THE ASSESSEE COMPANY CONCERNED EXPENSES AC COUNTS HAVE BEEN CREDITED AND THE ACCOUNT OF M/S USHODAYA ENTERPRISES LTD. HAS BEEN DEBITED BY RS.52,74,493/- . 6.3. THE BALANCE TO BE CONSIDERED AMOUNTS TO RS.50 ,86,707/- IT IS CLAIMED BY THE ASSESSEE THAT THE OUTSTANDING BALANCE IN THE ACCOUNT OF M/S USHODAYA ENTERPRISES LTD., IS RS.49,79,886/- REPRESENTS ADVANCE SUBSCRIPTION CHAR GES RECEIVED AND THE BALANCE RS.1,06,821/- REPRESENTS T DS THEREON. HOWEVER, THE INCOME ADMITTED IN THE ASSESSMENT YEAR 2004-05 AND TDS CERTIFICATES IN RELATION TO THAT ASSESSMENT YEAR SHOW THAT THE RECEIPTS AS PER TDS CERTIFICATES FILED AMO UNTING TO RS.29,64,19,913/- HAVE BEEN ADMITTED AS INCOME, THE BREAKUP OF WHICH IS GIVEN BELOW: I) SUBSCRIPTION REVENUE RS.27,90,00,000 II) SUPERVISION CHARGES INCLUDED IN OTHER INCOME RS.44,90,653/- ITA NO.586/H/2011 M/S NEWS TODAY (P) LTD., HYDERABAD III) REIMBURSEMENT OF EXPENSES FOR ELECTION AND SPECIAL PROGRAMMES RS.1,26,12,435 IV) OTHER EXPENSES NET OFF RS.3,16,825/- -------------------- TOTAL RS.29,64,19,913/- ============== 6.4. THE INCOME RELATING TO THE ADVANCE OF RS.50,8 6,707/- HAS NOT BEEN ADMITTED AS INCOME IN THE ASSESSMENT YEAR 2004-05. THEREFORE, THE ASSESSEES CONTENTION THAT THE SUM O F RS.50,86,707/- REPRESENTS ADVANCE SUBSCRIPTION CHAR GES IS NOT TENABLE. IT IS FOR THE ASSESSEE TO CONCLUSIVELY PR OVE THAT THEY DO NOT FORM PART OF INCOME. IN THE ABSENCE OF ANY OTH ER MATERIAL FURNISHED BY THE ASSESSEE, THERE IS NO OPTION BUT T O TREAT THE SUM OF RS.50,86,707/- AS INCOME WHICH IS NOT DISCLO SED. HENCE THE SAME IS BROUGHT TO TAX. 6.5. BEFORE THE CIT(A) THE ASSESSEE CONTENDED THAT IT HAD AN AGREEMENT WITH M/S USHODAYA ENTERPRISES LIMITED ON THE ISSUE AND MANY TIMES DURING THE YEAR IT RECEIVED AD VANCE PAYMENTS WHICH WERE LATER ADJUSTED AGAINST SUBSEQUE NT BILLS. IN ORDER TO DEMONSTRATE THE ABOVE FACTS, THE RELEVA NT LEDGER EXTRACTS WERE PRODUCED ALONG WITH A COPY OF THE AGR EEMENT WITH M/S USHODAYA ENTERPRISES LTD. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE SUBMITTED BEFORE THE CIT(A) AS FOLLOWS: IN THIS REGARD THE CIT(A) RAISED A QUERY AS TO WHY M/S USHODAYA ENTERPRISES P LTD., DEDUCTED TAX AT SOURCE EVEN ON THE ADVANCE GIVEN BY IT. ITA NO.586/H/2011 M/S NEWS TODAY (P) LTD., HYDERABAD THE ASSESSEE WISHES TO SUBMIT THAT USHODAYA ENTERPRISES P LTD., IS UNDER AN OBLIGATION U/S 194C TO DEDUCT TAX AT SOURCE AT THE TIME OF PAYMENT OR AT T HE TIME OF CREDITING THE AMOUNT TO THE CONTRACTEES ACCOUNT WHICHEVER IS EARLIER. THEREFORE, USHODAYA ENTERPRI SES P LTD. DEDUCTED TAX AT SOURCE FROM EVERY PAYMENT MADE TO THE ASSESSEE, WHICH WAS PRIOR TO THE DATE OF CREDIT OF SUCH AMOUNT TO THE ASSESSEES ACCOUNT, WHICH WAS IN ACCORDANCE WITH STIPULATION UNDER THE SAID PROVISIO N. M/S USHODAYA ENTERPRISES P LTD., HAD BEEN MAKING ON ACCOUNT PAYMENTS FROM TIME TO TIME WHICH IT HAD DEDUCTED TAX AT SOURCE AS PER THE PROVISIONS OF SEC TION 194C. ACCORDINGLY FOR THE YEAR IT HAD DEDUCTED TAX AT SOURCE OF RS.1,06,821/- BEING TDS ON ADVANCE PAYMEN TS FOR WHICH NO CREDIT WAS ALLOWED IN THE ASSESSMENT. THE ASSESSEE PLEADED THAT THE SAID ADDITION OF THE ADVANCE AMOUNT OF RS.50,86,707/- RECEIVED FROM USHODAYA ENTERPRISES P LTD., MAY BE DELETED. THE ASSESSING OFFICER DID NOT ALLOW CREDIT FOR TDS OF RS.1,10,760/- ON REIMBURSEMENT OF EXPENSES OF RS.52,74,293/- THOUGH THE SAME WAS ACCEPTED AS REIMBURSEMENT OF EXPENSES. A COPY OF THE LETTER DATED JULY 10, 2007 FILED BEFO RE THE ASSESSING OFFICER ON THE ISSUES WAS SUBMITTED BY TH E ASSESSEE FOR REFERENCE. 8. WE HEARD BOTH THE PARTIES. WE HAVE CONSIDERED CAREFULLY THE FACTS AND EVIDENCE AND WE FIND THAT B OTH THE ITA NO.586/H/2011 M/S NEWS TODAY (P) LTD., HYDERABAD ASSESSEE AND M/S USHODAYA ENTERPRISES LIMITED HAVE AGREED TO THE FACT THAT THE ADVANCE WAS PAID. THEY HAVE D ULY ACCOUNTED FOR THE SAME IN THEIR BOOKS. FURTHER, AD VANCES HAVE BEEN RECEIVED DURING THE YEAR ALSO AND HAVE BE EN ADJUSTED ACCORDINGLY. MOREOVER, THERE IS NO EVIDEN CE WITH THE ASSESSING OFFICER TO SHOW THAT THE AMOUNT WAS DEFIN ITELY IN THE CHARACTER OF INCOME AGAINST CERTAIN SERVICES. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE FIND FORCE IN THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT REPRESENTS ADVANCE RELATING TO ASSESSMENT YEAR 2004-05. ACCORDINGLY, ADDITION ON THIS ACCOUNT IS ORDERED TO BE DELETED. HOWEVER, THE ASS ESSING OFFICER HAS MADE AN OBSERVATION THAT THE ADVANCE OF RS.50,86,707/- HAS NOT BEEN SHOWN AS INCOME IN THE ASSESSMENT YEAR 2004-05. THE ASSESSEE HAS STATED T HAT INCOME RELATING TO THE AFOREMENTIONED ADVANCES IS S HOWN AGAINST VARIOUS BILLS AND IS COVERED UNDER THE HEAD SUBSCRIPTION REVENUE IN ASSESSMENT YEAR 2004-05. IN THIS REGARD, THE ASSESSING OFFICER MAY REOPEN THE ASSESS MENT FOR THE ASSESSMENT YEAR 2004-05, IF HE FINDS THAT THE A MOUNT HAS NOT BEEN ADMITTED AS INCOME IN THAT YEAR. 9. FROM THE READING OF THE APPELLATE ORDER WE FIND CIT(A) HAS STATED THAT THE ASSESSING OFFICER MAY REOPEN TH E ASSESSMENT FOR THE ASSESSMENT YEAR 2004-05 IF HE FI NDS THAT THE AMOUNT HAS NOT BEEN ADMITTED AS INCOME IN THAT ORDER WE FIND THAT IS THE ASSESSMENT ORDER OF THE ASSESSMEN T YEAR 2004-05 DATED 31.12.2009 CLEARLY STATES THAT A SUM OF RS.50,86,707/- HAS BEEN BROUGHT TO TAX FOR THE ASSE SSMENT YEAR 2003-04, AND HENCE IS NOT ADDED FOR THE ASSESS MENT YEAR 2004-05. ONCE THIS AMOUNT HAS BEEN BROUGHT TO THE EARLIER (WHETHER ASSESSMENT YEAR 2004-05 OR 2003-04). THER E IS NO QUESTION OF ADDING THE SAME FOR THIS YEAR. THE ASS ESSING ITA NO.586/H/2011 M/S NEWS TODAY (P) LTD., HYDERABAD OFFICER MAY VERIFY THIS FACT WHETHER THIS AMOUNT HA S BEEN OFFERED TO TAX IN ANY OF THE EARLIER YEARS AND IF S O DELETE THE ADDITION. 10. WITH RESPECT TO THE CREDIT FOR TDS OF RS.1,10, 760/-, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ) AS IT HAS BEEN HELD THAT THE TDS RELATES REIMBURSEMENT OF EXP ENSES AND THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER T O QUANTIFY THE EXACT TDS RELATING TO SUCH REIMBURSEMENT AND TH EN ALLOW THE AMOUNT OF CREDIT. 11. IN THE RESULT, THE REVENUE APPEAL IS PARTLY AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 31.1 0.2011 SD/ - (CHANDRA POOJARI) SD/ - (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST OCTOBER, 2011 COPY FORWARDED TO: 1. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(1), ROOM NO.612, AYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S NEWS TODAY (P) LTD.,, D.NO.6-3-570, EENADU COMPLEX, SOMAJIGUDA, HYDERABAD 3. THE CIT(A) V, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/