PRAMOD LAKRA, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(1), KOLKATA, KOLKATA V. M/S. SELVEL MEDIA SERVICES PRIVATE LIMITED , KOLKATA

ITA 2545/KOL/2024

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax against the order of the Ld. Commissioner of Income Tax (Appeals), which had granted various reliefs to M/s Selvel Media Services Pvt. Ltd. for the Assessment Year 2014-15. The Revenue challenged the CIT(A)'s decisions on several grounds, including the allowance of interest on TDS, sales promotion expenses, depreciation on hoardings, prior period expenses, and deductions under section 80IA of the Income Tax Act. The ITAT, after reviewing the submissions and precedents, upheld the CIT(A)'s order, dismissing the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398464 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Other Referred Cases: Welkin Telecom Infra (P.) Ltd. vs. DCIT, Sutna Stone and Lime Ltd. vs. Commissioner of Income Tax, Principal Commissioner of Income Tax, Kolkata 4, Kolkata Vs. Vantage Advertising Pvt. Ltd., Commissioner of Income Tax, Kolkata-IV, Kolkata vs. Selvel Advertising Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Condonation of delay; Business expenditure; Question of law; Depreciation; TDS
• Section: 37; 43B; 37(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A. No.2545/Kol/2024 (Assessment Year 2014-15) Deputy Commissioner of Income Tax, Aayakar Bhawan, 6th Floor, P-7, Chowringhee Square, Kolkata - 700069 …….…...……………..... Appellant vs. M/s Selvel Media Services Pvt. Ltd., Selvel House, 10/1B, Diamond Harbour Road, Kolkata - 700027 .................................. Respondent [PAN: AADCS7951G] Appearances by: Assessee represented by : Akshay Ringasia, AR Department represented by : Subhro Das, Addl. CIT Date of concluding the hearing : 14.05.2025 Date of pronouncing the order : 04.06.2025 O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER 1. In this case, there is a delay of 591 days in the filing of the present appeal of which the Revenue has filed a condonation of delay petition as under: “Dates Events/Reasons 10.02.2023 Order of CIT(A) was received in the O/o Pr. CIT-2, Kol. 13.08.2024 Due date for filing of 2nd Appeal. 29.01.2024 ASR is submitted to the O/o PCIT-2, Kolkata through proper channel 16.02.2024 Certificate of filing 2nd appeal was received from the O/o Pr. CIT-2, Kolkata 06.12.2024 Necessary hardcopies of documents/paper/details required for filing 2nd Appeal before Hon’ble ITAT, Kolkata were collected and prepared. 2 ITA No. 2545/Kol/2024 M/s Selvel Media Services Private Limited 11.12.2024 2nd Appeal was filed. It is respectfully submitted that the appeal could not be filed on or before due date due to an immense work load relating to assessment, penalties and writ petition filed by the various assessee in the Calcutta High Court against the order U/s 148A(d) and notice U/s148, as well as collecting and arranging the required documents/files for the 2nd appeal. Therefore, it is requested to kindly condone the delay of 610 days in filing appeal before the Hon'ble ITAT, Kolkata for the sake of substantial justice.” Considering the reasons given for the said delay, we condone the delay and admit this appeal for adjudication. 2. The present appeal arises from order u/s 250 of the Income Tax Act, 1961 (hereinafter “the Act”), passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)”], vide order, dated 10.02.2023 for AY 2014-15. 2.1 The facts of the case are that Ld. AO passed the order making various additions and disallowances and assessing the total income at Rs 70,85,832 as against “nil” income shown. A perusal of the impugned order reveals that relief was afforded by the Ld. CIT(A) to the assessee with respect to the following additions: (i) Interest on TDS of Rs 77,673; (ii) Sales promotion expenses of Rs 2,28,885; (iii) Rs 77,46,502 on account of depreciation on hoardings; (iv) Rs 33,08,095 on account of prior period expenses; and (v) Rs 1,49,51,324 on account of deduction u/s 80IA of the Act. 2.2 Being aggrieved, the Revenue has approached the ITAT with the following grounds of appeal: “1. The CIT(A) has erred in allowing interest on TDS (Rs. 77,673/-) which is not allowable as per the settled position of law. 2. The CIT(A) has erred in allowing sales promotion expenses of Rs. 2,28,885/- without any verification. 3. The CIT(A) has erred in allowing 100% depreciation of Rs. 77,46,502/- on hoarding ignoring the fact that an iron made hoarding has an enduring benefit. 4. The CIT(A) has erred in allowing prior period expenses of Rs. 33,08,095/- which is not allowable as per Act. 3 ITA No. 2545/Kol/2024 M/s Selvel Media Services Private Limited 5. The CIT(A) has erred in allowing deduction u/s 801A of Rs. 49,51,324/- merely relied on the earlier decisions in the case of the assessee, ignoring the provision of the Act and without going deep into the matter of the case. 6. The appellant craves leave to make any amend, addition, alternation, modification etc. of the grounds either before the appellate proceedings, or in the course of appellate proceedings.” 3.0 Before us the Ld. DR read out from various portions of the Ld. AO’s order and supported the findings therein. He also assailed the findings of the Ld. CIT(A) by stating that the impugned order lacked clarity and was not speaking on several issues. He concluded his arguments by saying that the Ld. CIT(A) has mechanically followed earlier years’ orders in deciding a few of the issues. 3.1 The Ld. AR, on the other hand, supported the findings in the impugned order and read out from various portions thereon. The Ld. AR also extensively relied on written submissions. Regarding the issue of interest on TDS, it was stated that the order of Coordinate Bench of ITAT, Kolkata in Welkin Telecom Infra (P.) Ltd. vs. DCIT [2022] 142 taxmann.com 146 (Kolkata - Trib.) covered the issue in favour of the assessee. On the issue of sales promotion expenses of Rs. 2,28,885/-, it was averred that the Ld. CIT(A) has provided a reasoned finding that the AO merely alleged that expenses were internally vouched without pointing out any specific deficiency. Regarding the issue of allowing 100% depreciation of Rs. 77,46,502/- on hoarding, by claiming that iron hoardings have an enduring benefit, it was argued that the Ld. CIT(A)'s decision is fully justified as the issue has been consistently decided in favour of the assessee year after year by the Hon'ble ITAT [ITAT Kolkata in ITA Nos. 1601 & 1602/Kol/2012]. Regarding the issue of allowing prior period expenses of Rs. 33,08,095/-, it was stated that the Ld. CIT(A)’s order is supported by the decision in assessee’s own case before the Hon’ble Calcutta High Court [ITA 362/2009, dated 9th February 2023,] where similar issues were dealt with. Finally, regarding the issue of claim u/s 80IA of the Act, it was stated that the Ld. CIT(A)’s decision is squarely covered in favour of the assessee 4 ITA No. 2545/Kol/2024 M/s Selvel Media Services Private Limited by the Hon’ble Calcutta High Court in assessee’s own case [ITA 362/2009] [ dated 9th February 2023]. 4.0 We have considered the rival submissions and have carefully perused the documents before us. Regarding the issue of interest on TDS, we find that the issue is covered in favour of the assessee by the Coordinate Bench order in the case of Welkin Telecom Infra (supra). Relevant extract in Para 38 of ITAT’s order is as under: \"38. We have heard both the parties and perused the judicial precedents available on this subject. The question before us is, whether the interest paid on non-deduction of TDS/late payment of TDS can be claimed as expenditure for determining the taxable income. The Ld. AR of the assessee pointed out that for claiming any expenditure under the head 'Profits & Gains from Business', it has to be in pursuance to the provisions of sections 30 to 37 of the Act and such expenditure should not be subjected to disallowance u/s. 40 or 43B of the Act. So, it is first required to be ascertained as to whether the interest paid on TDS qualifies as expenditure within any of the provisions contained in sections 30 to 37 of the Act. Before that, it is relevant to first ascertain the nature and allowability of the tax withheld/deducted by the payer. Admittedly, the withholding tax liability is a vicarious liability. The payer of expenditure is required to withhold the tax component (say Rs. 10) set out in Chapter XVII-B of the Act from the gross amount of expenditure (say Rs. 100). The payer acting as the agent of the Government is required to pay the said tax component (Rs. 10) to the credit of the Government. The expenditure (net of TDS) (Rs. 90) is paid to the payee. It is not in dispute that the gross sum (Rs.100) viz., the net expenditure paid (Rs.90) and the withholding tax component thereon (Rs.10) is deductible as business expenditure in terms of section 37 of the Act. To put it simply, the withholding tax/TDS is not in the nature of ‘income-tax’ as defined for the purposes of section 40(a)(ii) of the Act. Instead the TDS deducted and paid on the business expenditure and is thus a deductible item u/s 37 of the Act. Following the ITAT’s order (supra), this issue is decided against the Revenue. 4.1 Regarding the issue of sales promotion expenses of Rs. 2,28,885/-, we find that the Ld. CIT(A) has passed a reasoned order as under: CIT(A)'s Findings (para 10): “In this case, AO did not specifically point out any deficiency in claim of expenditure except stating that they were internally vouched. Disallowance of expenditure u/s 37(1) is warranted only if assessee is unable to establish that such expenditure was incurred wholly and exclusively for the purposes of the business. There is no record of assessee having failed to produce the relevant material for examination and neither is there any 5 ITA No. 2545/Kol/2024 M/s Selvel Media Services Private Limited justification provided in the order for disallowance of 10 percent of the expenses claimed. In view of this, disallowance of expenses is deleted.” We are in agreement with these findings and hence the claim of Revenue on this account is not accepted. 4.2 So far as the issue of allowing 100% depreciation of Rs. 77,46,502/- on hoardings, ostensibly ignoring the fact that iron hoardings have an enduring benefit is concerned, we find that this issue is also covered in favour of the assessee and against the Revenue. The ITAT Kolkata in ITA Nos. 1601 & 1602/Kol/2012 (Para 8-9) has held as under: “8. The facts relating to this issue in brief are that the AO considered the holdings as permanent structure and did not allow 100% depreciation amounting to Rs.1,39,80,376/ claimed by the assessee. When the assessee carried the matter to ld. CIT(A), he allowed the claim of the assessee, by observing that this issue was covered in favour of the assessee in assessee's own case by the decision of ITAT in ITA NO.1065/Kol/2008 (supra). 9. Now the department is in appeal. However, the ld. DR failed to bring any material on record in contravention of the decision taken by the ld. CIT(A) i.e. the issue has been decided in favour of the assessee in assessee’s own case by ITAT for A.Y 2005-06 in ITA No. 1065/Kol/2008 (supra). We, therefore do not see any merit on this issue of the departmental appeal.” 4.3 Ground No. 4 pertaining to allowing of prior period expenses of Rs. 33,08,095/-, is seen to be covered in favour of the assessee and against the Revenue as the Ld. CIT(A)’s order is supported by the decision in assessee’s own case before the Hon’ble Calcutta High Court [ITA 362/2009 [ dated 9th February 2023,] where similar issues were dealt with. Relevant extract from High Court decision (pages 1-3 of the order): “B) Whether on the facts and circumstances of the case, the Income-tax Appellate Tribunal was justified in allowing expenditure for the period prior to Assessment year 2004-05? With regard to the second substantial question of law, the issue is once again covered by the decision of this Court in Sutna Stone and Lime Ltd. vs. Commissioner of Income Tax, 1991 (192) ITR 478 (Cal.) In fact, the decision in Sutna Stone and Lime Co. Ltd. had been relied on and followed by the learned Tribunal and the Tribunal has also pointed out that in the assessee’s own case for the assessment year 2004-05 in ITA 1040/Kol/2008, this issue was decided in favour of the assessee. In the light of the above, the substantial question of law no. 2 is also answered against the revenue.” 6 ITA No. 2545/Kol/2024 M/s Selvel Media Services Private Limited 4.4 Regarding the claim of deduction u/s 80IA of the Act, the Ld. CIT(A)’s decision is supported by the Hon’ble Calcutta High Court in assessee’s own case [ITA 362/2009] [ dated 9th February 2023]. Relevant extract from the High Court’s decision (pages 1-3) is as under: “A) whether on the facts and circumstances of the case the learned Tribunal was justified in law in upholding the contention of the assessee that the deduction of the expenditure for development of toilet blocks, bus shelters and foot over bridges are infrastructural facility as per explanation to Section 80 IA(4) of the Income-tax Act, 1961? \"The first substantial question of law has to be decided against the revenue in the light of the decision of this Court in the case of assessee's sister concern in Principal Commissioner of Income Tax, Kolkata 4, Kolkata Vs. Vantage Advertising Pvt. Ltd. in ITA No. 41 of 2017. In the said decision the said question was answered against the revenue in the following terms: \"The Commissioner of Income Tax (Appeals) and the Tribunal considered the fact and have returned the finding on merits. The Revenue's contention is that the assessee is only an advertising firm putting banner for their own purpose and, therefore, the question of claiming of any deduction under section 801A of the Act would not arise. This appears to be factually incorrect as is seen from the order passed by the CIT [A] as well as the Tribunal where the Tribunal has clearly held that the assessee is engaged in infrastructure development which involves construction of foot over bridge as well as the bus shelter and, therefore, the assessee is entitled to deduction under section 801A of the Act. The Tribunal followed the decision of this Court in the case of Commissioner of Income Tax, Kolkata-IV, Kolkata vs. Selvel Advertising Pvt. Ltd., ITA 49 of 2010 dated 22.4.2010 which was also a similar matter wherein an advertising company engaged in infrastructure development has erected automatic traffic signal and pedestrian foot over bridge and the question was whether this would constitute infrastructure development as contemplated in clause [a] of the Explanation to subsection [4] of section 801A of the Act. The Division Bench by the said judgement had upheld the decision rendered by the Tribunal and dismissed the Revenue's appeal. This decision has attained finality. Therefore, we are of the view that the decision of the Tribunal in so far as the claim of deduction made by the assessee under section 801A of the Act requires to be sustained. Accordingly, substantial questions of law nos. 1 to 4 are answered against the Revenue.\" Following the above, the first substantial question of law is answered against the revenue.\" 5. In result, this appeal of Revenue is dismissed Order pronounced on 04.06.2025 Sd/- Sd/- (Pradip Kumar Choubey) (Sanjay Awasthi) Judicial Member Accountant Member Dated: 04.06.2025 7 ITA No. 2545/Kol/2024 M/s Selvel Media Services Private Limited AK, Sr. P.S. Copy of the order forwarded to: 1. M/s Selvel Media Services Pvt. Ltd 2. Deputy Commissioner of Income Tax 3. CIT(A)- 4. CIT- 5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches "