ZEE AKAASH NEWS PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(4), MUMBAI, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI PAWAN SINGH (JUDICIAL MEMBER) ITA 4124/MUM/2026 Assessment Year: (2017-18) ZEE AKAASH NEWS PRIVATE DEPUTY COMMISSIONER OF LIMITED INCOME TAX, CENTRAL CIRCLE 2(4), MUMBAI. 14TH FLOOR, A- WING, MARATHON Vs. FUTUREX, N.M. JOSHI MARG, AAYAKAR BHAVAN, MAHARSHI LOWER PAREL, MUMBAI 400 013, KARVE ROAD, MUMBAI MUMBAI-400013, MAHARASHTRA MUMBAI-400020, MAHARASHTRA Appellant Respondent

PAN No. AAACZ2474J

Shri Fenil Bhatt, Adv. a/w Shri Appellant represented by: Madhur Agarwal, Adv. Shri Basavaraj Hiremath - CIT Respondent represented by: DR Date of conclusion of hearing: 30-07-2026 Date of pronouncement: 17-09-2026

ORDER PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 10th February, 2026 passed by the learned Commissioner of Income-Tax (Appeals) - 48, Mumbai [in short learned ‘CIT(A)’] for Assessment Year 2017-18, raising following grounds:- “1. Ground 1 - Disallowance under section 40A(2)(b) amounting to Rs. 7,00,00,000/-

1.1 On the facts and circumstances of the case, the Learned Commissioner of Income-tax (Appeals)-48 (hereinafter referred to as the 'Ld. CIT(A)) erred in upholding the action of Speessing Officer ('AO') in making disallowance of Rs. 7 crores, being payment madnefit specified persons, holding that the expenditure incurred is excessive and made to benefit the related concern and hence, covered u/s 40A(2)(b) of the Act. The reasons given by him for doing so are wrong, contrary to the facts of the case and provisions of law.

1.2 On the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate the documents, invoice, and supporting evidences furnished by the assessee, which clearly demonstrated that the transactions were undertaken in the ordinary course of business and were at arm's length, thereby disallowance under the provisions of section 40A(2)(b) of the Act is not warranted.

1.3 On the facts and circumstances of the case, the Ld. CIT(A) erred in sustaining the disallowance under section 40A(2)(b) of the Act by summarily rejecting the arguments of the appellant, without providing any cogent reason of its allegation that the benefits are passed on to the related concerns.

2.1 On the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the action of the Assessing Officer in disallowing the claim of expenditure amounting to Rs. 3,60,00,000 incurred on production of programs. The reasons given by him for doing so are wrong, contrary to the facts of the case and provisions of law.

2.2 On the facts and circumstances of the case, Ld. CIT(A) failed to appreciate that payment made to 'Channel Eight was toward cost of production of various programme in the ordinary course of business. Such expenditure was wholly and exclusively incurred for the purpose of the business of the Appellant and was therefore allowable as a deduction under Section 37(1) of the Act.

2.3 On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the appellant failed to establish the genuineness of the transaction, ignoring the evidences furnished during the course of assessment and appellate proceedings. 2.4 On the facts and circumstances of the case, Ld. CIT(A) uphold the action of AO in making disallowance of Rs. 3.6 crores without appreciating non- appearance beyond assessee's control and cannot be sole basis for making addition. 3. Ground 3 - Addition of unearned revenue of Rs. 43,85,336 3.1 On the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating that the amount of Rs. 43,85,336, shown as unearned revenue, represents advances received during the year in respect of services to be rendered in the subsequent year.

3.2 On the facts and circumstances of the case, Ld. CIT(A) failed to appreciate the documentary evidence submitted by assessee which clearly demonstrate unearned revenue of Rs. 43,85,336 has been duly offered to tax in subsequent year i.e. AY 2018-19 taxing the same would lead to double taxation. 4. Ground 4 - Prior period expenditure of Rs. 16,59,161 4.1 The Ld. CIT(A) erred in law and facts in making disallowance of Rs. 16,59,161 holding the same to be in the nature of prior period expenditure. The reasons given by him are wrong and contrary to the facts of the case and provisions of law. 4.2 The Ld. CIT(A) failed to appreciate that the impugned expenditure pertains to the year under consideration (and not the prior years) and is a part of year end provisions made during the year for the services availed during the year but invoices not received. 4.3 Without prejudice to above, the Ld. CIT(A) failed to appreciate that the appellant has suo moto disallowed 30% of the expenditure as per the provisions of section 40(a) of the Act on account of non-deduction of TDS and therefore, addition by the AO amounts to double disallowance to that extent.” 2. Briefly stated, facts of the case are that the assessee is engaged in the business of broadcasting news and current-affairs programmes through its 24x7 Bengali news channel, ‘Zee 24 Ghanta’, in West Bengal, besides sale of television programmes and programme feeds. For the year under consideration, the assessee filed its return of income on 31/10/2017 declaring total income at ₹13,95,62,230. The return of income filed by the assessee was selected for scrutiny assessment on the parameters of reduction in profit due to Income Computation and Disclosure Standard (ICDS) and deduction and deposit of TDS. The statutory notices under Income Tax Act, 1961 [in short the ‘Act’] were issued and complied with.

i) Disallowance under section 40A(2)(b) of the Act aggregating to Rs. 7,00,00,000 regarding payments made to specified persons (Diligent Media Corporation Ltd and Sky Bangla Pvt Ltd).

ii) Disallowance of Rs. 3,60,00,000 on account of short deduction of TDS and non-verification of genuineness regarding payments to ‘Channel Eight’.

iii) Addition of Rs. 43,85,336 on account of Unearned Revenue which the AO treated as income of the current year.

iv) Disallowance of Prior Period Expenditure amounting to Rs. 16,59,161.

6.1 The facts in brief qua the issue in dispute are that the assessee had incurred advertisement and publicity expenditure of ₹7,28,91,199, which included ₹5.40 crores paid to Diligent Media Corporation Ltd. (‘DMCL’) towards advertisement in DNA newspaper and ₹1.60 crores paid to Sky Bangla Pvt. Ltd. towards advertisement on ‘Aakash Aath’ channel. To substantiate its claim, the assessee had filed party-wise details along with copy of invoice, purchase order along with explanation on the allowability of the claim of expenditure. The Assessing Officer, however, considered the payments to be excessive and unreasonable principally on the ground that the recipients were group concerns. The Assessing Officer observed that the assessee could not substantiate the claim with any comparative data or documents to justify that the transactions were at arm's length.

6.2 Further, the Assessing Officer questioned the payment made to Diligent Media Corporation Limited for advertisement given to ‘DNA’ newspaper. The Assessing Officer referred to the press release by Audit Bureau of Circulation and observed that the newspaper ‘DNA’ did not feature anywhere in highest circulated ABC member publication or in the list of top 10 publications language-wise and sales-wise as certified up to 22nd February, 2019. In relation to payment to the Sky Bangla Private Limited on ‘Akash aath’ channel, he referred to its viewership position by Broadcast Audience Research Council India, and observed that it was not among the top five channels in West Bengal. On that basis, and in the absence of what he considered to be satisfactory comparative evidence, the entire expenditure of ₹7 crore was disallowed under section 40A(2)(b).

6.3 Before the learned CIT(A), the assessee furnished further material, including the official ‘DNA’ rate card, purchase orders and invoices for the respective periods, copies of advertisements actually published, and comparative rate material in respect of ‘Aakash Aath’. The assessee submitted that the ‘DNA’ campaign comprised 130 insertions for an aggregate consideration of ₹5.40 crore, with the average rate per insertion remaining below the published rate of ₹4,25,000. It was further submitted that the ‘Aakash Aath’ rates were comparable to, or lower than, rates charged for similar advertising by other parties. Further the assessee made submission on the issue as under: “ …………………………………… Condition 1: AO is of the opinion that such expenditure is excessive or unreasonable i.e. The AO shall not disallow the expense merely on suspicion. The AO must form an opinion objectively on the basis of material brought on record to demonstrate that the payment made by the appellant was excessive and unreasonable having regard to the market rate. In the present case, Your Honour would appreciate that the Ld. AO has failed to bring any material or evidence to show that the payment made for advertisement was excessive or unreasonable. Condition 2: The AO should prove the payment made is excessive of Fair Market Value ('FMV') of goods or service i.e. The AO should compare the payment made to specified persons with the fair market value to similar goods and service in the market and find the amount of expenses which are excessive and unreasonable and shall disallowance expenses only to that extent. Condition 3: Expense should be legitimate need of the business i.e. The Ld. AO shall conduct comprehensive analysis to conclude that the expense incurred was legitimate need of the business or not. During the year under consideration there was Vidhan Sabha election in the state of West Bengal. The appellant saw this as an opportunity and therefore to increase the number of viewership and boost advertisement revenue income the appellant incurred advertisement and publicity expense. Contention 4: Provider and recipient of the advertisement services are assessed at same tax rate, The Ld. AO failed to appreciate the fact that the appellant and DMCL / Sky Bangla are assessed at same tax rate. The expenditure claimed by the appellant is offered to tax as income by the said parties in their return of income.” 6.4 The learned CIT(A), nevertheless, sustained the disallowance. He principally relied upon five alleged deficiencies: (i) the purchase orders were for lump-sum amounts; (ii) the expenditure in the January-March quarter was substantially higher than that in the preceding quarter; (iii) the invoices did not themselves contain detailed particulars of the advertisements; (iv) the format and numbering of one invoice differed from earlier invoices; and (v) the Aakash Aath transaction was a package arrangement without telecast logs or certificates accompanying the invoice. The learned CIT(A) concluded that the documents were self-serving and that the payments represented arbitrary transfers for the benefit of related parties. For ready reference, finding of ld CIT(A) is reproduced as under: “1. Ground No. 1: Disallowance under section 40A(2)(b) - Rs. 7,00,00,000/- 1.1 The AO observed that the appellant had made substantial payments to related parties, namely Diligent Media Corporation Ltd (DMCL) for Rs. 5.4 Crores and Sky Bangla Pvt Ltd for Rs. 1.6 Crores, towards advertisement expenses. The AO invoked the provisions of section 40A(2)(b) of the Act and disallowed the entire expenditure of Rs. 7 Crores holding it to be excessive and unreasonable. The AO noted that the DNA newspaper (DMCL) and Aakash Aath Channel (Sky Bangla) did not feature in the top tier of circulation/viewership lists, and thus the payments made to group companies amounted to siphoning of funds. 1.2 The provisions of section 40A(2)(b) of the Act empower the Assessing Officer to disallow expenditure incurred by an assessee in respect of which payment has been made to a specified person (relative/associate), if the AO is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities. The appellant has argued that the expenditure was incurred for commercial expediency to boost viewership during the West Bengal Vidhan Sabha elections. The appellant further argued in the additional submissions that the rates paid were as per the "rate card" of DNA and comparable to Zee 24 Ghanta's own rates. However, the arguments of the appellant are not convincing. In addition to the lack of independent benchmarking with fair market value of similar transaction and the commercial disproportion discussed in the assessment order, a closer scrutiny of the additional documents submitted by the appellant reveals contradictions which undermine the claim of arm's length pricing. Analysis of Documentary Deficiencies and Inconsistencies reveals that: i) Lump Sum nature of Purchase Orders and Invoices: The appellant has claimed that the payments were based on a specific "official rate card" of Rs. 4,25,000 per insertion for the "DNA After Hours" segment. However, the Purchase Orders (POs) and Invoices submitted contradict this claim. PO No. ZANPL/002A/16-17 dated 01.04.2016 is for a lump sum amount of Rs. 2,00,00,000 for "Advertisement in DNA News paper from Apr 16 to Sep'16" with a "Quantity" of " PO No. ZANPL/008/16-17 dated dated 01.10.2016 is for a lump sum of Rs. 90,00,000. PO No. ZANPL/0101 dated 01.01.2017 iS MENT 2,50,00,000. a lump sum of Rs.2,50,00,000. If the transaction were truly based on a per-insertion rate card, the Purchase Orders would specify a number of insertions at a specific unit rate (e.g., "50 insertions @ Rs. 4.25 Lakhs"). Instead, the POs reflect a pre-determined, round- figure budget allocation (Rs. 2 Crores, Rs. 2.5 Crores) irrespective of the actual volume of advertising. This indicates that the "rate card" defense is an afterthought, and the payments were actually fixed lump sums transferred to the sister concern. ii) Inconsistency in Billing and Price Fluctuation: There is a contradiction in the pricing between the quarters.

For the period October to December 2016 (3 months), the billing was Rs. 90,00,000. For the immediately succeeding period January to March 2017 (3) months), the billing skyrocketed to Rs. 2,50,00,000. This represents an unexplained increase of nearly 2.8 times in the monthly expenditure within the same financial year. The appellant's explanation of election-related publicity does not justify such a massive variance in billing for the same newspaper "DNA," especially when the Purchase Order descriptions remain identical ("Advertisement in DNA Newspaper"). iii) Deficiencies in Invoice Details: The invoices submitted (e.g., Invoice No. Misc/03/16-17 and Invoice No. DN05766) are lacking in necessary particulars. They merely state "Advertisement in DNA Newspaper" for a specific period and quote a total amount. A standard arm's length advertising invoice would detail the dates of publication, the size of the ad (column centimeters), the edition, and the caption of the ad to allow for verification against the release orders. The absence of these basic details in the invoices prevents any verification of whether 60 ads were actually published as claimed in the submissions. iv) Contradictions in Document Formats It is also observed that the invoice for the last quarter (Invoice No. DN05766 dated 31.03.2017) differs significantly in format, font, and series numbering from the invoices of the previous quarters (e.g.. Invoice No. Misc/04/16-17). despite being from the same vendor, Diligent Media Corporation Ltd. The change from a "Misc" series to a "DN" series specifically for the year-end invoice of Rs. 2.5 Crores suggests an ad-hoc arrangement to book expenses at the closure of the financial year rather than a consistent running account. v) Inconsistency in Sky Bangla Transaction: Regarding the payment to Sky Bangla, the Invoice (P/001/16-17) and Purchase Order are for a lump sum of Rs. 1.6 Crores for a short duration of 45 days (April 1 to May 15). The Deal Letter is also a vague "package" offer. The appellant's later submission of a comparative rate chart showing per-second rates (Rs. 190/5 sec) contradicts the actual billing, which was a flat package fee. There is no evidence (such as telecast logs or certificates) attached to the invoice to show that the volume of FCT (Free Commercial Time) consumed actually justified the Rs. 1.6 Crore valuation based on the unit rates provided. Lastly as required u/s 40A(2)(b); appellant is required to demonstrate with supporting evidence that transaction was as per fair market value consistent with third party market transaction values which appellant has failed to do. Therefore, the documents submitted by the appellant are self-serving, inconsistent, and lack the granularity expected in genuine third-party similarity commercial dealings. They confirm the AO's finding that the payments were not based on fair market value and actual service utilization but were arbitrary amounts transferred to benefit related parties.”

6.5 Before us, the learned counsel for the assessee referred to paper book pages from 139 to 158A, comprising of detailed purchase orders, invoices etc in relation to payments to both parties.

6.6 The learned counsel submitted that advertisement in print media in DNA Mumbai was given because advertisement in other newspapers was an expensive affair. The learned counsel filed a copy of the relevant advertisements printed in the newspaper. The Learned counsel also referred to paper book page 141 to 143, which are a copy of invoices raised which include purchase order issued by the assessee to Sky B Bangla Private Limited, copy of invoice issued by Sky B Bangla Private Limited dated 02.06.2016 with reference to purchase order dated 04.04.2016. Further, offer letter of Sky B Bangla to the assessee is also placed on paper book page 143.

6.7 Further on page 145, purchase order issued by the assessee to Diligent Media Corporation Limited dated 1st January 2017 and corresponding invoice issued by said company is placed on paper book page 144. Similarly, another purchase order issued by the assessee dated 1st April 2016 is available on paper book page 147 and corresponding invoice issued by Diligent Media Corporation Limited is available on paper book page 146. Similarly, copy of the other purchase order and corresponding invoice are available on page 148 to 150.

6.8 Further, the learned counsel referred to justification of the market value filed before the learned CIT(A) available on paper book pages 391 to 394. For ready reference, said submissions are reproduced as under:- 2.1 DNA Newspaper had a targeted English-speaking urban readership, with wide circulation in different metros and Tier-I cities, particularly amongst decision-makers, senior executives, and business professionals. The publication was known for its editorial focus on current affairs, business, and urban issues, making it an ideal medium to reach corporate entities 2.2 The appellant's objective was to build brand visibility of 'Zee 24 Ghanta' among corporate with the ultimate aim of attracting advertisement revenue for the channel. 2.3 To substantiate that the payments made to DMCL were not excessive, the appellant submits: 2.3.1 During the relevant financial year, the appellant undertook a structured advertising campaign in the Mumbai edition of DNA Newspaper, specifically the "DNA After Hours" segment. The advertisements were published at a premium visual spot that guarantees strong reader visibility. 2.3.2 As per the official rate card issued by DNA, the standard rate for a single insertion in this format and segment was Rs 4,25,000. The rate card, which applied uniformly to all external advertisers, has been enclosed to substantiate that the payments made by the appellant were fully aligned with prevailing market rates. 2.3.3 The appellant adopted a deliberate placement strategy involving repeated, high-visibility insertions across the financial year 2016-17, with the strategic objective of enhancing brand recall and retention among a targeted, influential urban readership. This audience segment included corporate decision-makers and media planners, whose engagement was critical to driving future advertisement revenue for the appellant's news channel. 2.3.4 The total expenditure incurred by the appellant for advertisements in DNA Newspaper amounted to Rs 5.4 crores during the relevant financial year. This expenditure was spread across three invoice periods, with the details summarized below: Period Average Cost per Ad (Rs) No. of Total Amount Paid Advertisements (Rs) April 2016 – September 2016 48 2,00,00,000 4,16,667 October 2016 – December 2016 22 90,00,000 4,09,091 January 2017 – March 2017 60 2,50,00,000 4,16,667

2.3.5 The amounts paid by the appellant are closely aligned with the published rate card rate of Rs 4,25,000 per insertion. Therefore, the cost incurred by the appellant is completely in line with market norms reaffirming that the expenditure was neither excessive nor unreasonable. In support of its claim, the appellant has furnished comprehensive documentation such as – Reference Annexure A ● the official rate card issued by DNA Newspaper; ● copies of invoices and purchase order corresponding to each billing period; ● physical newspaper clippings evidencing actual publication of the advertisements.

2.3.6 These materials, taken together, provide clear evidence that the transactions were conducted at fair market value and were neither excessive nor unreasonable in comparison with those applicable to external, unrelated advertisers for similar placements during the same period. This substantiates that the expenditure was incurred wholly and exclusively for business purposes and on arm's length terms. 2.3.7 It is settled law that commercial expediency lies within the domain of the assessee, and the Revenue cannot substitute its judgment unless there is evidence of clear misuse or diversion of funds, which is not the case here. The appellant's objective was to increase the brand equity of its news channel by targeting a niche but influential readership, and the costs incurred for that purpose were well within market norms. Hence, the payments to DMCL are at arm's length, fully substantiated, and justifiable as business expenditure under section 37(1) of the Act. Advertisement in Aakash Aath Channel 2.4 The appellant incurred advertisement expenditure of Rs 1.6 crores (copy of invoice attached as Annexure B) towards payments made to Sky Bangla Pvt. Ltd., for promoting its 24x7 Bengali news channel 'Zee 24 Ghanta' through the medium of Aakash Aath, a Bengali-language general entertainment and infotainment channel with a sturdy viewership base in West Bengal. The commercial rationale for engaging Sky Bangla Pvt. Ltd. is as follows: 2.4.1 Aakash Aath is a Kolkata-based regional TV channel with a mass-market Bengali-speaking audience, making it an ideal platform for reaching a broad demographic in West Bengal. 2.4.2 The channel broadcasts a diverse mix of news, current affairs, entertainment, and social programming, ensuring that the advertisement reaches both urban and rural Bengali viewers. 2.4.3 The timing of the campaign coincided with the West Bengal Vidhan Sabha elections, which traditionally attracts higher TV viewership, particularly for political content among regional audiences. 2.4.4 The advertisements were strategically placed in L-Band, Aster Band, and Scroll Band formats, offering high-frequency and cost-effective visibility. Format Description L-Band Rectangular static display at the bottom of the screen during programming Aster Band Side band scrolls or highlights running parallel to programming Scroll Continuous ticker-format text Band message, typically used for promotional slogans

These formats are widely used for mass reach with repeated visibility, especially during prime-time news and entertainment slots. 2.4.5 To substantiate that the payments made to Skybangla were not excessive, the appellant submits: The appellant would like to submit the following rate chart comparison between A Aakash Aath and Zee 24 Ghanta to demonstrate that the payments made were consistent with market rates and not excessive – Reference C. This comparison highlights the advertising costs for various formats offered by both channels during the same period. Advertising Format Aakash Aath (per Zee 24 Ghanta Rate (per unit) - Sky Bangla unit) Rs 190 / 5 sec Rs 350 / 5 sec FCT (Fixed Commercial Time) BUGS Rs 7,000 per unit Rs 7,500 per unit ASTOR BAND Rs 1,250 per unit Rs 1,400 per unit LBAND Rs 1,500 per unit Rs 1,623 per unit SCROLL Rs 5,500 per unit Rs 5,820 per unit

The comparative rate chart clearly demonstrates that the amounts paid by the appellant to Sky Bangla (Aakash Aath) for each format of advertisement were either equal to or lower than the rates charged by Zee 24 Ghanta, a comparable regional broadcaster in the same market. The FCT rate charged by Sky Bangla (Rs 190 per 5 seconds) was significantly lower than Zee 24 Ghanta's (Rs 350 per 5 seconds), evidencing cost-effectiveness. For high-frequency formats such as BUGS, ASTOR BAND, LBAND, and SCROLL, the difference in rates ranges from 6% to 12% lower. The Zee 24 Ghanta corresponding invoices serves as reliable third- party benchmarks for determining arm's length pricing for similar services. Since both entities operate in the same geographic and linguistic market (Bengali regional TV in West Bengal), and target similar audiences, they form valid comparables. 2.3.8 The comparative rate chart, clearly establishes that the payments made to Sky Bangla Pvt. Ltd. were at arm's length, reasonable, and aligned with industry norms. The rates charged were equal to or lower than comparable services provided by another independent broadcaster (Zee 24 Ghanta), thereby rebutting any presumption of excessive or unjustified payments. 2.3.9 Accordingly, the disallowance of Rs 1.60 crores under Section 40A(2)(b) is arbitrary, factually incorrect, and deserves to be deleted.

6.9 Further, the learned counsel referred to paper book page 395 and drawn our attention to the advertisement rates charged by the assessee from independent parties. According to the learned counsel, rate of Rs.4,25,000/- was charged in edition of ‘DNA After Hours’ on Sky B's page for a square centimeter for Rs.4,25,000, whereas the corresponding money charged to the assessee is less than that, and therefore the market value of the services obtained from the related party is much higher as compared to the charges paid to the related party. And therefore, no disallowance is called for under section 40A(2)(b) of the Act.

6.10 Similarly, regarding the fair market value charged by Sky B Bangla Private Limited from independent parties in respect of the identical services, the learned counsel referred to paper book page 415 to 419 of the paper book and submitted that rate charged to the related party, i.e. the assessee, is much lower than the rate charged for telecasting the advertisements of other independent parties. He submitted that in respect of advertisement of ‘BS Diagnostic’, rate of per 5 seconds has been charged at Rs.350. And similarly, advertisement of ‘Orient Fans’ were charged at the rate of Rs.7,500 per second during program of ‘Bangala Ballot’. He submitted that this was the period of election in Bengal. In view of the specific instances, the fair market value being not higher than the expenditure incurred by the assessee, no disallowance was required.

6.11 Per contra, the learned DR relied on the order of the lower authorities.

6.12 We have heard rival submissions of the parties and perused the relevant material on record. We find that though the Assessing Officer has made ultimate addition invoking Section 40A(2)(b), but in his reasoning, he has raised the doubt on the rendering of the services itself. But since he has not made any addition in respect of non-rendering of the services and he has made addition only questioning the market value of those services, therefore, we are not going into the issue whether those services were actually rendered or not. Further, since the disallowance is one under section 40A(2)(b) of the Act, the fact that a payment is made to a specified person is a statutory condition for invoking the provision; it does not, by itself, render the expenditure excessive or unreasonable. The statutory enquiry is whether the expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made. Equally, the assessee cannot succeed merely by producing the related-party invoices. The assessee is required to substantiate the commercial transaction and the reasonableness of the consideration. The Hon’ble Bombay High Court in CIT v. Shatrunjay Diamonds [2003] 261 ITR 258 (Bom) has emphasised the need for cogent evidence in relation to payments to specified persons. The converse is equally important: once relevant material demonstrating the prevailing market value is placed on record, the Revenue must examine that material and bring contrary evidence on record before disallowing the expenditure.

6.13 In the present case, the assessee did not rest its claim merely upon the purchase orders and invoices. In respect of the DNA campaign, it furnished the published rate card showing a rate of ₹4,25,000 per insertion, together with the purchase orders, corresponding invoices and copies of the advertisements. The detailed sheets accompanying the purchase orders also specified the number of insertions and the applicable rate. The three billing periods comprised 48 insertions for ₹2 crore, 22 insertions for ₹90 lakh and 60 insertions for ₹2.50 crore. The corresponding average cost per insertion worked out to approximately ₹4,16,667, ₹4,09,091 and ₹4,16,667 respectively. Thus, in each of the three periods, the effective rate was below the stated rate-card rate of ₹4,25,000 per insertion. The aggregate of the three periods is 130 insertions for ₹5.40 crore, whereas 130 insertions at the stated rate of ₹4,25,000 would amount to ₹5.525 crore.

6.14 The learned CIT(A) treated the lump-sum figures appearing in the purchase orders as destructive of the assessee’s explanation. We are unable to agree. A purchase order may specify the aggregate contractual value, while the detailed schedule accompanying it may contain the number of insertions and the applicable unit rate. The mere fact that the face of the purchase order contains an aggregate amount cannot convert otherwise supporting schedules into an afterthought. More importantly, the learned CIT(A) has not demonstrated that the detailed schedules relied upon by the assessee were false, fabricated or inconsistent with the corresponding invoices.

6.15 The second objection of the learned CIT(A) was that the expenditure for January-March 2017 was ₹2.50 crore as against ₹90 lakh for October-December 2016, representing an increase of about 2.78 times in the aggregate quarterly billing. This reasoning overlooks the corresponding increase in the number of advertisements—from 22 insertions in the latter period to 60 insertions in the former. The average cost per insertion, in fact, remained substantially constant and below the stated rate-card rate. The assessee also explained that the January-March period coincided with the West Bengal Legislative Assembly elections , a period of heightened advertising demand and correspondingly higher market rates, as reflected in the independent third-party rate instances placed on record. The learned CIT(A) rejected this explanation merely because the description in the purchase orders remained the same. Such reasoning does not address the relevant question under section 40A(2)(b), namely, whether the consideration paid per unit of service was excessive or unreasonable having regard to its fair market value.

6.16 The third objection was that the invoices did not themselves contain particulars such as the dates of publication, size of advertisements and editions. The learned CIT(A), however, failed to consider the detailed sheets accompanying the invoices and purchase orders, which contained the particulars necessary for identifying the advertisements. The absence of every detail on the face of the invoice cannot, by itself, establish that the underlying expenditure was excessive. Nor can it substitute for an enquiry into the fair market value of the services.

6.17 The fourth objection relates to the difference in format, font and series numbering of the last invoice. In our considered view, an internal change in a vendor's invoice format or numbering series is an administrative matter for that vendor and is not, by itself, a determinative test of the fair market value of the underlying service. This circumstance has no rational nexus with the statutory test under section 40A(2)(b). Unless the Revenue establishes that the invoice was fabricated or that the underlying service was not rendered, a difference in invoice format or series numbering cannot determine whether the consideration paid was excessive or unreasonable. Indeed, the Assessing Officer did not make a separate disallowance on the ground that the advertisements were not actually published.

6.18 The fifth objection concerns the payment of ₹1.60 crore to Sky Bangla Pvt. Ltd. for advertising on Aakash Aath. Here again, the assessee furnished the purchase order, invoice and comparative rate material. The assessee specifically demonstrated that the rates for the relevant advertising formats were comparable with, and in several instances lower than, the rates of the assessee’s own channel. More significantly, before us, attention was drawn to independent instances of rates charged by Sky Bangla to other advertisers, including the material placed at pages 415 to 419 of the paper book. The learned CIT(A) did not disprove those comparables; he merely observed that the contractual consideration was a package amount and that telecast logs were not attached to the invoice.

6.19 The objection again proceeds on an erroneous premise. A package arrangement does not cease to have a market value merely because the consideration is contractually expressed as a lump sum. The relevant question is whether the aggregate consideration can be related to the services contracted for and whether comparable market evidence supports its reasonableness. The assessee furnished such comparative material, and the learned CIT(A) has not brought any contrary market quotation or independent comparable transaction on record.

6.20 We are also unable to approve the broad conclusion that the payments constituted “siphoning of funds” merely because the recipients were related parties. Such a serious conclusion must rest on positive material demonstrating diversion or inflation of expenditure. No such material has been identified either by the Assessing Officer or by the learned CIT(A).

6.21 The decision of the Hon’ble Gujarat High Court in CIT v. Ashok J. Patel [2014] 43 taxmann.com 227 (Guj) also underscores that a disallowance under section 40A(2)(b) cannot rest upon an ad hoc assessment divorced from a determination of fair market value and comparable instances. The present case stands on an even stronger footing for the assessee because the assessee has itself placed rate-card and comparable material on record.

6.22 Thus, the learned CIT(A), instead of testing the material furnished by the assessee against the statutory yardstick of fair market value, has treated incidental documentary features as conclusive against the assessee. We find that approach unsustainable. The Revenue has neither identified the fair market value of the services nor established any excess over such value. The material on record, on the contrary, demonstrates that the effective rates paid by the assessee were in line with, and in several respects below, the rates relied upon by the assessee as market benchmarks.

6.23 We, therefore, find no justification for sustaining the disallowance of ₹7,00,00,000 under section 40A(2)(b) of the Act. The same is directed to be deleted. The ground No. 1 of the appeal is accordingly allowed.

Ground No. 2 – Payment to Channel Eight: ₹3,60,00,000

7.1 The assessee paid ₹3.60 crore to Channel Eight towards production of programmes to be broadcast on its channel. The expenditure was initially booked under the head ‘Event Management Fees’, which the assessee explained before the Assessing Officer as an inadvertent classification; according to the assessee, the expenditure was in substance the cost of production of television programmes. The assessee deducted tax at source under section 194C at 1 per cent. The Assessing Officer considered that the payment was in the nature of professional/technical services attracting section 194J at the rate of 10% and also drew an adverse inference from the non- compliance of Channel Eight with summons issued under section 131. He accordingly disallowed the entire expenditure.

7.2 Before the learned CIT(A), the assessee furnished material relating to the identity and financial particulars of Channel Eight, including its PAN, income-tax return acknowledgment, bank statements and ledger details, besides invoices and purchase orders. It was also submitted that Channel Eight had produced programmes such as ‘Sahityer Sera Samay’, ‘Janani’, ‘Puja Asche’, ‘Pujor Bhoj’, ‘Asche Bochor Abar Hobe’ and other programmes for telecast on the assessee’s channel. The learned CIT(A), however, sustained the disallowance principally on the grounds that Channel Eight did not appear in response to summons under section 131, that the expenditure had been described as ‘Event Management Fees’ in the books, and that the assessee had not produced what the CIT(A) regarded as independent corroborative evidence such as production tapes, telecast certificates or copyright assignments. He concluded that the transaction was not genuine and that the assessee had failed to establish that the expenditure was incurred wholly and exclusively for business purposes. The relevant finding of ld CIT(A) is reproduced as under: “1.3.2 The appellant has challenged the disallowance primarily on the technical ground of TDS rates (Section 194C vs 194J). However, the issue goes deeper into the very allowability of the expense under Section 37 of the Act. Section 37(1) of the Act provides that any expenditure (not being capital or personal in nature) laid out or expended wholly and exclusively for the purposes of the business is allowable. The burden of proof to establish that the expenditure was "wholly and exclusively" for business lies on the assessee. This burden includes proving the genuineness of the transaction. A transaction that is not genuine cannot be said to be for the purpose of business. ii) In this case, the Assessing Officer issued summons u/s 131 to the payee "Channel Eight" to verify the transaction, but the payee failed to appear. The appellant claims to have submitted invoices and ledgers, but mere paper documentation is insufficient when the counterparty refuses to confirm the transaction. If the party receiving the payment does not exist at the given address or evades statutory summons, the very reality of the services rendered is called into question. iii) The appellant has failed to produce the party or any independent evidence (such as production tapes, third-party telecast certificates, or copyright assignments) to prove that "Channel Eight" actually produced and delivered the programs named "Sahityer Sera Samay", "Janani", etc.. Without proof of delivery of services, the expense cannot be allowed u/s 37.

iv) It is pertinent to note that the appellant recorded these expenses as "Event Management Fees" in its books but claimed they were for "Production of Programs" during assessment. This shifting stand regarding the nature of the expense indicates an attempt to obscure the true nature of the transaction. Booking a production cost as event management fee and then deducting TDS at the lower contractual rate of 1% (instead of 10% for technical services) suggests a colorable device adopted to accommodate the entry. v) The combination of the payee's non-appearance, the misclassification of the expense in the books, and the lack of independent corroborative evidence regarding the actual production of content leads to the conclusion that the transaction is not genuine. Since the genuineness of the expenditure is not established, the condition of it being incurred "wholly and exclusively for the purpose of business" under Section 37 is not met. Consequently, the addition is confirmed not just on the basis of incorrect TDS, but on the substantive ground that the appellant failed to discharge the onus of proving the genuineness of the expenditure as required u/s 37 of the Act.” 7.3 Before us, the learned counsel for the assessee referred to page 152 and 153, which are the invoices issued by Channel 8 and purchase order by the issue for production of various Durga Puja related programs including 'Pujo Acche', 'Pujor Bhoj', 'Pujor Fashion', 'Asche Bochar Abar Hobe'. The learned counsel also referred to the application for admission of the additional evidence under section rule 46A before the learned CIT(A). It was submitted that assessee entered into production of TV programs. The assessee filed documents in support of identity and creditworthiness of Channel 8 and genuineness of the transaction between the assessee and Channel 8, including PAN card, ITR acknowledgment, bank statement, and ledger copies, a copy of which is available on paper book page 206 to 208.

7.4 We have heard rival submissions of the parties and perused the relevant material on record. The issue in dispute is (i) whether the amount paid to Channel 8 is in the nature of a contract receipt or it was receipt in the nature of professional or technical services; and (ii) whether services rendered wholly and exclusively or not.

7.5 The reasoning of the learned CIT(A) suffers from two fundamental infirmities. Firstly, non-appearance of the payee pursuant to summons under section 131 is a circumstance requiring further verification; it is not, by itself, proof that the transaction is fictitious. The assessee had furnished documentary material concerning the identity of the payee, its tax particulars, banking transactions, ledger account, invoices and purchase order. The assessee had also identified the programmes produced for it. The learned CIT(A) has not demonstrated any contradiction in those documents, any cash movement, any return of consideration to the assessee, or any other material establishing that the expenditure was sham. The principle that mere non- appearance of a party, in the face of substantive documentary evidence, cannot by itself justify rejection of a transaction has also been recognised by the Hon’ble Bombay High Court in CIT v. Nikunj Eximp Enterprises (P.) Ltd. [2015] 372 ITR 619 (Bom). While that decision arose in the context of purchases, the underlying evidentiary principle is of relevance: adverse inference cannot rest solely upon the failure of a third party to respond when the assessee has furnished other contemporaneous evidence.

7.6 Secondly, the learned CIT(A) has attached undue significance to the accounting nomenclature ‘Event Management Fees’. It is the substantive nature of the expenditure, and not merely the nomenclature under which it was initially recorded, that has to be examined. The assessee explained during assessment itself that the expenditure had been inadvertently booked under that head and was actually incurred towards production of television programmes. The documentary material relating to the programmes and the corresponding purchase order/invoices has not been shown to be false.

7.7 As regards the applicable TDS provision, the conclusion of the lower authorities that production of programmes for broadcasting or telecasting necessarily falls under section 194J cannot be accepted. Explanation to section 194C expressly includes “broadcasting and telecasting including production of programmes for such broadcasting or telecasting” within the expression “work”. The Hon’ble Delhi High Court in CIT v. Prasar Bharati (Broadcasting Corporation of India) [2007] 292 ITR 580 (Del) held that the specific provision contained in section 194C governing production of programmes for broadcasting/telecasting prevails over the more general provision contained in section 194J. The same principle has been followed in decisions concerning television programme production. The assessee’s claim, therefore, cannot be rejected by simply characterising the programme-production expenditure as professional or technical fees under section 194J.

7.8 We also find that the learned CIT(A) proceeded upon the premise that the assessee was required to produce the payee itself or produce specific forms of evidence such as production tapes or copyright assignments. In our opinion , what was 24 required is a satisfactory appreciation of the totality of the evidence. In the present case, the documentary evidence furnished by the assessee has not been displaced by any positive material brought on record by the Revenue. We therefore find that the learned CIT(A) was not justified in converting the payee’s non- appearance into a finding of falsity, nor in treating the accounting description as determinative of the nature of the underlying expenditure. As regards the rate of TDS, the Revenue has failed to establish that the payment in question was a payment for professional or technical services falling under section 194J. Consequently, the very foundation of the disallowance on the basis adopted by the Assessing Officer and sustained by the learned CIT(A) does not survive. The disallowance of ₹3,60,00,000 is accordingly deleted. The ground No. 2 of the appeal is accordingly allowed.

Ground No. 3 – Unearned Revenue: ₹43,85,336

8.1 The facts in brief for the issue in dispute are that the assessee had /raised invoices aggregating to ₹43,85,336 during the relevant previous year but credited the corresponding amount as ‘unearned revenue’ deferring it to the subsequent year, contending that the advertising/telecasting services were to be rendered in the subsequent year. The Assessing Officer treated the amount as taxable in the year under consideration primarily because the invoices had been raised during the relevant financial year. According to the Assessing Officer, the assessee followed the mercantile system of accounting, and under said system, income accrued when the right to receive it arises.

8.2 Before the learned CIT(A), the assessee claimed that services of telecasting corresponding to those invoices were rendered in the subsequent year and therefore, assessee has considered the revenue corresponding to those invoices in the subsequent assessment year 2017-18. But, the learned CIT(A) endorsed that reasoning, holding that under the mercantile system income accrues when the right to receive arises and that the raising of an invoice ordinarily establishes such right. He further observed that the assessee had not produced contractual clauses showing that the right to receive payment arose only upon telecast and held that any subsequent-year taxation could be dealt with by consequential relief.

8.3 Before us, the learned counsel for the assessee further submitted that since no services were rendered corresponding to the invoices raised, and therefore, though the invoices were raised, the corresponding income did not accrue. It was submitted those invoices were in the nature of the estimate and not actual billing of the services rendered. It was submitted that books of accounts may not be determinative factor while deciding the accrual of income and it has to be examined as per provisions of Income-tax Act. Alternatively, the learned counsel submitted that the invoices represented advance billing in respect of telecast services to be rendered subsequently and that the assessee had, in fact, offered the corresponding income to tax in the subsequent assessment year 2017-18 and therefore it is a tax-neutral exercise. Reliance was also placed on the principle laid down by the Hon’ble Supreme Court in CIT v. Excel Industries Ltd. [2013] 358 ITR 295 (SC).

8.4 We have heard rival submissions of the parties and perused the relevant material on record. We find that the whether income accrued corresponding the revenue booked is required to be determined on verification of period when the actual services were rendered. The reasoning adopted by the learned CIT(A) that the mere raising of an invoice necessarily results in accrual of taxable income cannot be accepted as an absolute proposition. Under the mercantile system, what is relevant is the accrual of a legally enforceable right to receive income. The accounting entry or nomenclature is not conclusive of the year in which income accrues. The assessee has specifically contended that the corresponding advertising services were to be rendered in the subsequent year and that the amount represented advance/unearned revenue. The assessment order itself contains a tabulation of the underlying invoices showing service periods extending into the subsequent financial year. The question, therefore, is factual and requires examination of the underlying agreements, invoices, period of telecast and actual rendering of services. The learned CIT(A) has proceeded largely on the premise that an invoice creates an unconditional right to receive the amount. That proposition cannot be applied without examining the terms of the underlying arrangement. If the invoice represented only advance consideration for services which were to be performed subsequently, accrual of the corresponding service revenue cannot be determined merely from the date of the invoice. At the same time, the assessee’s alternative contention that the amount has already been offered to tax in the subsequent year also requires verification. The principle enunciated by the Hon’ble Supreme Court in CIT v. Excel Industries Ltd. (supra) recognises that where the dispute is essentially one of the year of taxability and the income has in fact been subjected to tax in another year, the Revenue should not pursue a purely revenue-neutral exercise divorced from the question of real accrual.

8.5 We, therefore, consider it appropriate to restore this issue to the file of the Assessing Officer for limited verification of the following:

(i) the actual period during which the advertising/telecasting services covered by the disputed amount were rendered;

(ii) whether the amount represented advance consideration for services to be rendered in the subsequent year; and

(iii) whether, and to what extent, the corresponding amount has actually been offered to tax by the assessee in the subsequent assessment year.

8.6 The Assessing Officer shall decide the issue afresh in accordance with law after affording adequate opportunity of hearing to the assessee. Needless to say, the same income cannot be subjected to tax twice merely on account of a difference in the year of recognition. The ground No. 3 is allowed for statistical purposes.

Ground No. 4 – Prior-period expenditure: ₹16,59,161

9.1 The assessee had made a provision of ₹16,59,161 towards commission expenses payable to Prachar Communications Pvt. Ltd. According to the assessee, the provision represented expenditure relating to services for the relevant year, for which invoices had not been received by the year-end. Since tax had not been deducted at source on the provision, the assessee had suo motu disallowed 30 per cent thereof under section 40(a)(ia). It was further explained that when the invoices were subsequently received, the corresponding provision was reversed and the liability was transferred to the respective party account. But, the Assessing Officer treated the expenditure as pertaining to earlier financial years on the basis of the invoices subsequently received. The learned CIT(A) sustained the disallowance on the ground that the assessee had failed to establish with evidence that the provision actually related to services rendered during the year under consideration.

9.2 Before us, the learned counsel for the assessee submitted that those expenses have already been considered in financial year 2014-15 and 2015-16, and in year under consideration they were not claimed, and therefore making disallowance is not warranted.

9.3 We have heard rival submissions of the parties and perused the relevant material on record. The material placed before us indicates that the assessee had created a provision during the year and had already disallowed 30 per cent thereof under section 40(a)(ia). The assessee has further explained that the invoices subsequently received were adjusted against provisions created in the books and that the expenditure represented liabilities pertaining to different years. The precise accounting trail, however, requires verification. The assessee itself has referred to invoices aggregating to ₹10,64,585 and ₹6,09,307, while the provision under dispute is stated to be ₹16,59,161. The relationship between the individual invoices, the corresponding provisions, their reversals and the expenditure actually claimed in the year under consideration therefore requires reconciliation. The learned CIT(A) was not justified in confirming the entire addition merely because the invoices were received subsequently. Receipt of an invoice in a subsequent year does not, by itself, determine the year in which the underlying liability accrued. Conversely, a mere provision also cannot establish allowability unless the liability was incurred or had accrued during the relevant year. The correct test is the year in which the liability accrued in accordance with the mercantile system regularly followed by the assessee. The Hon’ble Supreme Court in Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC) has recognised that the accounting entry is not decisive of the allowability of an expenditure; the real nature and accrual of the liability have to be examined in accordance with law. There is, however, no justification for subjecting to disallowance again the 30 per cent of the provision which the assessee had already suo motu disallowed under section 40(a)(ia). To that extent, a further disallowance would plainly result in duplication.

9.4 Accordingly, we set aside the finding of the learned CIT(A) and restore the issue to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall verify:

(i) the year in which the underlying services were actually rendered;

(ii) the corresponding provisions made by the assessee in the books;

(iii) the subsequent invoices and their adjustment against the provisions;

(iv) whether any part of the expenditure had already been claimed and allowed in an earlier assessment year; and

(v) the extent of the amount already disallowed by the assessee under section 40(a)(ia).

9.5 The Assessing Officer shall thereafter determine the amount, if any, legitimately disallowable, after allowing due opportunity to the assessee. We make it clear that the amount already disallowed by the assessee under section 40(a)(ia) shall not be disallowed once again on the same factual basis. Ground No. 4 is allowed for statistical purposes.

Order pronounced in the open Court on 17/09/2026.

Sd/- Sd/- (PAWAN SINGH) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 17/09/2026 M. Ranganath Vittal , Sr. P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI PAWAN SINGH (JUDICIAL MEMBER) ITA 4124/MUM/2026 Assessment Year: (2017-18) ZEE AKAASH NEWS PRIVATE DEPUTY COMMISSIONER OF LIMITED INCOME TAX, CENTRAL CIRCLE 2(4), MUMBAI. 14TH FLOOR, A- WING, MARATHON Vs. FUTUREX, N.M. JOSHI MARG, AAYAKAR BHAVAN, MAHARSHI LOWER PAREL, MUMBAI 400 013, KARVE ROAD, MUMBAI MUMBAI-400013, MAHARASHTRA MUMBAI-400020, MAHARASHTRA Appellant Respondent

PAN No. AAACZ2474J

Shri Fenil Bhatt, Adv. a/w Shri Appellant represented by: Madhur Agarwal, Adv. Shri Basavaraj Hiremath - CIT Respondent represented by: DR Date of conclusion of hearing: 30-07-2026 Date of pronouncement: 17-09-2026

ORDER PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 10th February, 2026 passed by the learned Commissioner of Income-Tax (Appeals) - 48, Mumbai [in short learned ‘CIT(A)’] for Assessment Year 2017-18, raising following grounds:- “1. Ground 1 - Disallowance under section 40A(2)(b) amounting to Rs. 7,00,00,000/-

1.1 On the facts and circumstances of the case, the Learned Commissioner of Income-tax (Appeals)-48 (hereinafter referred to as the 'Ld. CIT(A)) erred in upholding the action of Speessing Officer ('AO') in making disallowance of Rs. 7 crores, being payment madnefit specified persons, holding that the expenditure incurred is excessive and made to benefit the related concern and hence, covered u/s 40A(2)(b) of the Act. The reasons given by him for doing so are wrong, contrary to the facts of the case and provisions of law.

1.2 On the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate the documents, invoice, and supporting evidences furnished by the assessee, which clearly demonstrated that the transactions were undertaken in the ordinary course of business and were at arm's length, thereby disallowance under the provisions of section 40A(2)(b) of the Act is not warranted.

1.3 On the facts and circumstances of the case, the Ld. CIT(A) erred in sustaining the disallowance under section 40A(2)(b) of the Act by summarily rejecting the arguments of the appellant, without providing any cogent reason of its allegation that the benefits are passed on to the related concerns.

2.1 On the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the action of the Assessing Officer in disallowing the claim of expenditure amounting to Rs. 3,60,00,000 incurred on production of programs. The reasons given by him for doing so are wrong, contrary to the facts of the case and provisions of law.

2.2 On the facts and circumstances of the case, Ld. CIT(A) failed to appreciate that payment made to 'Channel Eight was toward cost of production of various programme in the ordinary course of business. Such expenditure was wholly and exclusively incurred for the purpose of the business of the Appellant and was therefore allowable as a deduction under Section 37(1) of the Act.

2.3 On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the appellant failed to establish the genuineness of the transaction, ignoring the evidences furnished during the course of assessment and appellate proceedings. 2.4 On the facts and circumstances of the case, Ld. CIT(A) uphold the action of AO in making disallowance of Rs. 3.6 crores without appreciating non- appearance beyond assessee's control and cannot be sole basis for making addition. 3. Ground 3 - Addition of unearned revenue of Rs. 43,85,336 3.1 On the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating that the amount of Rs. 43,85,336, shown as unearned revenue, represents advances received during the year in respect of services to be rendered in the subsequent year.

3.2 On the facts and circumstances of the case, Ld. CIT(A) failed to appreciate the documentary evidence submitted by assessee which clearly demonstrate unearned revenue of Rs. 43,85,336 has been duly offered to tax in subsequent year i.e. AY 2018-19 taxing the same would lead to double taxation. 4. Ground 4 - Prior period expenditure of Rs. 16,59,161 4.1 The Ld. CIT(A) erred in law and facts in making disallowance of Rs. 16,59,161 holding the same to be in the nature of prior period expenditure. The reasons given by him are wrong and contrary to the facts of the case and provisions of law. 4.2 The Ld. CIT(A) failed to appreciate that the impugned expenditure pertains to the year under consideration (and not the prior years) and is a part of year end provisions made during the year for the services availed during the year but invoices not received. 4.3 Without prejudice to above, the Ld. CIT(A) failed to appreciate that the appellant has suo moto disallowed 30% of the expenditure as per the provisions of section 40(a) of the Act on account of non-deduction of TDS and therefore, addition by the AO amounts to double disallowance to that extent.” 2. Briefly stated, facts of the case are that the assessee is engaged in the business of broadcasting news and current-affairs programmes through its 24x7 Bengali news channel, ‘Zee 24 Ghanta’, in West Bengal, besides sale of television programmes and programme feeds. For the year under consideration, the assessee filed its return of income on 31/10/2017 declaring total income at ₹13,95,62,230. The return of income filed by the assessee was selected for scrutiny assessment on the parameters of reduction in profit due to Income Computation and Disclosure Standard (ICDS) and deduction and deposit of TDS. The statutory notices under Income Tax Act, 1961 [in short the ‘Act’] were issued and complied with.

i) Disallowance under section 40A(2)(b) of the Act aggregating to Rs. 7,00,00,000 regarding payments made to specified persons (Diligent Media Corporation Ltd and Sky Bangla Pvt Ltd).

ii) Disallowance of Rs. 3,60,00,000 on account of short deduction of TDS and non-verification of genuineness regarding payments to ‘Channel Eight’.

iii) Addition of Rs. 43,85,336 on account of Unearned Revenue which the AO treated as income of the current year.

iv) Disallowance of Prior Period Expenditure amounting to Rs. 16,59,161.

6.1 The facts in brief qua the issue in dispute are that the assessee had incurred advertisement and publicity expenditure of ₹7,28,91,199, which included ₹5.40 crores paid to Diligent Media Corporation Ltd. (‘DMCL’) towards advertisement in DNA newspaper and ₹1.60 crores paid to Sky Bangla Pvt. Ltd. towards advertisement on ‘Aakash Aath’ channel. To substantiate its claim, the assessee had filed party-wise details along with copy of invoice, purchase order along with explanation on the allowability of the claim of expenditure. The Assessing Officer, however, considered the payments to be excessive and unreasonable principally on the ground that the recipients were group concerns. The Assessing Officer observed that the assessee could not substantiate the claim with any comparative data or documents to justify that the transactions were at arm's length.

6.2 Further, the Assessing Officer questioned the payment made to Diligent Media Corporation Limited for advertisement given to ‘DNA’ newspaper. The Assessing Officer referred to the press release by Audit Bureau of Circulation and observed that the newspaper ‘DNA’ did not feature anywhere in highest circulated ABC member publication or in the list of top 10 publications language-wise and sales-wise as certified up to 22nd February, 2019. In relation to payment to the Sky Bangla Private Limited on ‘Akash aath’ channel, he referred to its viewership position by Broadcast Audience Research Council India, and observed that it was not among the top five channels in West Bengal. On that basis, and in the absence of what he considered to be satisfactory comparative evidence, the entire expenditure of ₹7 crore was disallowed under section 40A(2)(b).

6.3 Before the learned CIT(A), the assessee furnished further material, including the official ‘DNA’ rate card, purchase orders and invoices for the respective periods, copies of advertisements actually published, and comparative rate material in respect of ‘Aakash Aath’. The assessee submitted that the ‘DNA’ campaign comprised 130 insertions for an aggregate consideration of ₹5.40 crore, with the average rate per insertion remaining below the published rate of ₹4,25,000. It was further submitted that the ‘Aakash Aath’ rates were comparable to, or lower than, rates charged for similar advertising by other parties. Further the assessee made submission on the issue as under: “ …………………………………… Condition 1: AO is of the opinion that such expenditure is excessive or unreasonable i.e. The AO shall not disallow the expense merely on suspicion. The AO must form an opinion objectively on the basis of material brought on record to demonstrate that the payment made by the appellant was excessive and unreasonable having regard to the market rate. In the present case, Your Honour would appreciate that the Ld. AO has failed to bring any material or evidence to show that the payment made for advertisement was excessive or unreasonable. Condition 2: The AO should prove the payment made is excessive of Fair Market Value ('FMV') of goods or service i.e. The AO should compare the payment made to specified persons with the fair market value to similar goods and service in the market and find the amount of expenses which are excessive and unreasonable and shall disallowance expenses only to that extent. Condition 3: Expense should be legitimate need of the business i.e. The Ld. AO shall conduct comprehensive analysis to conclude that the expense incurred was legitimate need of the business or not. During the year under consideration there was Vidhan Sabha election in the state of West Bengal. The appellant saw this as an opportunity and therefore to increase the number of viewership and boost advertisement revenue income the appellant incurred advertisement and publicity expense. Contention 4: Provider and recipient of the advertisement services are assessed at same tax rate, The Ld. AO failed to appreciate the fact that the appellant and DMCL / Sky Bangla are assessed at same tax rate. The expenditure claimed by the appellant is offered to tax as income by the said parties in their return of income.” 6.4 The learned CIT(A), nevertheless, sustained the disallowance. He principally relied upon five alleged deficiencies: (i) the purchase orders were for lump-sum amounts; (ii) the expenditure in the January-March quarter was substantially higher than that in the preceding quarter; (iii) the invoices did not themselves contain detailed particulars of the advertisements; (iv) the format and numbering of one invoice differed from earlier invoices; and (v) the Aakash Aath transaction was a package arrangement without telecast logs or certificates accompanying the invoice. The learned CIT(A) concluded that the documents were self-serving and that the payments represented arbitrary transfers for the benefit of related parties. For ready reference, finding of ld CIT(A) is reproduced as under: “1. Ground No. 1: Disallowance under section 40A(2)(b) - Rs. 7,00,00,000/- 1.1 The AO observed that the appellant had made substantial payments to related parties, namely Diligent Media Corporation Ltd (DMCL) for Rs. 5.4 Crores and Sky Bangla Pvt Ltd for Rs. 1.6 Crores, towards advertisement expenses. The AO invoked the provisions of section 40A(2)(b) of the Act and disallowed the entire expenditure of Rs. 7 Crores holding it to be excessive and unreasonable. The AO noted that the DNA newspaper (DMCL) and Aakash Aath Channel (Sky Bangla) did not feature in the top tier of circulation/viewership lists, and thus the payments made to group companies amounted to siphoning of funds. 1.2 The provisions of section 40A(2)(b) of the Act empower the Assessing Officer to disallow expenditure incurred by an assessee in respect of which payment has been made to a specified person (relative/associate), if the AO is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities. The appellant has argued that the expenditure was incurred for commercial expediency to boost viewership during the West Bengal Vidhan Sabha elections. The appellant further argued in the additional submissions that the rates paid were as per the "rate card" of DNA and comparable to Zee 24 Ghanta's own rates. However, the arguments of the appellant are not convincing. In addition to the lack of independent benchmarking with fair market value of similar transaction and the commercial disproportion discussed in the assessment order, a closer scrutiny of the additional documents submitted by the appellant reveals contradictions which undermine the claim of arm's length pricing. Analysis of Documentary Deficiencies and Inconsistencies reveals that: i) Lump Sum nature of Purchase Orders and Invoices: The appellant has claimed that the payments were based on a specific "official rate card" of Rs. 4,25,000 per insertion for the "DNA After Hours" segment. However, the Purchase Orders (POs) and Invoices submitted contradict this claim. PO No. ZANPL/002A/16-17 dated 01.04.2016 is for a lump sum amount of Rs. 2,00,00,000 for "Advertisement in DNA News paper from Apr 16 to Sep'16" with a "Quantity" of " PO No. ZANPL/008/16-17 dated dated 01.10.2016 is for a lump sum of Rs. 90,00,000. PO No. ZANPL/0101 dated 01.01.2017 iS MENT 2,50,00,000. a lump sum of Rs.2,50,00,000. If the transaction were truly based on a per-insertion rate card, the Purchase Orders would specify a number of insertions at a specific unit rate (e.g., "50 insertions @ Rs. 4.25 Lakhs"). Instead, the POs reflect a pre-determined, round- figure budget allocation (Rs. 2 Crores, Rs. 2.5 Crores) irrespective of the actual volume of advertising. This indicates that the "rate card" defense is an afterthought, and the payments were actually fixed lump sums transferred to the sister concern. ii) Inconsistency in Billing and Price Fluctuation: There is a contradiction in the pricing between the quarters.

For the period October to December 2016 (3 months), the billing was Rs. 90,00,000. For the immediately succeeding period January to March 2017 (3) months), the billing skyrocketed to Rs. 2,50,00,000. This represents an unexplained increase of nearly 2.8 times in the monthly expenditure within the same financial year. The appellant's explanation of election-related publicity does not justify such a massive variance in billing for the same newspaper "DNA," especially when the Purchase Order descriptions remain identical ("Advertisement in DNA Newspaper"). iii) Deficiencies in Invoice Details: The invoices submitted (e.g., Invoice No. Misc/03/16-17 and Invoice No. DN05766) are lacking in necessary particulars. They merely state "Advertisement in DNA Newspaper" for a specific period and quote a total amount. A standard arm's length advertising invoice would detail the dates of publication, the size of the ad (column centimeters), the edition, and the caption of the ad to allow for verification against the release orders. The absence of these basic details in the invoices prevents any verification of whether 60 ads were actually published as claimed in the submissions. iv) Contradictions in Document Formats It is also observed that the invoice for the last quarter (Invoice No. DN05766 dated 31.03.2017) differs significantly in format, font, and series numbering from the invoices of the previous quarters (e.g.. Invoice No. Misc/04/16-17). despite being from the same vendor, Diligent Media Corporation Ltd. The change from a "Misc" series to a "DN" series specifically for the year-end invoice of Rs. 2.5 Crores suggests an ad-hoc arrangement to book expenses at the closure of the financial year rather than a consistent running account. v) Inconsistency in Sky Bangla Transaction: Regarding the payment to Sky Bangla, the Invoice (P/001/16-17) and Purchase Order are for a lump sum of Rs. 1.6 Crores for a short duration of 45 days (April 1 to May 15). The Deal Letter is also a vague "package" offer. The appellant's later submission of a comparative rate chart showing per-second rates (Rs. 190/5 sec) contradicts the actual billing, which was a flat package fee. There is no evidence (such as telecast logs or certificates) attached to the invoice to show that the volume of FCT (Free Commercial Time) consumed actually justified the Rs. 1.6 Crore valuation based on the unit rates provided. Lastly as required u/s 40A(2)(b); appellant is required to demonstrate with supporting evidence that transaction was as per fair market value consistent with third party market transaction values which appellant has failed to do. Therefore, the documents submitted by the appellant are self-serving, inconsistent, and lack the granularity expected in genuine third-party similarity commercial dealings. They confirm the AO's finding that the payments were not based on fair market value and actual service utilization but were arbitrary amounts transferred to benefit related parties.”

6.5 Before us, the learned counsel for the assessee referred to paper book pages from 139 to 158A, comprising of detailed purchase orders, invoices etc in relation to payments to both parties.

6.6 The learned counsel submitted that advertisement in print media in DNA Mumbai was given because advertisement in other newspapers was an expensive affair. The learned counsel filed a copy of the relevant advertisements printed in the newspaper. The Learned counsel also referred to paper book page 141 to 143, which are a copy of invoices raised which include purchase order issued by the assessee to Sky B Bangla Private Limited, copy of invoice issued by Sky B Bangla Private Limited dated 02.06.2016 with reference to purchase order dated 04.04.2016. Further, offer letter of Sky B Bangla to the assessee is also placed on paper book page 143.

6.7 Further on page 145, purchase order issued by the assessee to Diligent Media Corporation Limited dated 1st January 2017 and corresponding invoice issued by said company is placed on paper book page 144. Similarly, another purchase order issued by the assessee dated 1st April 2016 is available on paper book page 147 and corresponding invoice issued by Diligent Media Corporation Limited is available on paper book page 146. Similarly, copy of the other purchase order and corresponding invoice are available on page 148 to 150.

6.8 Further, the learned counsel referred to justification of the market value filed before the learned CIT(A) available on paper book pages 391 to 394. For ready reference, said submissions are reproduced as under:- 2.1 DNA Newspaper had a targeted English-speaking urban readership, with wide circulation in different metros and Tier-I cities, particularly amongst decision-makers, senior executives, and business professionals. The publication was known for its editorial focus on current affairs, business, and urban issues, making it an ideal medium to reach corporate entities 2.2 The appellant's objective was to build brand visibility of 'Zee 24 Ghanta' among corporate with the ultimate aim of attracting advertisement revenue for the channel. 2.3 To substantiate that the payments made to DMCL were not excessive, the appellant submits: 2.3.1 During the relevant financial year, the appellant undertook a structured advertising campaign in the Mumbai edition of DNA Newspaper, specifically the "DNA After Hours" segment. The advertisements were published at a premium visual spot that guarantees strong reader visibility. 2.3.2 As per the official rate card issued by DNA, the standard rate for a single insertion in this format and segment was Rs 4,25,000. The rate card, which applied uniformly to all external advertisers, has been enclosed to substantiate that the payments made by the appellant were fully aligned with prevailing market rates. 2.3.3 The appellant adopted a deliberate placement strategy involving repeated, high-visibility insertions across the financial year 2016-17, with the strategic objective of enhancing brand recall and retention among a targeted, influential urban readership. This audience segment included corporate decision-makers and media planners, whose engagement was critical to driving future advertisement revenue for the appellant's news channel. 2.3.4 The total expenditure incurred by the appellant for advertisements in DNA Newspaper amounted to Rs 5.4 crores during the relevant financial year. This expenditure was spread across three invoice periods, with the details summarized below: Period Average Cost per Ad (Rs) No. of Total Amount Paid Advertisements (Rs) April 2016 – September 2016 48 2,00,00,000 4,16,667 October 2016 – December 2016 22 90,00,000 4,09,091 January 2017 – March 2017 60 2,50,00,000 4,16,667

2.3.5 The amounts paid by the appellant are closely aligned with the published rate card rate of Rs 4,25,000 per insertion. Therefore, the cost incurred by the appellant is completely in line with market norms reaffirming that the expenditure was neither excessive nor unreasonable. In support of its claim, the appellant has furnished comprehensive documentation such as – Reference Annexure A ● the official rate card issued by DNA Newspaper; ● copies of invoices and purchase order corresponding to each billing period; ● physical newspaper clippings evidencing actual publication of the advertisements.

2.3.6 These materials, taken together, provide clear evidence that the transactions were conducted at fair market value and were neither excessive nor unreasonable in comparison with those applicable to external, unrelated advertisers for similar placements during the same period. This substantiates that the expenditure was incurred wholly and exclusively for business purposes and on arm's length terms. 2.3.7 It is settled law that commercial expediency lies within the domain of the assessee, and the Revenue cannot substitute its judgment unless there is evidence of clear misuse or diversion of funds, which is not the case here. The appellant's objective was to increase the brand equity of its news channel by targeting a niche but influential readership, and the costs incurred for that purpose were well within market norms. Hence, the payments to DMCL are at arm's length, fully substantiated, and justifiable as business expenditure under section 37(1) of the Act. Advertisement in Aakash Aath Channel 2.4 The appellant incurred advertisement expenditure of Rs 1.6 crores (copy of invoice attached as Annexure B) towards payments made to Sky Bangla Pvt. Ltd., for promoting its 24x7 Bengali news channel 'Zee 24 Ghanta' through the medium of Aakash Aath, a Bengali-language general entertainment and infotainment channel with a sturdy viewership base in West Bengal. The commercial rationale for engaging Sky Bangla Pvt. Ltd. is as follows: 2.4.1 Aakash Aath is a Kolkata-based regional TV channel with a mass-market Bengali-speaking audience, making it an ideal platform for reaching a broad demographic in West Bengal. 2.4.2 The channel broadcasts a diverse mix of news, current affairs, entertainment, and social programming, ensuring that the advertisement reaches both urban and rural Bengali viewers. 2.4.3 The timing of the campaign coincided with the West Bengal Vidhan Sabha elections, which traditionally attracts higher TV viewership, particularly for political content among regional audiences. 2.4.4 The advertisements were strategically placed in L-Band, Aster Band, and Scroll Band formats, offering high-frequency and cost-effective visibility. Format Description L-Band Rectangular static display at the bottom of the screen during programming Aster Band Side band scrolls or highlights running parallel to programming Scroll Continuous ticker-format text Band message, typically used for promotional slogans

These formats are widely used for mass reach with repeated visibility, especially during prime-time news and entertainment slots. 2.4.5 To substantiate that the payments made to Skybangla were not excessive, the appellant submits: The appellant would like to submit the following rate chart comparison between A Aakash Aath and Zee 24 Ghanta to demonstrate that the payments made were consistent with market rates and not excessive – Reference C. This comparison highlights the advertising costs for various formats offered by both channels during the same period. Advertising Format Aakash Aath (per Zee 24 Ghanta Rate (per unit) - Sky Bangla unit) Rs 190 / 5 sec Rs 350 / 5 sec FCT (Fixed Commercial Time) BUGS Rs 7,000 per unit Rs 7,500 per unit ASTOR BAND Rs 1,250 per unit Rs 1,400 per unit LBAND Rs 1,500 per unit Rs 1,623 per unit SCROLL Rs 5,500 per unit Rs 5,820 per unit

The comparative rate chart clearly demonstrates that the amounts paid by the appellant to Sky Bangla (Aakash Aath) for each format of advertisement were either equal to or lower than the rates charged by Zee 24 Ghanta, a comparable regional broadcaster in the same market. The FCT rate charged by Sky Bangla (Rs 190 per 5 seconds) was significantly lower than Zee 24 Ghanta's (Rs 350 per 5 seconds), evidencing cost-effectiveness. For high-frequency formats such as BUGS, ASTOR BAND, LBAND, and SCROLL, the difference in rates ranges from 6% to 12% lower. The Zee 24 Ghanta corresponding invoices serves as reliable third- party benchmarks for determining arm's length pricing for similar services. Since both entities operate in the same geographic and linguistic market (Bengali regional TV in West Bengal), and target similar audiences, they form valid comparables. 2.3.8 The comparative rate chart, clearly establishes that the payments made to Sky Bangla Pvt. Ltd. were at arm's length, reasonable, and aligned with industry norms. The rates charged were equal to or lower than comparable services provided by another independent broadcaster (Zee 24 Ghanta), thereby rebutting any presumption of excessive or unjustified payments. 2.3.9 Accordingly, the disallowance of Rs 1.60 crores under Section 40A(2)(b) is arbitrary, factually incorrect, and deserves to be deleted.

6.9 Further, the learned counsel referred to paper book page 395 and drawn our attention to the advertisement rates charged by the assessee from independent parties. According to the learned counsel, rate of Rs.4,25,000/- was charged in edition of ‘DNA After Hours’ on Sky B's page for a square centimeter for Rs.4,25,000, whereas the corresponding money charged to the assessee is less than that, and therefore the market value of the services obtained from the related party is much higher as compared to the charges paid to the related party. And therefore, no disallowance is called for under section 40A(2)(b) of the Act.

6.10 Similarly, regarding the fair market value charged by Sky B Bangla Private Limited from independent parties in respect of the identical services, the learned counsel referred to paper book page 415 to 419 of the paper book and submitted that rate charged to the related party, i.e. the assessee, is much lower than the rate charged for telecasting the advertisements of other independent parties. He submitted that in respect of advertisement of ‘BS Diagnostic’, rate of per 5 seconds has been charged at Rs.350. And similarly, advertisement of ‘Orient Fans’ were charged at the rate of Rs.7,500 per second during program of ‘Bangala Ballot’. He submitted that this was the period of election in Bengal. In view of the specific instances, the fair market value being not higher than the expenditure incurred by the assessee, no disallowance was required.

6.11 Per contra, the learned DR relied on the order of the lower authorities.

6.12 We have heard rival submissions of the parties and perused the relevant material on record. We find that though the Assessing Officer has made ultimate addition invoking Section 40A(2)(b), but in his reasoning, he has raised the doubt on the rendering of the services itself. But since he has not made any addition in respect of non-rendering of the services and he has made addition only questioning the market value of those services, therefore, we are not going into the issue whether those services were actually rendered or not. Further, since the disallowance is one under section 40A(2)(b) of the Act, the fact that a payment is made to a specified person is a statutory condition for invoking the provision; it does not, by itself, render the expenditure excessive or unreasonable. The statutory enquiry is whether the expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made. Equally, the assessee cannot succeed merely by producing the related-party invoices. The assessee is required to substantiate the commercial transaction and the reasonableness of the consideration. The Hon’ble Bombay High Court in CIT v. Shatrunjay Diamonds [2003] 261 ITR 258 (Bom) has emphasised the need for cogent evidence in relation to payments to specified persons. The converse is equally important: once relevant material demonstrating the prevailing market value is placed on record, the Revenue must examine that material and bring contrary evidence on record before disallowing the expenditure.

6.13 In the present case, the assessee did not rest its claim merely upon the purchase orders and invoices. In respect of the DNA campaign, it furnished the published rate card showing a rate of ₹4,25,000 per insertion, together with the purchase orders, corresponding invoices and copies of the advertisements. The detailed sheets accompanying the purchase orders also specified the number of insertions and the applicable rate. The three billing periods comprised 48 insertions for ₹2 crore, 22 insertions for ₹90 lakh and 60 insertions for ₹2.50 crore. The corresponding average cost per insertion worked out to approximately ₹4,16,667, ₹4,09,091 and ₹4,16,667 respectively. Thus, in each of the three periods, the effective rate was below the stated rate-card rate of ₹4,25,000 per insertion. The aggregate of the three periods is 130 insertions for ₹5.40 crore, whereas 130 insertions at the stated rate of ₹4,25,000 would amount to ₹5.525 crore.

6.14 The learned CIT(A) treated the lump-sum figures appearing in the purchase orders as destructive of the assessee’s explanation. We are unable to agree. A purchase order may specify the aggregate contractual value, while the detailed schedule accompanying it may contain the number of insertions and the applicable unit rate. The mere fact that the face of the purchase order contains an aggregate amount cannot convert otherwise supporting schedules into an afterthought. More importantly, the learned CIT(A) has not demonstrated that the detailed schedules relied upon by the assessee were false, fabricated or inconsistent with the corresponding invoices.

6.15 The second objection of the learned CIT(A) was that the expenditure for January-March 2017 was ₹2.50 crore as against ₹90 lakh for October-December 2016, representing an increase of about 2.78 times in the aggregate quarterly billing. This reasoning overlooks the corresponding increase in the number of advertisements—from 22 insertions in the latter period to 60 insertions in the former. The average cost per insertion, in fact, remained substantially constant and below the stated rate-card rate. The assessee also explained that the January-March period coincided with the West Bengal Legislative Assembly elections , a period of heightened advertising demand and correspondingly higher market rates, as reflected in the independent third-party rate instances placed on record. The learned CIT(A) rejected this explanation merely because the description in the purchase orders remained the same. Such reasoning does not address the relevant question under section 40A(2)(b), namely, whether the consideration paid per unit of service was excessive or unreasonable having regard to its fair market value.

6.16 The third objection was that the invoices did not themselves contain particulars such as the dates of publication, size of advertisements and editions. The learned CIT(A), however, failed to consider the detailed sheets accompanying the invoices and purchase orders, which contained the particulars necessary for identifying the advertisements. The absence of every detail on the face of the invoice cannot, by itself, establish that the underlying expenditure was excessive. Nor can it substitute for an enquiry into the fair market value of the services.

6.17 The fourth objection relates to the difference in format, font and series numbering of the last invoice. In our considered view, an internal change in a vendor's invoice format or numbering series is an administrative matter for that vendor and is not, by itself, a determinative test of the fair market value of the underlying service. This circumstance has no rational nexus with the statutory test under section 40A(2)(b). Unless the Revenue establishes that the invoice was fabricated or that the underlying service was not rendered, a difference in invoice format or series numbering cannot determine whether the consideration paid was excessive or unreasonable. Indeed, the Assessing Officer did not make a separate disallowance on the ground that the advertisements were not actually published.

6.18 The fifth objection concerns the payment of ₹1.60 crore to Sky Bangla Pvt. Ltd. for advertising on Aakash Aath. Here again, the assessee furnished the purchase order, invoice and comparative rate material. The assessee specifically demonstrated that the rates for the relevant advertising formats were comparable with, and in several instances lower than, the rates of the assessee’s own channel. More significantly, before us, attention was drawn to independent instances of rates charged by Sky Bangla to other advertisers, including the material placed at pages 415 to 419 of the paper book. The learned CIT(A) did not disprove those comparables; he merely observed that the contractual consideration was a package amount and that telecast logs were not attached to the invoice.

6.19 The objection again proceeds on an erroneous premise. A package arrangement does not cease to have a market value merely because the consideration is contractually expressed as a lump sum. The relevant question is whether the aggregate consideration can be related to the services contracted for and whether comparable market evidence supports its reasonableness. The assessee furnished such comparative material, and the learned CIT(A) has not brought any contrary market quotation or independent comparable transaction on record.

6.20 We are also unable to approve the broad conclusion that the payments constituted “siphoning of funds” merely because the recipients were related parties. Such a serious conclusion must rest on positive material demonstrating diversion or inflation of expenditure. No such material has been identified either by the Assessing Officer or by the learned CIT(A).

6.21 The decision of the Hon’ble Gujarat High Court in CIT v. Ashok J. Patel [2014] 43 taxmann.com 227 (Guj) also underscores that a disallowance under section 40A(2)(b) cannot rest upon an ad hoc assessment divorced from a determination of fair market value and comparable instances. The present case stands on an even stronger footing for the assessee because the assessee has itself placed rate-card and comparable material on record.

6.22 Thus, the learned CIT(A), instead of testing the material furnished by the assessee against the statutory yardstick of fair market value, has treated incidental documentary features as conclusive against the assessee. We find that approach unsustainable. The Revenue has neither identified the fair market value of the services nor established any excess over such value. The material on record, on the contrary, demonstrates that the effective rates paid by the assessee were in line with, and in several respects below, the rates relied upon by the assessee as market benchmarks.

6.23 We, therefore, find no justification for sustaining the disallowance of ₹7,00,00,000 under section 40A(2)(b) of the Act. The same is directed to be deleted. The ground No. 1 of the appeal is accordingly allowed.

Ground No. 2 – Payment to Channel Eight: ₹3,60,00,000

7.1 The assessee paid ₹3.60 crore to Channel Eight towards production of programmes to be broadcast on its channel. The expenditure was initially booked under the head ‘Event Management Fees’, which the assessee explained before the Assessing Officer as an inadvertent classification; according to the assessee, the expenditure was in substance the cost of production of television programmes. The assessee deducted tax at source under section 194C at 1 per cent. The Assessing Officer considered that the payment was in the nature of professional/technical services attracting section 194J at the rate of 10% and also drew an adverse inference from the non- compliance of Channel Eight with summons issued under section 131. He accordingly disallowed the entire expenditure.

7.2 Before the learned CIT(A), the assessee furnished material relating to the identity and financial particulars of Channel Eight, including its PAN, income-tax return acknowledgment, bank statements and ledger details, besides invoices and purchase orders. It was also submitted that Channel Eight had produced programmes such as ‘Sahityer Sera Samay’, ‘Janani’, ‘Puja Asche’, ‘Pujor Bhoj’, ‘Asche Bochor Abar Hobe’ and other programmes for telecast on the assessee’s channel. The learned CIT(A), however, sustained the disallowance principally on the grounds that Channel Eight did not appear in response to summons under section 131, that the expenditure had been described as ‘Event Management Fees’ in the books, and that the assessee had not produced what the CIT(A) regarded as independent corroborative evidence such as production tapes, telecast certificates or copyright assignments. He concluded that the transaction was not genuine and that the assessee had failed to establish that the expenditure was incurred wholly and exclusively for business purposes. The relevant finding of ld CIT(A) is reproduced as under: “1.3.2 The appellant has challenged the disallowance primarily on the technical ground of TDS rates (Section 194C vs 194J). However, the issue goes deeper into the very allowability of the expense under Section 37 of the Act. Section 37(1) of the Act provides that any expenditure (not being capital or personal in nature) laid out or expended wholly and exclusively for the purposes of the business is allowable. The burden of proof to establish that the expenditure was "wholly and exclusively" for business lies on the assessee. This burden includes proving the genuineness of the transaction. A transaction that is not genuine cannot be said to be for the purpose of business. ii) In this case, the Assessing Officer issued summons u/s 131 to the payee "Channel Eight" to verify the transaction, but the payee failed to appear. The appellant claims to have submitted invoices and ledgers, but mere paper documentation is insufficient when the counterparty refuses to confirm the transaction. If the party receiving the payment does not exist at the given address or evades statutory summons, the very reality of the services rendered is called into question. iii) The appellant has failed to produce the party or any independent evidence (such as production tapes, third-party telecast certificates, or copyright assignments) to prove that "Channel Eight" actually produced and delivered the programs named "Sahityer Sera Samay", "Janani", etc.. Without proof of delivery of services, the expense cannot be allowed u/s 37.

iv) It is pertinent to note that the appellant recorded these expenses as "Event Management Fees" in its books but claimed they were for "Production of Programs" during assessment. This shifting stand regarding the nature of the expense indicates an attempt to obscure the true nature of the transaction. Booking a production cost as event management fee and then deducting TDS at the lower contractual rate of 1% (instead of 10% for technical services) suggests a colorable device adopted to accommodate the entry. v) The combination of the payee's non-appearance, the misclassification of the expense in the books, and the lack of independent corroborative evidence regarding the actual production of content leads to the conclusion that the transaction is not genuine. Since the genuineness of the expenditure is not established, the condition of it being incurred "wholly and exclusively for the purpose of business" under Section 37 is not met. Consequently, the addition is confirmed not just on the basis of incorrect TDS, but on the substantive ground that the appellant failed to discharge the onus of proving the genuineness of the expenditure as required u/s 37 of the Act.” 7.3 Before us, the learned counsel for the assessee referred to page 152 and 153, which are the invoices issued by Channel 8 and purchase order by the issue for production of various Durga Puja related programs including 'Pujo Acche', 'Pujor Bhoj', 'Pujor Fashion', 'Asche Bochar Abar Hobe'. The learned counsel also referred to the application for admission of the additional evidence under section rule 46A before the learned CIT(A). It was submitted that assessee entered into production of TV programs. The assessee filed documents in support of identity and creditworthiness of Channel 8 and genuineness of the transaction between the assessee and Channel 8, including PAN card, ITR acknowledgment, bank statement, and ledger copies, a copy of which is available on paper book page 206 to 208.

7.4 We have heard rival submissions of the parties and perused the relevant material on record. The issue in dispute is (i) whether the amount paid to Channel 8 is in the nature of a contract receipt or it was receipt in the nature of professional or technical services; and (ii) whether services rendered wholly and exclusively or not.

7.5 The reasoning of the learned CIT(A) suffers from two fundamental infirmities. Firstly, non-appearance of the payee pursuant to summons under section 131 is a circumstance requiring further verification; it is not, by itself, proof that the transaction is fictitious. The assessee had furnished documentary material concerning the identity of the payee, its tax particulars, banking transactions, ledger account, invoices and purchase order. The assessee had also identified the programmes produced for it. The learned CIT(A) has not demonstrated any contradiction in those documents, any cash movement, any return of consideration to the assessee, or any other material establishing that the expenditure was sham. The principle that mere non- appearance of a party, in the face of substantive documentary evidence, cannot by itself justify rejection of a transaction has also been recognised by the Hon’ble Bombay High Court in CIT v. Nikunj Eximp Enterprises (P.) Ltd. [2015] 372 ITR 619 (Bom). While that decision arose in the context of purchases, the underlying evidentiary principle is of relevance: adverse inference cannot rest solely upon the failure of a third party to respond when the assessee has furnished other contemporaneous evidence.

7.6 Secondly, the learned CIT(A) has attached undue significance to the accounting nomenclature ‘Event Management Fees’. It is the substantive nature of the expenditure, and not merely the nomenclature under which it was initially recorded, that has to be examined. The assessee explained during assessment itself that the expenditure had been inadvertently booked under that head and was actually incurred towards production of television programmes. The documentary material relating to the programmes and the corresponding purchase order/invoices has not been shown to be false.

7.7 As regards the applicable TDS provision, the conclusion of the lower authorities that production of programmes for broadcasting or telecasting necessarily falls under section 194J cannot be accepted. Explanation to section 194C expressly includes “broadcasting and telecasting including production of programmes for such broadcasting or telecasting” within the expression “work”. The Hon’ble Delhi High Court in CIT v. Prasar Bharati (Broadcasting Corporation of India) [2007] 292 ITR 580 (Del) held that the specific provision contained in section 194C governing production of programmes for broadcasting/telecasting prevails over the more general provision contained in section 194J. The same principle has been followed in decisions concerning television programme production. The assessee’s claim, therefore, cannot be rejected by simply characterising the programme-production expenditure as professional or technical fees under section 194J.

7.8 We also find that the learned CIT(A) proceeded upon the premise that the assessee was required to produce the payee itself or produce specific forms of evidence such as production tapes or copyright assignments. In our opinion , what was 24 required is a satisfactory appreciation of the totality of the evidence. In the present case, the documentary evidence furnished by the assessee has not been displaced by any positive material brought on record by the Revenue. We therefore find that the learned CIT(A) was not justified in converting the payee’s non- appearance into a finding of falsity, nor in treating the accounting description as determinative of the nature of the underlying expenditure. As regards the rate of TDS, the Revenue has failed to establish that the payment in question was a payment for professional or technical services falling under section 194J. Consequently, the very foundation of the disallowance on the basis adopted by the Assessing Officer and sustained by the learned CIT(A) does not survive. The disallowance of ₹3,60,00,000 is accordingly deleted. The ground No. 2 of the appeal is accordingly allowed.

Ground No. 3 – Unearned Revenue: ₹43,85,336

8.1 The facts in brief for the issue in dispute are that the assessee had /raised invoices aggregating to ₹43,85,336 during the relevant previous year but credited the corresponding amount as ‘unearned revenue’ deferring it to the subsequent year, contending that the advertising/telecasting services were to be rendered in the subsequent year. The Assessing Officer treated the amount as taxable in the year under consideration primarily because the invoices had been raised during the relevant financial year. According to the Assessing Officer, the assessee followed the mercantile system of accounting, and under said system, income accrued when the right to receive it arises.

8.2 Before the learned CIT(A), the assessee claimed that services of telecasting corresponding to those invoices were rendered in the subsequent year and therefore, assessee has considered the revenue corresponding to those invoices in the subsequent assessment year 2017-18. But, the learned CIT(A) endorsed that reasoning, holding that under the mercantile system income accrues when the right to receive arises and that the raising of an invoice ordinarily establishes such right. He further observed that the assessee had not produced contractual clauses showing that the right to receive payment arose only upon telecast and held that any subsequent-year taxation could be dealt with by consequential relief.

8.3 Before us, the learned counsel for the assessee further submitted that since no services were rendered corresponding to the invoices raised, and therefore, though the invoices were raised, the corresponding income did not accrue. It was submitted those invoices were in the nature of the estimate and not actual billing of the services rendered. It was submitted that books of accounts may not be determinative factor while deciding the accrual of income and it has to be examined as per provisions of Income-tax Act. Alternatively, the learned counsel submitted that the invoices represented advance billing in respect of telecast services to be rendered subsequently and that the assessee had, in fact, offered the corresponding income to tax in the subsequent assessment year 2017-18 and therefore it is a tax-neutral exercise. Reliance was also placed on the principle laid down by the Hon’ble Supreme Court in CIT v. Excel Industries Ltd. [2013] 358 ITR 295 (SC).

8.4 We have heard rival submissions of the parties and perused the relevant material on record. We find that the whether income accrued corresponding the revenue booked is required to be determined on verification of period when the actual services were rendered. The reasoning adopted by the learned CIT(A) that the mere raising of an invoice necessarily results in accrual of taxable income cannot be accepted as an absolute proposition. Under the mercantile system, what is relevant is the accrual of a legally enforceable right to receive income. The accounting entry or nomenclature is not conclusive of the year in which income accrues. The assessee has specifically contended that the corresponding advertising services were to be rendered in the subsequent year and that the amount represented advance/unearned revenue. The assessment order itself contains a tabulation of the underlying invoices showing service periods extending into the subsequent financial year. The question, therefore, is factual and requires examination of the underlying agreements, invoices, period of telecast and actual rendering of services. The learned CIT(A) has proceeded largely on the premise that an invoice creates an unconditional right to receive the amount. That proposition cannot be applied without examining the terms of the underlying arrangement. If the invoice represented only advance consideration for services which were to be performed subsequently, accrual of the corresponding service revenue cannot be determined merely from the date of the invoice. At the same time, the assessee’s alternative contention that the amount has already been offered to tax in the subsequent year also requires verification. The principle enunciated by the Hon’ble Supreme Court in CIT v. Excel Industries Ltd. (supra) recognises that where the dispute is essentially one of the year of taxability and the income has in fact been subjected to tax in another year, the Revenue should not pursue a purely revenue-neutral exercise divorced from the question of real accrual.

8.5 We, therefore, consider it appropriate to restore this issue to the file of the Assessing Officer for limited verification of the following:

(i) the actual period during which the advertising/telecasting services covered by the disputed amount were rendered;

(ii) whether the amount represented advance consideration for services to be rendered in the subsequent year; and

(iii) whether, and to what extent, the corresponding amount has actually been offered to tax by the assessee in the subsequent assessment year.

8.6 The Assessing Officer shall decide the issue afresh in accordance with law after affording adequate opportunity of hearing to the assessee. Needless to say, the same income cannot be subjected to tax twice merely on account of a difference in the year of recognition. The ground No. 3 is allowed for statistical purposes.

Ground No. 4 – Prior-period expenditure: ₹16,59,161

9.1 The assessee had made a provision of ₹16,59,161 towards commission expenses payable to Prachar Communications Pvt. Ltd. According to the assessee, the provision represented expenditure relating to services for the relevant year, for which invoices had not been received by the year-end. Since tax had not been deducted at source on the provision, the assessee had suo motu disallowed 30 per cent thereof under section 40(a)(ia). It was further explained that when the invoices were subsequently received, the corresponding provision was reversed and the liability was transferred to the respective party account. But, the Assessing Officer treated the expenditure as pertaining to earlier financial years on the basis of the invoices subsequently received. The learned CIT(A) sustained the disallowance on the ground that the assessee had failed to establish with evidence that the provision actually related to services rendered during the year under consideration.

9.2 Before us, the learned counsel for the assessee submitted that those expenses have already been considered in financial year 2014-15 and 2015-16, and in year under consideration they were not claimed, and therefore making disallowance is not warranted.

9.3 We have heard rival submissions of the parties and perused the relevant material on record. The material placed before us indicates that the assessee had created a provision during the year and had already disallowed 30 per cent thereof under section 40(a)(ia). The assessee has further explained that the invoices subsequently received were adjusted against provisions created in the books and that the expenditure represented liabilities pertaining to different years. The precise accounting trail, however, requires verification. The assessee itself has referred to invoices aggregating to ₹10,64,585 and ₹6,09,307, while the provision under dispute is stated to be ₹16,59,161. The relationship between the individual invoices, the corresponding provisions, their reversals and the expenditure actually claimed in the year under consideration therefore requires reconciliation. The learned CIT(A) was not justified in confirming the entire addition merely because the invoices were received subsequently. Receipt of an invoice in a subsequent year does not, by itself, determine the year in which the underlying liability accrued. Conversely, a mere provision also cannot establish allowability unless the liability was incurred or had accrued during the relevant year. The correct test is the year in which the liability accrued in accordance with the mercantile system regularly followed by the assessee. The Hon’ble Supreme Court in Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC) has recognised that the accounting entry is not decisive of the allowability of an expenditure; the real nature and accrual of the liability have to be examined in accordance with law. There is, however, no justification for subjecting to disallowance again the 30 per cent of the provision which the assessee had already suo motu disallowed under section 40(a)(ia). To that extent, a further disallowance would plainly result in duplication.

9.4 Accordingly, we set aside the finding of the learned CIT(A) and restore the issue to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall verify:

(i) the year in which the underlying services were actually rendered;

(ii) the corresponding provisions made by the assessee in the books;

(iii) the subsequent invoices and their adjustment against the provisions;

(iv) whether any part of the expenditure had already been claimed and allowed in an earlier assessment year; and

(v) the extent of the amount already disallowed by the assessee under section 40(a)(ia).

9.5 The Assessing Officer shall thereafter determine the amount, if any, legitimately disallowable, after allowing due opportunity to the assessee. We make it clear that the amount already disallowed by the assessee under section 40(a)(ia) shall not be disallowed once again on the same factual basis. Ground No. 4 is allowed for statistical purposes.

Order pronounced in the open Court on 17/09/2026.

Sd/- Sd/- (PAWAN SINGH) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 17/09/2026 M. Ranganath Vittal , Sr. P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai