INNOVATIVE TECH TEAM MEDIA ENTERPRISES PRIVATE LIMITED,MAHARASHTRA vs. ASSISTANT COMMISSIONER OF INCOME TAX, MUMBAI MAHARASHTRA

आदेश / ORDER PER: MAKARAND VASANT MAHADEOKAR, AM

This appeal by the assessee is directed against the order dated 31.03.2026 passed by the National Faceless Appeal Centre, Delhi[hereinafter referred to as "the CIT(A)"], under section 250 of the Income-tax Act, 1961[hereinafter referred to as "the Act"], for

2 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited the assessment year 2016-17, arising from the assessment order dated 29.11.2018 passed by the Assistant Commissioner of Income-tax, Circle 3(2)(1), Mumbai[hereinafter referred to as "Assessing Officer"], under section 143(3) of the Act. Facts of the Case 2. The assessee filed its return of income for the year under consideration on 14.10.2016, declaring total income of Rs.4,25,86,260/- under the normal provisions of the Act. The return was initially processed under section 143(1) of the Act. Thereafter, the case was selected for scrutiny and notice under section 143(2) dated 07.07.2017 was issued. Notices under section 142(1) were subsequently issued on 10.04.2018 and 25.09.2018, in response to which the assessee furnished details electronically through the e-filing portal. The assessee was engaged in the business of sale of internet advertising space and online content. 3. During the course of assessment proceedings, the Assessing Officer noticed certain receipts appearing in Form No. 26AS which, according to him, had not been fully offered to tax by the assessee. In the case of M/s. Fork Media Private Limited, Form No. 26AS reflected tax deducted at source of Rs.2,06,913/- on the corresponding amount of Rs.1,03,45,535/-. The assessee had not claimed credit for the said tax deducted at source. The Assessing Officer, therefore, issued a show-cause notice under section

3 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited 142(1) dated 25.09.2018, requiring the assessee to explain why the corresponding amount should not be added to its total income. 4. In its reply dated 28.09.2018, the assessee submitted that, out of the amount of Rs.1,03,45,535/-, a sum of Rs.74,59,548/- had already been included in its revenue and that the balance amount of Rs.28,85,987/- did not relate to it. The Assessing Officer did not accept the explanation. He observed that Form No. 26AS specifically showed that M/s. Fork Media Private Limited had deducted tax of Rs.2,06,913/- on the income credited against the PAN of the assessee. According to the Assessing Officer, this established accrual of the corresponding income to the assessee. He further observed that, since the assessee was a company maintaining its accounts on the mercantile system, the entire amount was required to be offered to tax, with the corresponding credit of tax deducted at source being allowable under section 199 of the Act. In the absence of a reconciliation or further supporting evidence, the Assessing Officer added the balance amount of Rs.28,85,987/- to the total income of the assessee. 5. The Assessing Officer further noticed that Form No. 26AS reflected tax deducted at source of Rs.9,000/- by M/s. Logiservice Technologies Private Limited on the corresponding amount of Rs.4,50,000/-. The assessee had neither offered the said amount as its revenue nor claimed credit for the corresponding tax deducted at source. In response to the show-cause notice dated

4 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited 25.09.2018, the assessee submitted, by its reply dated 28.09.2018, that the amount of Rs.4,50,000/- did not relate to it. 6. The Assessing Officer rejected the explanation on the ground that the tax had been deducted by M/s. Logiservice Technologies Private Limited against the PAN of the assessee and deposited in the Government Treasury. According to him, the assessee had not furnished any reconciliation or material in support of its assertion that the amount did not pertain to it. He accordingly added Rs.4,50,000/- to the total income of the assessee. Thus, the aggregate addition on account of income allegedly not offered to tax was worked out at Rs.33,35,987/-, comprising Rs.28,85,987/- relating to M/s. Fork Media Private Limited and Rs.4,50,000/- relating to M/s. Logiservice Technologies Private Limited. 7. The second issue before the Assessing Officer related to the expenditure debited by the assessee under the head “sales promotion expenses”. The assessee had debited aggregate sales promotion expenses of Rs.2,71,87,837/-, out of which Rs.2,38,75,429/- was stated to have been paid to M/s. The Indian Express Private Limited, the holding company of the assessee. In response to the notice issued under section 142(1), the assessee furnished party-wise details and copies of the invoices and bills.

5 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited 8. The Assessing Officer observed that the sales promotion expenditure was more than ten times the expenditure of Rs.19,67,142/- incurred in the immediately preceding assessment year, whereas the revenue from operations had not increased in the same proportion. He further observed that the invoices issued by M/s. The Indian Express Private Limited did not contain adequate particulars regarding the nature of the sales promotion services, the basis of computation or uniform rates. According to him, different invoices reflected rates of Rs.5,870/-, Rs.3,550/- and Rs.1,280/-. The assessee had also not furnished any agreement or memorandum of understanding governing the advertisements and the rates to be charged. 9. By a show-cause notice dated 26.10.2018, the assessee was required to explain why the payment made to its holding company should not be disallowed in the absence of an agreement, memorandum of understanding or a detailed note regarding the nature of the services rendered. In response, the assessee explained that its business consisted of the sale of advertising space on websites and mobile applications, including IE.com, FE.com, LS.com and JS.com. The online campaigns of its clients were carried on those websites and mobile applications. For promoting the websites and soliciting advertisements from clients, the assessee published advertisements in various newspapers of M/s. The Indian Express Private Limited.

6 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited 10. The assessee submitted that the bills raised by M/s. The Indian Express Private Limited were for publication of the assessee’s advertisements in its newspapers. Sample advertisements were furnished in support of the claim. It was explained that the column titled “Advertiser” in the invoices contained a brief description of the advertisement published, such as “IE.COM-OUR APP IS LIKE THE STD” and “STORIES- 10.05/08/05/2015”. The assessee further submitted that there was no separate agreement or memorandum of understanding, since the invoices were received and accounted for as and when the advertisements were released. As regards the absence of service tax, it was explained that the sale of advertisement space in print media was covered by the negative list of services under section 66D of the Finance Act, 1994. 11. The Assessing Officer did not accept these explanations. He compared the invoices of M/s. The Indian Express Private Limited with an invoice issued by M/s. Orangeplus Media Solutions Private Limited. According to him, the latter invoice contained particulars such as the release date, name of publication, size and location of the advertisement, page position, space occupied, rate and the cities in which the newspaper was to be circulated. He observed that similar particulars were absent from the invoices of M/s. The Indian Express Private Limited. He also noticed that, in several specified invoices, the column containing the description of the advertiser or product was blank.

7 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited 12. The Assessing Officer further observed that, despite the substantial amount of expenditure incurred with the holding company, there was no agreement, quotation or other material evidencing the basis on which the rates had been fixed. Though the invoices referred to an order number and date, the assessee had not furnished the corresponding orders, their terms and conditions or other supporting material. According to him, the advertisements predominantly publicised the name “Indian Express”, while the name of the assessee and the features of its alleged products were not evident. On the cumulative consideration of these circumstances, the Assessing Officer held that the expenditure was not supported by genuine rendering of services by M/s. The Indian Express Private Limited. He accordingly made a disallowance of Rs.2,38,00,000/- and initiated penalty proceedings under section 271(1)(c) of the Act. 13. The Assessing Officer computed the total income at Rs.6,97,22,248/-, rounded off to Rs.6,97,22,250/-, after making an addition of Rs.33,35,987/- on account of income not offered to tax and a disallowance of Rs.2,38,00,000/- on account of sales promotion expenses. The assessment was accordingly completed under section 143(3) of the Act. 14. Before the learned CIT(A), the assessee challenged the addition of Rs.33,35,987/- as income not offered to tax and the disallowance of advertisement expenditure. In relation to the first issue, the assessee submitted that it had earlier operated the

8 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited digital content business of the Indian Express Group under a licensing arrangement which came to an end on 31.12.2015. With effect from 01.01.2016, the licence, management and operation of the websites and e-papers were stated to have been taken over by M/s. IE Online Media Services Private Limited. 15. The assessee relied upon an agreement dated 01.01.2016 entered into between itself and M/s. IE Online Media Services Private Limited. It was submitted that, under the said agreement, all income and profit accruing or arising in connection with the digital content business from 01.01.2016, together with the corresponding expenditure and liabilities, were to be treated as those of M/s. IE Online Media Services Private Limited. The arrangement was stated to cover subsisting contracts with third parties under which bills, release orders, purchase orders or challans continued to be issued in the name of the assessee on or after 01.01.2016. 16. On this basis, the assessee contended that the amounts of Rs.28,85,987/- from M/s. Fork Media Private Limited and Rs.4,50,000/- from M/s. Logiservice Technologies Private Limited stood diverted by overriding title to M/s. IE Online Media Services Private Limited. The assessee also furnished a letter from the said company confirming that the aggregate amount of Rs.33,35,987/- had been offered to tax by it in its return of income for the assessment year 2016-17. It was, therefore, contended that the

9 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited same income could not again be brought to tax in the hands of the assessee. 17. The learned CIT(A) did not accept the contention. He observed that the third-party payers had treated the assessee as the recipient of the income and had deducted tax at source against its PAN. According to the learned CIT(A), there was no contemporaneous third-party material demonstrating that M/s. Fork Media Private Limited or M/s. Logiservice Technologies Private Limited was under an obligation to make the payment to M/s. IE Online Media Services Private Limited or that the inter se agreement dated 01.01.2016 had been communicated to or accepted by the payers. 18. The learned CIT(A) held that the agreement relied upon by the assessee was an internal arrangement between related parties and did not establish an antecedent title in favour of M/s. IE Online Media Services Private Limited at the point of accrual of the income. He further observed that the assessee had neither credited the receipts in its profit and loss account nor produced contemporaneous correspondence to show that the invoices were raised in the name of M/s. IE Online Media Services Private Limited or that the payers had recognised the said company as the beneficiary. The confirmation obtained from M/s. IE Online Media Services Private Limited was treated as an internal confirmation which, according to him, could not prevail over Form No. 26AS and the payer-side tax deduction. He accordingly

10 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited held that the income had accrued to the assessee within the meaning of section 5 of the Act and confirmed the addition of Rs.33,35,987/-. 19. As regards the advertisement expenditure, the assessee submitted before the learned CIT(A) that the year under consideration was the first year of its operations and that it had undertaken an advertising campaign for its websites and mobile applications in order to promote the sale of advertising space. It was explained that it was not engaged in the sale of products and, therefore, the Assessing Officer’s observation regarding the absence of a list of products was misconceived. 20. The assessee further submitted that it was not customary in the newspaper trade to execute separate agreements or memoranda of understanding for the release of advertisements. The advertising rates were fixed by the publication and were common to advertisers. The rates depended upon the publication, edition, language, page position and the number of editions in which an advertisement was released. It was also submitted that there was no occasion for the assessee to invite quotations because the applicable rates were fixed by the publication. 21. The assessee explained the particulars appearing in Invoice No. 1002394600 dated 15.05.2015 and submitted that the abbreviations appearing therein demonstrated that the advertisement had been released in all editions of “Financial

11 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited Express”, its Gujarati edition and all editions of “The Indian Express”. The assessee also explained the particulars relating to the cities, dimensions, volume, page position and release date appearing in the invoice. As regards the comparison made by the Assessing Officer with the invoice of M/s. Orangeplus Media Solutions Private Limited, the assessee submitted that the difference in the rates arose because the advertisement under one invoice was published in several editions, whereas the other advertisement was confined to the Delhi edition. 22. It was further submitted that tax of Rs.4,77,509/- had been deducted at source on aggregate invoices amounting to Rs.2,38,75,428.75. According to the assessee, sample advertisements furnished during assessment established that the advertisements had actually been released and published. The invoices contained a description of the advertisements, while the difference in rates stood explained by the number of publications and editions in which the advertisements were released. The expenditure was, therefore, claimed as having been incurred wholly and exclusively for the purposes of business and allowable under section 37(1) of the Act. 23. The assessee also relied before the learned CIT(A) upon an appellate order dated 22.02.2024 passed in the case of M/s. IE Online Media Services Private Limited for the assessment year 2016-17, wherein a similar disallowance of sales promotion expenditure was stated to have been deleted. The assessee

12 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited contended that the facts in that case were identical and that the same view ought to be followed in its case. 24. The learned CIT(A), however, sustained the disallowance. He observed that there was no agreement or memorandum of understanding specifying the terms of the promotional campaign, rates, volume or the obligations of the parties. According to him, several invoices did not clearly specify the release date, advertisement size, page position or circulation particulars. He also found that the variation in the rates and the comparison made by the Assessing Officer with the invoice of M/s. Orangeplus Media Solutions Private Limited had not been satisfactorily explained by independent rate cards or market evidence. 25. The learned CIT(A) further observed that no contemporaneous media plan, campaign brief, board resolution or independent documentation had been furnished to demonstrate the basis on which the quantum, timing and targeting of the advertising campaign had been decided. Only selected press clippings were stated to have been produced, instead of comprehensive evidence corresponding to the major invoices. The explanation based upon abbreviations such as “FE ALL”, “FE(G)” and “IE ALL” was treated as self-referential and unsupported by independent confirmation from the circulation or advertising departments of M/s. The Indian Express Private Limited.

13 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited 26. The learned CIT(A) held that deduction of tax at source, though relevant, was not conclusive either of the genuineness of the expenditure or its business purpose. He distinguished the appellate order in the case of M/s. IE Online Media Services Private Limited on the ground that each case had to be determined on its own facts and that the assessee had not demonstrated that the factual matrix and supporting material in the two cases were identical. On the cumulative consideration of the quantum of expenditure, the related-party nature of the transaction, the absence of independent corroboration and the unresolved differences in the rates, the learned CIT(A) held that the assessee had failed to establish that the entire expenditure was genuinely and wholly and exclusively incurred for the purposes of its business. He consequently sustained the disallowance and dismissed the appeal of the assessee.

14 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited diverted by overridingtitle to IE Online Media Services Pvt. Ltd. which had taken over the business w.e.f.01.01.2016 and had also offered such income in its return of income. 4. Without prejudice to the above, the National Faceless Appeal Centre ought to haveheld that if the income of Rs. 33,35,987 was assessable in the hands of the assessee,then it should have also been granted the corresponding TDS on the same. 5. On the facts and in law, the National Faceless Appeal Centre was not justified in sustaining the disallowance of advertisement expenses of Rs.2,38,75,429. 6. The National Faceless Appeal Centre failed to note on the facts and in law that the said expenditure was incurred for releasing advertisement during its first year ofoperation in the Indian Express group of newspapers as per their standard businessmodel and at the same rates as charged by them from third parties. Each of the above grounds are mutually exclusive, independent and withoutprejudice to each other. 7. The Appellant craves leave to add, alter, modify or amend any of the ground(s) /sub-ground(s) of the appeal. 28. At the outset, the learned Authorised Representative (AR) submitted that Ground No. 1, challenging the validity of the assessment order on the ground that it was unsigned, is not pressed. Accordingly, Ground No. 1 is dismissed as not pressed.

15 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited income pertaining to M/s. IE Online Media Services Private Limited. The corresponding tax deducted at source had not been claimed by the assessee. According to him, upon the transfer of the digital-content business with effect from 01.01.2016, the related revenue was transferred to and accounted for by the new entity in terms of the agreement governing the transition of the business. 30. The learned AR further invited our attention to the copy of the agreement placed on record. Referring to its recitals, he submitted that the assessee’s licence to use the digital content of the Indian Express Group came to an end on 31.12.2015 and that, with effect from 01.01.2016, the licence, business, management and operation of the websites and e-papers were taken over by M/s. IE Online Media Services Private Limited. He particularly referred to the clauses providing that all income or profit arising from the digital-content business from 01.01.2016, together with the corresponding outgoings, costs, expenses and liabilities, was to be treated as that of M/s. IE Online Media Services Private Limited. He also referred to the clause dealing with subsisting third-party contracts under which bills, release orders, purchase orders or challans continued to be issued in the name of the assessee on or after 01.01.2016, although the corresponding services were rendered by or for M/s. IE Online Media Services Private Limited. On this basis, it was contended that the disputed income stood diverted to the new entity under

16 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited the contractual arrangement and did not constitute the income of the assessee. 31. The learned AR thereafter invited our attention to the confirmation issued by M/s. IE Online Media Services Private Limited, placed at page 287 of the paper book. The said entity confirmed that, during the financial year ended 31.03.2016, it had received Rs.28,85,987/- from M/s. Fork Media Private Limited and Rs.4,50,000/- from M/s. Logiservice Technologies Private Limited against the invoices specified in the confirmation. It further confirmed that the aggregate amount of Rs.33,35,987/- had been included as revenue in its statement of profit and loss for the year ended 31.03.2016, offered to tax under the head “Profits and gains of business or profession” in its return of income for the assessment year 2016-17 and assessed to tax in its hands. The learned AR, therefore, submitted that the addition of the same income in the hands of the assessee resulted in taxation of the identical income in the hands of two entities. He accordingly prayed that the addition of Rs.33,35,987/- be deleted. Alternatively, it was submitted that, if the income was held assessable in the hands of the assessee, the corresponding credit for tax deducted at source ought to be granted. 32. Regarding Ground Nos. 5 and 6, the learned AR submitted that the disallowance of advertisement expenditure was founded upon assumptions which were contrary to the documentary evidence placed on record. He invited our attention to the invoice-

17 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited wise details, the corresponding copies of the newspapers and magazines containing the advertisements, and the evidence of tax deducted at source. It was submitted that these documents established the identity of the service provider, the nature of the services, the actual publication of the advertisements, the amount charged and the payment made by the assessee. Thus, this was not a case where the claim rested merely upon entries in the books of account or unsupported invoices. 33. The learned AR submitted that the genuineness of the advertisements was demonstrated by the actual newspaper and magazine copies in which they appeared. The invoices raised by M/s. The Indian Express Private Limited corresponded with the advertisements so published. The lower authorities had not brought on record any contrary material to establish that the copies of the advertisements were fabricated, that the invoices were false or that the services evidenced by the published advertisements had not been rendered. According to him, once the advertisements were demonstrably published, the conclusion that the expenditure was not backed by the genuine rendering of services was factually unsustainable. 34. The learned AR further submitted that the finding that the invoices did not contain particulars regarding the release date, publication, edition, size, placement or area of circulation arose from an incomplete reading of the invoices. He explained that the relevant particulars were recorded through abbreviations and

18 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited publication codes appearing at the foot of the invoices. By way of illustration, Invoice No. 1002394600 dated 15.05.2015 recorded publication in “FE ALL”, “FE(G)” and “IE ALL”, signifying publication in all editions of the Financial Express, the Gujarati edition of the Financial Express and all editions of The Indian Express. The invoice also contained codes indicating the cities covered, the dimensions of the advertisement, its volume, page position and release date. Therefore, the observation that these particulars were absent from the invoices was stated to be factually incorrect. 35. Addressing the alleged lack of uniformity in rates, the learned AR submitted that the basic advertisement rates were fixed by the newspaper publication and were uniformly applicable according to the relevant parameters. The rate for an advertisement depended upon the publication, language, number of editions, geographical coverage, dimensions, page position and number of insertions. Consequently, different rates appearing in different invoices did not represent arbitrary pricing but reflected differences in the services covered by the respective invoices. 36. The learned AR illustrated this distinction by comparing Invoice No. 1002394600 dated 15.05.2015 with Invoice No. 1002394601 dated 12.08.2015. The former covered publication in several editions of the Financial Express, its Gujarati edition and The Indian Express, whereas the latter related only to the Delhi edition of The Indian Express. Thus, the difference between the

19 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited rate of Rs.5,780/- under the first invoice and Rs.1,280/- under the second invoice was attributable to the materially different publication coverage. According to him, the comparison made by the Assessing Officer with an invoice of M/s. Orangeplus Media Solutions Private Limited was not a like-for-like comparison because the publication, editions, geographical coverage and placement covered by the respective invoices were different. 37. It was further submitted that the rates charged to the assessee were based upon the standard rate structure followed for advertisers and that the assessee had, in fact, been granted a discount of 50% on the applicable advertisement rates. The learned AR contended that this material aspect had not been properly appreciated by the lower authorities. According to him, the discounted rates demonstrated that the payment was not excessive and that the assessee had obtained the advertisements on commercially favourable terms. 38. The learned AR then addressed the observation regarding the absence of an agreement or memorandum of understanding. He submitted that advertisements in newspapers were ordinarily released on the basis of publication rates, release instructions and invoices and that it was not the prevailing trade practice to execute a separate agreement for every advertisement. In the present case, the actual newspaper and magazine copies established publication, while the invoices established the corresponding charges. Therefore, the absence of a separate

20 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited agreement could not override direct documentary evidence showing that the advertisements had actually been published. 39. As regards the observation that the assessee had not identified the product advertised, the learned AR submitted that the assessee was not engaged in selling a tangible product. Its business consisted of providing news content and selling advertising space on its websites and mobile applications. The advertisements promoted the assessee’s website, “IndianExpress.com”, its mobile applications and their content- related achievements. Consequently, there was no occasion for the assessee to furnish a list of products. The conclusion drawn from the alleged absence of product details was, therefore, based upon an incorrect understanding of the assessee’s business model. 40. The learned AR also controverted the comparison of the expenditure with the revenue earned during the year. He submitted that advertisement expenditure was incurred to establish, promote and expand the assessee’s digital platform and could not be expected to generate an immediate or mathematically proportionate increase in revenue during the same year. A tenfold increase in advertisement expenditure did not necessarily require a corresponding tenfold increase in revenue. The commercial efficacy of advertisement expenditure could not be judged solely by comparing the percentage increase in expenditure with the percentage increase in revenue.

21 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited 41. The learned AR fairly accepted that M/s. The Indian Express Private Limited was the holding company of the assessee. He, however, submitted that the mere fact that the payment was made to a related party did not render the expenditure non- genuine. Neither the Assessing Officer nor the learned CIT(A) had sustained the disallowance under section 40A(2) by determining that the expenditure was excessive or unreasonable having regard to the fair market value of the services. The comparison relied upon by the Assessing Officer was not comparable because it related to materially different publication coverage. On the contrary, the assessee’s case was that the rates followed the uniform advertisement-rate structure and were further discounted by 50%. Therefore, the related-party relationship, by itself, could not justify disallowance of the entire expenditure under section 37(1) of the Act. 42. The learned AR also relied upon the order dated 22.02.2024 passed by the learned CIT(A) in the case of M/s. IE Online Media Services Private Limited for the assessment year 2016-17, wherein a similar disallowance of advertisement expenditure was stated to have been deleted after considering substantially identical explanations regarding the absence of an agreement, variation in rates and particulars appearing in the invoices. He contended that the material facts and the business model were identical and that a uniform approach was warranted. On the cumulative consideration of the actual publication of the

22 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited advertisements, invoice-wise particulars, uniform rate structure, 50% discount, deduction of tax at source and the direct nexus with the assessee’s business, the learned AR prayed that the entire disallowance be deleted. 43. We have considered the rival submissions and perused the material placed on record. The addition of Rs.33,35,987/- comprises Rs.28,85,987/- relating to M/s. Fork Media Private Limited and Rs.4,50,000/- relating to M/s. Logiservice Technologies Private Limited. The Assessing Officer made the addition principally on the basis that the corresponding tax had been deducted against the PAN of the assessee and the receipts appeared in its Form No. 26AS. 44. The material placed before us, however, shows that the assessee’s licence to operate the digital-content business came to an end on 31.12.2015 and that, with effect from 01.01.2016, the licence, management and operation of the websites and e-papers were taken over by M/s. IE Online Media Services Private Limited. The agreement placed on record specifically provides that all income and profits accruing or arising from the digital- content business from 01.01.2016, together with the corresponding expenditure and liabilities, were to be treated as those of M/s. IE Online Media Services Private Limited. The agreement also deals with subsisting third-party contracts under which invoices, release orders or other documents might continue to be issued in the name of the assessee after 01.01.2016,

23 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited although the corresponding services were rendered by or for the new entity. 45. The party-wise reconciliation placed at pages 189 and 190 of the paper book separately identifies the amounts relating to M/s. IE Online Media Services Private Limited. The assessee has also placed on record a confirmation from the said entity specifying the invoices under which it received Rs.28,85,987/- from M/s. Fork Media Private Limited and Rs.4,50,000/- from M/s. Logiservice Technologies Private Limited. The invoices referred to in the confirmation are dated between 31.01.2016 and 31.03.2016, namely, after the transfer of the digital-content business with effect from 01.01.2016. The new entity has further confirmed that the aggregate amount of Rs.33,35,987/- was included as revenue in its statement of profit and loss for the year ended 31.03.2016, offered to tax in its return of income for the assessment year 2016-17 and assessed to tax in its hands. 46. It is true that Form No. 26AS constitutes relevant evidence regarding the person against whose PAN tax was deducted. It cannot, however, be regarded as conclusive of the accrual of income when contemporaneous material is produced to demonstrate that the underlying business had been transferred and that the corresponding revenue was accounted for and offered to tax by the successor entity. The non-claim of the corresponding TDS credit by the assessee is also a relevant

24 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited circumstance consistent with its explanation that the income did not belong to it after 01.01.2016.

a. whether the aggregate income of Rs.33,35,987/-, comprising Rs.28,85,987/- received from M/s. Fork Media Private Limited and Rs.4,50,000/- received from M/s. Logiservice Technologies Private Limited, was included in the revenue and return of income of M/s. IE Online Media Services Private Limited for the assessment year 2016-17; b. whether the said income was subjected to tax in the assessment of M/s. IE Online Media Services Private Limited;

25 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited c. whether the amounts so accounted for correspond to the invoices specified in the confirmation placed on record; and d. whether the corresponding TDS credit was not claimed or allowed in the hands of the assessee. 49. If the above particulars are found to be correct, the Assessing Officer shall delete the addition of Rs.33,35,987/- from the income of the assessee. If any corresponding TDS credit has been granted to the assessee, the same shall be withdrawn or appropriately regulated so that the income and the related TDS credit are not allowed in the hands of two different entities. The verification shall remain confined to the above matters and shall not extend to a fresh or open-ended examination of the entire arrangement. The assessee shall be afforded a reasonable opportunity to furnish the relevant return, computation, financial statements, assessment order and other supporting material of M/s. IE Online Media Services Private Limited.

26 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited promoting its websites and mobile applications. The invoice-wise statement records an aggregate amount of Rs.2,38,75,428.75, rounded off to Rs.2,38,75,429/-, on which tax of Rs.4,77,509/- was deducted at source. 52. The primary requirement under section 37(1) is that the expenditure should be laid out wholly and exclusively for the purposes of the business and should not be capital or personal expenditure or expenditure prohibited by law. In the present case, the assessee’s business consisted of maintaining websites and mobile applications, providing digital news content and earning revenue from the sale of advertising space. Advertisements promoting those websites and applications have a direct nexus with the business carried on by the assessee. 53. The assessee produced the invoices and sample copies of the newspapers and magazines in which the advertisements were published. Thus, the claim was not supported merely by accounting entries or invoices. The actual publication of the advertisements was demonstrated by the corresponding newspaper and magazine copies. No contrary material was brought on record to establish that the copies of the published advertisements were not genuine or that the advertisements represented in those copies had not been released. 54. The conclusion of the Assessing Officer that the invoices did not contain particulars regarding the publication, editions,

27 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited release date, dimensions, placement and area of circulation does not accord with a complete reading of the invoices. The relevant particulars were recorded through publication abbreviations and edition codes appearing at the foot of the invoices. For instance, Invoice No. 1002394600 dated 15.05.2015 contained the expressions “FE ALL”, “FE(G)” and “IE ALL”, signifying publication in all editions of the Financial Express, its Gujarati edition and all editions of The Indian Express. The invoice also contained codes identifying the cities covered, besides the dimensions, volume, page position and release date of the advertisement. The absence of these particulars, therefore, could not have been inferred merely because they were recorded in abbreviated form. 55. The variation in the rates has also been satisfactorily explained. Advertisement rates depended upon the publication, language, number of editions, geographical coverage, dimensions, placement and number of insertions. Invoice No. 1002394600 covered several editions of different publications, whereas Invoice No. 1002394601 dated 12.08.2015 related only to the Delhi edition of The Indian Express. The difference between the rate of Rs.5,780/- under the former invoice and Rs.1,280/- under the latter was, therefore, attributable to materially different publication coverage. The comparison made with the invoice of M/s. Orangeplus Media Solutions Private Limited was not a like- for-like comparison because the services covered by the

28 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited respective invoices differed in publication, editions, placement and geographical coverage. 56. The assessee also explained that the basic rate structure was uniformly followed according to the relevant advertising parameters and that it had been allowed a discount of 50% on the applicable rates. The lower authorities did not demonstrate, by reference to any comparable advertisement having identical publication coverage, dimensions, placement and number of editions, that the amount charged to the assessee was excessive or above the rate charged in comparable circumstances. 57. The absence of a separate agreement or memorandum of understanding also cannot be decisive when the rendering of services is otherwise established through invoices and copies of the published advertisements. An agreement would have constituted additional evidence of the terms between the parties, but its absence cannot efface the documentary evidence showing the actual publication of the advertisements. The invoices, published advertisements and deduction of tax at source, considered cumulatively, establish the genuineness of the expenditure. 58. The observation regarding the assessee’s failure to furnish a list of products also proceeds on an incorrect appreciation of its business. The assessee was not promoting a tangible product. It was promoting its websites, mobile applications and digital

29 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited content with a view to increasing traffic and attracting clients for the sale of advertising space. The advertisements referring to “IndianExpress.com” were, therefore, directly connected with the assessee’s revenue-generating platform. 59. Similarly, the fact that the expenditure increased by more than ten times over the preceding year, without an equivalent increase in revenue during the same year, cannot determine its allowability. Advertisement expenditure is incurred to promote and develop the business, and its benefit may not result in an immediate or arithmetically proportionate increase in revenue. The lower authorities could examine whether the expenditure was actually incurred and whether it had a business nexus, but the absence of a corresponding increase in revenue could not, by itself, establish that the expenditure was non-genuine. 60. M/s. The Indian Express Private Limited was admittedly the holding company of the assessee. Nevertheless, a payment does not become non-genuine merely because it is made to a related party. Section 40A(2) permits disallowance only to the extent a related-party payment is found excessive or unreasonable by reference to the fair market value of the services, the legitimate needs of the business or the benefit derived therefrom. In the present case, no disallowance was made under section 40A(2), nor was any excessive portion identified through a comparable rate analysis. The entire expenditure was disallowed under section 37(1) despite evidence of actual publication and without

30 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited quantifying any amount alleged to be excessive. Such an approach cannot be sustained. 61. The learned CIT(A) additionally referred to the absence of a media plan, campaign brief or board resolution. These documents may have provided further corroboration, but their absence cannot outweigh direct evidence of the services actually rendered. Once publication of the advertisements, their business nexus and the corresponding invoices are established, the claim cannot be rejected merely because the assessee did not maintain its commercial decision-making in the particular documentary form considered desirable by the lower authorities. 62. The deduction of tax at source is not, by itself, conclusive of the allowability of expenditure. In the present case, however, it is corroborative of the invoices, proof of payment and actual newspaper and magazine publications. On a cumulative consideration of the material, we find that the assessee established the genuineness of the expenditure and its direct nexus with the business. The reasons given by the lower authorities do not justify disallowance of the expenditure, much less its disallowance in entirety. 63. The invoice-wise statement aggregates to Rs.2,38,75,428.75, rounded off to Rs.2,38,75,429/-. The assessment computation, however, shows that the amount actually added to the returned income was Rs.2,38,00,000/-. We accordingly hold that the

31 ITA No. 4907/Mum/2026 Innovateive Tech Team Media Enterprises Private Limited advertisement expenditure represented by the invoices is allowable under section 37(1) of the Act and direct the Assessing Officer to delete the disallowance of Rs.2,38,00,000/- actually made in computing the assessed income. Ground Nos. 5 and 6 are accordingly allowed.

Order pronounced in the open court on 31.08.2026.

Sd/- Sd/- (SAKTIJIT DEY) (MAKARAND VASANT MAHADEOKAR) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 31.08.2026 ANKIT, PS

आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलाथी / The Appellant 1. प्रत्यथी / The Respondent. 2. 3. संबंधधत आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई/ DR, ITAT, Mumbai 5. 6. गार्ड फाईल / Guard file.

आदेशानुसार/BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai