THE COMMISSIONER OF INCOME TAX II vs. LEARNING UNIVERSE P. LTD.

ITA - 1237 / 2009HC Delhi01 December 20091 pages

For Petitioner: MR.SANJEEV SABHARWAL

AI SummaryDismissed

What did the High Court hold?

The High Court held that the addition made by the CIT(A) and the Income Tax Appellate Tribunal was perfectly justified. The Court found that the Assessing Officer was incorrect in presuming that NIIT had taken over a net liability of Rs. 10 Crores payable to Star TV by the assessee and adding it as income. The factual finding of the authorities below was that the rights were sold to NIIT for a consideration of Rs. 1 Crore only. The Court reasoned that only the benefit of the agreement was transferred to NIIT, which was to pay/spend Rs. 10 Crores and get the benefit of Rs. 12.25 Crores. Therefore, the fruits of advertisements were to be enjoyed by NIIT, not the assessee, and it was a future arrangement for which no benefit accrued to the assessee. Consequently, no substantial question of law arose for determination, and the appeal was dismissed.

What were the facts?

The assessee entered into an agreement with Star Television Ltd. on July 13, 2000, committing to spend US$25,00,000 on properties owned or controlled by Star over three years, expiring in July 2003. A revised agreement on July 31, 2001, amended the payment schedule. The benefit of this agreement was transferred to NIIT, which was to pay/spend Rs. 10 Crores and receive the benefit of Rs. 12.25 Crores. The Assessing Officer presumed NIIT took over a net liability of Rs. 10 Crores payable to Star TV by the assessee and added this as income. The CIT(A) and Income Tax Appellate Tribunal upheld this addition. The High Court reviewed the orders of the CIT(A) and the ITAT.

What were the issues?

1. Whether the High Court should entertain the appeal filed by the Revenue, given that no substantial question of law arises for determination. (Question of law) Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the reasoning of the High Court implies that the assessee's position, as accepted by the lower authorities, was that the benefit of the agreement was transferred to NIIT, and the fruits of advertisements were to be enjoyed by NIIT, not the assessee, and it was a future arrangement with no benefit accrued to the assessee. Revenue's Contention: The Revenue appealed the order of the ITAT, presumably disagreeing with the findings of the lower authorities. The High Court's observation that the Assessing Officer was wrong in presuming the transfer of a net liability suggests the Revenue's stance was that the assessee had a liability that was effectively transferred and should be taxed as income.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF DELHI AT NEW DELHI . 01.12.2009 2# Present: Mr. Sanjeev Sabharwal, Adv. for the appellant-Revenue. . + ITA No.1237/2009 After going through the orders passed by the CIT (A) as well as the Income Tax Appellate Tribunal we find that the Assessing Officer was wrong in presuming that the NIIT had taken over a net liability of Rs.10 Crores payable to Star TV by the assessee and therefore, added that as an income of the assessee on the basis of Asset Purchase Agreement between the NIIT and the assessee. The finding of fact recorded by the two authorities below is that the rights were sold to NIIT at a consideration of Rs.1 Crore only. The assessee had entered into an agreement on 13.07.2000 with Star Television Ltd. as per which the assessee had committed to spend US$ 25,00,000 on properties majority owned or controlled by Star over a period of three years, . . which was due to expire in July 2003, but as per the revised agreement dated 31.07.2001, the payment schedule was amended. Only the benefit of this agreement was transferred to NIIT and as per this, the NIIT was to pay/spend the aforesaid amount of Rs.10 Crores and get the benefit of Rs.12.25 Crores. Thus, the fruits of advertisements were to be enjoyed by the NIIT and not by the assessee. Moreover, it was an arrangement in future for which no benefit accrued to the assessee. In these circumstances, such an addition as done by the CIT (A) as well as the Income Tax Appellate Tribunal is perfectly justified. No substantial question of law arises for determination, this appeal is accordingly dismissed. A.K. SIKRI, J. . . . SIDDHARTH MRIDUL, J. December 01, 2009 pmc . .

Recent GST High Court judgments

Search GST case law →