CIT vs. AIRTIME MARKETING & SALES INDIA PVT LTD

-, I #6& 7 % 03.08.2011 Present: Mr. Abhishek Maratha" Sr. 5taildiilg, Counsel for the appellant. ' +ITAs 924/2011 & 925/2011 , ' The Assessing Officer while carrying out the assessment pertainlng to Assessment Year 2003-04 notIced that the assessee had given an advance of ~8.59 crore to the two concerns narne!y (I) Hitz FM Radio Pvt. Ltd. and (Ii) india FM Radio Pvt: Ltd and on this advance no interest had been charged by the assessee. There was an agreement between the assessee and the aforesaid t~vo companies as per which the assessee vias to utilize their airtime since the assessee is in the business of provlding support services in media sector apart from giving engineering consultancy. The AsseSSing Officer looked into the agreements entered into between the assessee and the aforesaid two companies as per vi/hich the amount of the airtime proceeds mentioned was in the range of \2-3 crores to each of the parties. On this basis the Assessing Officer formed the opinion that the amount of ~8.59 crore was much more than the terms stipulated in the agreement. The Assessing Officer held that the interest bearing funds have been ,advanced for the non-business purposes, The assessee had aiso paid interest on loans taken by it which was to the tune of '<:'22,48,552/-. The 2011:DHC:14635-DB

'2---- Assessing Officer disa!lc\rved the sa:d interest paid on the aforesaid conce rnc:: n'rl-re'IV' -, ;i,c;t:::<nH;::;1 Y';::::~.\.. nf In;::,nc:: ;::.r'v?l"'-OO' wore renl it t c.':\ " _ j .,./. I • i ',.§ ~ \.-i. " ... i _ '- v. "'..,, I v. J ['-/..A l l. ...... j __ ...... ,~_ loA J . .. ... 1 • L '_ . ~ .,...-. ._ tt ,I, _ \.- L. to the aforesaid two companies. The oreler of the ,Assessing Officer was upheld by the ClT(A). However, no further appeal was preferred by the assessee before the Trlbur:al. The Tribuna! had disallowed this addition, /A perusal of the order of the Tribunal \Nou!d reflect that even when there were agreements between the parties, the ,L\ssessing Officer and CIT(A) ignored that after those agreements correspondence were exchanged "between the assessee and the said two companies as per which the assessee had agl~eed to give enhanced amount. The text of two 3uch letters was reproduced by the lTAT. Another finding of fact which is ver; material and is recorded by the Tribuna! is that these two concerns are not related to the assessee but are mere clients of the assesseer:md the entire business of the assessee relates to the said two concerns. /},s a part of agreement, the assessee was making paym·ent to tll2m which was to be adjusted against sale of airtime and the enhanced amount paid by the assessee was stipu:~ted by the aforementIoned " !etter. ObvioLlsiy, tile Assessing Officer and the ClT(A) ignored the subsequent terms agreed to betvveen the parties vlfhich were tile resuit of business exigencies and vvhereby the assessee and the 2011:DHC:14635-DB

~ said two parties had novated the original terms regarding payment of advance whereby the assessee had agreed to pay the higher advance for ;-naintaining healthy and robust business relationship with the said two partners, These are purely findi.ng of facts, The other addition made by the Assessing Officer was with iegard to travelUng and conveyance expenses incurred on various foreign consultants amounting to ~11,9Z, 781/-. The assessee had claimed that it had incurred travelling and conveyance expenses in the sum of ~22,48,552/-, Tile Assessing Officer was of the opinion that some of the amount was spent on foreign consultants and this expenditure vvas not co-related· witr: the business of the assessee. Here also, the ClT(A) disallo'wed this addition which is confirmed by the Tribunal. Relevant portion of the order of the CiT(A) had been reproduced by the Tribunal in its order. The finding of fact is related to the fact that it.: was made to hotel Taj Maha!, Kolkata on account of boarding and lodging charges of Mr. David Kelman and Shri Anand Raj. It is also a finding of fact mentioned by the Tribuna! that Mr. David Kelman was deputed by parent company to visit Koikata for the purpose of advising on the transmission and studio infrastructure facliitles being set up by the two ciients of the assessee and thus expenditure had been incurred wholiy and exclusively for the purpose of business and was fully vouched. This '---, 2011:DHC:14635-DB

1 was again a finding of fact. No question of law arises, The appeal is hereby dismissed. . ~ugust 03, 2011 awanish , C! . i/) L u---L., d 'fCfh' i lV~- d ~.~ <"' ~ ['/"'1> ~ II £y" "i\, •• ;!1 ~ 1,"-n.. ~ )" ~~r . ~LLMEHTPhP j . 2011:DHC:14635-DB