Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS. SUCHITRA KAMBLE
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the Revenue is preferred against the order of the CIT(A)- 3, New Delhi dated 09.07.2015 pertaining to A.Y 2011-12.
The substantive grievances raised by the assessee read as under:
“1. Whether on the facts and in the circumstances of the case and in law the CIT(A) has erred in deleting the addition on account of disallowance u/s 40(a)(ia) of Rs. 94,93,000/- made by the Assessing Officer.
2. Whether on the facts and in the circumstances of the case and in law the CIT(A) has erred in deleting the addition on account of disallowance on account of u/s 2(22)(e) of Rs. 72,95,697/- made by the Assessing Officer.”
At the very outset, the ld. AR stated that the grievance raised vide Ground No. 1 was considered by the Tribunal in A.Ys 2009-10 and 2010-11 in and 5006/DEL/2014 and has restored the matter to the file of the Assessing Officer with specific directions.
The ld. DR could not bring any distinguishing decision in favour of the Revenue.
3 5. We have carefully considered the orders of the authorities below and the decision of the co-ordinate bench in ITA No. 5236/DEL/2012. I find force in the contention of the ld. AR. A similar issue was considered by the coordinate bench. The relevant finding of the coordinate bench reads as under:
“7. So far the expenditure incurred on advertisements with Prativogita Darpan and Megna Publishing Pvt. Ltd. are concerned the contentions of the assessee remained that with them the understanding of the assessee was of cross-advertisements which as per the assessee do not fall in the category of job work or services rendered within the meaning of sec. 194C of the Act. Learned CIT(Appeals) has upheld the action of the Assessing Officer in this regard on the basis that the work of advertisement was quantified in terms of money every time which has been shown as sale in the account of those parties whereas in the barter transaction the amount is not quantified and there is simply exchange of things. Learned CtT(Appeals) has ignored the copy of barter agreement between the assessee and Pratiyogita Darpan submitted by the assessee on the basis that it is on a plain paper and the same was not produced before the Assessing Officer. Considering the submissions of the parties, we are of the view that the agreement between the parties can also be inferred by their actions in the transaction. We also concur with the submissions of the learned AR that after quantification of the work of advertisement in terms of money, the adjustment in the cross-advertisement by way of barter system was possible. The assessee has filed the details of barter transaction at page Nos. 19 to 24 of the paper book, but it is not clear that these details were made available before the Assessing Officer. We, thus, in the interest of justice set aside the matter to the file of the Assessing Officer affording opportunity to the assessee to furnish the nexus between the cross-advertisements under the claimed barter transaction between the assessee and the said two parties i.e. Pratiyogita Darpan and Meghna Publishing Pvt. Ltd. with the direction to decide the issue afresh after hearing the assessee.”
Respectfully following the findings of the co-ordinate bench, we direct accordingly.
Grievance raised vide Ground No. 2 is also covered by the decision of the co-ordinate bench in ITA No. 5006/DEL/2014. The relevant finding of the coordinate bench reads as under:
“Ground No. 3 of the appeal is with respect to the addition of Rs. 2052195/- u/s 2(22)(e) of the Act. The assessee has received excess payment of the above sum from M/s. Diamond Pocket Books Pvt ltd. There were common share holders in the assessee as well as the payer company. Therefore, the ld AO held that the above sum is deemed dividend in the hands of the assessee. The ld CIT(A) deleted the above addition for the reason that after complete examination of copy of account of the Diamond Pocket Books Pvt. Ltd it was clear that the transactions are consisting of purchase and sales. He therefore, held that it cannot be a case of deemed dividend.
The ld DR relied upon the orders of the ld AO whereas, the ld AR relied upon the order of the ld CIT(A). He further submitted the circular of CBDT which accepts the view that in the business transaction provision of section 2(22)(e) does not apply.
We have carefully considered the rival contentions. The copy of the account of the Diamond Pocket Books Pvt. Ltd from the books of assessee have been tabulated by the ld AO in para No. 7.1 of the order. The above transaction shows that all the transactions are with respect to the advertisement, sales, subscription and purchases only. The ld Assessing Officer has further stated that approximately 30% of the total entries are only fund transfer entries and therefore, the addition was made. The page DCIT Vs. Diamond Magazines Pvt. Ltd, (Assessment Year: 2010-11) Page | 5 NO. 8 to 22 of the paper book shows the detailed account of the Diamond Pocket Books Pvt. Ltd. From the examination of the above account it is apparent that the assessee purchases the material as well as sales material to this party. It is also evident that there are transaction of receipt of the funds as well as payment of the funds. The above transaction is a mixed account shows that payments are for the purchases and receipts are for the sale of the goods. Merely because there are payment and receipt in a mixed transaction of purchase and sale of goods it may also partake the character of trade advances which are of the commercial nature. The CBDT issued a circular No. 19/2017 dated 12.06.2017 wherein, it has been stated that it is a settled position that trade advances which are in the nature of commercial transactions would not fall within the ambit of the word „advance‟
in Section 2(22)(e) of the Act. In view of this we do not find any infirmity in the order of the ld CIT(A) in deleting the above addition. in the result ground No. 3 of the appeal is dismissed.”
Respectfully following the findings of the co-ordinate bench, we dismiss Ground No. 2.
In the result, the appeal of the Revenue in is allowed in part for statistical purposes.
The order is pronounced in the open court on 14.11.2018.