DCIT, NEW DELHI vs. M/S. DIAMOND MAGAZINES PVT. LTD., NEW DELHI

PER N.K. BILLAIYA, ACCOUNTANT MEMBER,

“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.”

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.”

“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.

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.”

The order is pronounced in the open court on 14.11.2018.