DCIT, NEW DELHI vs. M/S. INX NEWS PVT. LTD., NEW DELHI

ITA 6532/DEL/2015Status: DisposedITAT Delhi23 May 2023AY 2008-093 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer failed to appreciate the nature of the assessee's business, which involved launching a news channel. The Tribunal found that the business operations required content creation and resources for broadcasting, and that expenses incurred before the inauguration of the channel were legitimate.

What were the facts?

The Assessing Officer disallowed the business loss claimed by the assessee, M/s. INX News Pvt. Ltd., on the grounds that no business activity was carried out during the relevant year. The AO noted that while the company had income from interest, dividends, and profit on sale of investments, it failed to provide documents to establish business activities.

What were the issues?

Whether the business loss claimed by the assessee was allowable when the Assessing Officer doubted the existence of business activities during the relevant period.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI

Before: SH. N.K.BILLAIYA & SH.ANUBHAV SHARMA

For Respondent: Ms. Sarita Kumar, CIT-DR

Hearing: 25.04.2023Pronounced: 23.05.2023

The appeal has been preferred by the Revenue against the order dated 13.08.2015 of CIT(A)-4, Mumbai (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeal No. CIT(A)-4/Tr- 426/Appeal(3)/ACIT.16(1)/2015-16 arising out of an appeal before it against the order dated 24.12.2010 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the DCIT-5(2), Mumbai (hereinafter referred as the Ld. AO).

The facts in brief are that after going through the details filed by the appellant, the A.O. observed that as per Schedule 14 to P&L Account, the following are the only credit to P&L Account:-

6532.Del.2015 INX News P. Ltd. i) Interest Rs.25,61,059/- Dividend Income Rs.28,59,438/- ii) Profit on sale of investment Rs.28,59,512/- iii) Miscellaneous Income Rs. 350/- iv) In the computation of income, according to A.O., the appellant has subjected to tax interest income under the head ‘income from other sources’, dividend has been claimed exempt, profit on sale of investment has been considered for tax under the head capital gain. It was, therefore, observed that miscellaneous income could not be said to be business income whereas the appellant after claiming various expenses and allowances arrived at a business loss of Rs.49,13,34,690/-. The appellant was asked to explain the claim of expenses under the head business and arriving at a business loss of Rs.49,13,34,690/-. It is mentioned that the appellant failed to furnish any document to establish that the company was really involved in any business activity during the relevant previous year. The Assessing Officer, therefore, disallowed the business loss claimed holding that since no business activities had been carried out during the year, the same is not allowable and brought to tax the capital gain and income from other sources totaling to Rs.53,90,920/-.

The appeal before Ld. CIT(A) remand report was called upon the written submissions of the assessee and the paper book filed for which the Ld. AO submitted that para 4.5 of Ld. CIT(A) “4.5 Thus the only issue to be verified is whether the claim of launch of news channel is correct. From the submission/proof it appears that channel was inaugurated on 27.03.2008. And this is also genuine that before inauguration assessee must have incurred some expenses but fixed asset schedule is showing that most of the assets were put to use on 27.03.2008, so it is doubtful that this much expenses was incurred during the year.”

The Bench is of considered opinion that Ld. CIT(A) has rightly appreciated the facts in the light of the submissions of assessee and the remand

6532.Del.2015 INX News P. Ltd. report once statutory permission were received from the competent authority on 21.09.2007 the business operations of the assessee company required creation of content and resources for broadcasting the news. The Ld. AO had failed to appreciate the nature of business of the assessee to conclude that the assessee had not done any business activity during the relevant period. Thus, there is no substance in the grounds raised by the revenue, Consequently, the appeal of revenue is dismissed.

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