Income Tax Appellate Tribunal - Delhi
Turner International India Pvt. Ltd., ... vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'H' NEW DELHI
BEFORE SHRI G.D.AGARWAL, HON'BLE VICE PRESIDENT
AND
SHRI RAJPAL YADAV, JUDICIAL MEMBER
I.T.A .NO-2125/Delhi-2012
ASSESSMENT YEAR -2007-08
ACIT Vs. M/s Turner International India Pvt. Ltd.
Circle 16(1), 5th Floor, Radisson Commercial Plaza,
New Delhi. NH-8, Mahipal Pur,
Delhi-110037.
PAN : AAACT3821H
(APPELLANT) (RESPONDENT)
Appellant by: Shri. K.V.K. Singh, Sr. DR
Respondent by: Ms. Kanchun Kaushal & Shri Vikas Bansal, CAs
ORDER
PER RAJPAL YADAV, JM
The revenue is in appeal before us against the order of Ld. CIT(A) dated 06- 02-2012 passed for AY 2007-08. The revenue has taken three grounds of appeal, but its grievance revolves around a single issue, whereby it has challenged deletion of ` 10,80,000/- from the value of total Fringe Benefits.
2. The brief facts of the case are that assessee has filed its return of Fringe Benefits, declaring the value of Fringe Benefits at ` 1,58,41,527/-. The Ld. Assessing Officer has issued notice u/s 115WE(2) of the Income Tax Act, which 2 I.T.A .NO-2125/Delhi-2012 was served on the assessee on 30-09-2008. The Assessing Officer, thereafter, issued a detailed questionnaire.
3. It emerges around from the record that assessee company was set up with a view to carry out, inter alia, following business activities:-
• To carry on the business of producers, distributors of films, renting of film tapes, advertisers and franchisees of the programs and broadcasts of the Time Warner and Turner Group of Companies.
• To carry on the business of entering into agreements for presentation of films, television production inside India and abroad. • To carry out the business of sub-licensing and letting out the products of Time Warner and Turner Group of Companies.
4. In the accounting period, relating to AY 2007-08, it was engaged in the distribution of various products, namely television channels and television programmes of Time Warner Group Companies. It entered into a distribution agreement, wherein, TBSAP licensed for a fee, sub-distribution rights of TV channels like CNN, Cartoon Network, POGO etc. to TIIPL. As per the distribution agreement, TIIPL was responsible for importing, promoting, marketing, distributing and providing sub-distribution rights in respect of the TV channels to various cable and broadcast entities. In order to distribute one of the television channels of the Time Warner Group and to earn advertisement income, the 3 I.T.A .NO-2125/Delhi-2012 assessee entered into Telecasting Agreement in the financial year 2006-07 with Prasar Bharti, for telecasting a programme in Hindi language entitled 'Cartoon Network Duniya'. This programme comprises episodes from the television serials entitled 'Gali Gali Sim Sim', M.A.D (Music Art Dance), Kids Next Door etc. According to the agreement, Prasar Bharti had permitted telecast of two episodes per hour. Each episode having duration of 30 minutes. The payments have been defined in the agreement. The assessee had incurred Carriage Fee expenses amounting to ` 54,00,000/-. Ld. Assessing Officer has observed that the expenses incurred by the assessee were for the advertisements and therefore, they are in the nature of sales promotions, involving Fringe Benefits in them. He estimated the Fringe Benefits involved in this expenditure at 20 % and worked out the value at ` 10,80,000/-. The Assessing Officer in this way, determined the value of Fringe Benefits at ` 1,69,21,530/- as against ` 1,58,41,527/- disclosed by the assessee.
5. On appeal, Ld. CIT(A) has held that expenses were not incurred for sales promotion, rather it is contractual obligation for telecasting a programme namely 'Cartoon Network Duniya'. This payment made by the assessee does not fall within the ambit of sales promotion in which value of Fringe Benefits is involved. Ld. CIT(A) in this way deleted the addition.
6. Before us, Ld. DR relied upon the order of Assessing Officer and contented that this tele-serial was telecasted in order to promote viewer-ship of various 4 I.T.A .NO-2125/Delhi-2012 programmes of Time Warner Group Companies. Hence Ld. Assessing Officer has rightly treated the expenses incurred by the assessee in the nature of 'sales promotion'. ON the other hand, Ld. Counsel for the assessee submitted that assessee has earned advertisement revenue of ` 19,94,277/- on the telecast of these programmes. It was a business expenditure for availing a space from the Prasar Bharti for telecasting its programme. He took us through the written submission filed before the CIT(A), which is reproduced in paragraph no. 4.2. He relied upon the submission made before the CIT(A).
7. We have duly considered the rival contention and gone through the record carefully. The case of the Assessing Officer is that payment made by the assessee to Prasar Bharti for telecasting a programme in Hindi language entitled "Cartoon Network Duniya", was basically made towards sales promotion. It would increase the viewer-ship of Time Warner Group programme and therefore, it has debited the expenses under the head of carriage fee. He treated 20% of such payment as Fringe Benefits and made the disallowance. However, on analysis of the finding recorded by the CIT(A) and the submissions of the assessee, we are of the view that Ld. Assessing Officer has mis-read and mis-construed the business transaction carried out by the assessee for telecasting its tele-serials. It has not made the payment for showing its advertisement in other programmes, rather it has telecasted its own tele-serials which has resulted advertisement revenue also. Had 5 I.T.A .NO-2125/Delhi-2012 the assessee put advertisement in between other serials on different channels and then paid the money to the Prasar Bharti for displaying its advertisements than only one can say that Assessing Officer has rightly treated involvement of Fringe Benefits. But here the facts are otherwise.
8. Taking into consideration, the well reasoned order of Ld. CIT(A), we do not find any merit in this appeal of revenue, it is dismissed.
Sd/ Sd/
(G.D.AGARWAL) (RAJPAL YADAV)
HON'BLE VICE PRESIDENT JUDICIAL MEMBER
Dated: 27/07/2012
*Amit Kumar*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI