Income Tax Appellate Tribunal - Delhi
Asl Insurance Brokers Pvt. Ltd., New ... vs Department Of Income Tax on 9 April, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : 'A' NEW DELHI
BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND
SHRI K.G. BANSAL, ACCOUNTANT MEMBER
I.T.A No. 2713 & & 3579/Del/10
Asstt. Year - 2006-07 & 2007-08
DCIT, Vs. M/s. ASL Insurance Brokers Pvt.
Ltd., 2nd Floor,
Central Circle-9,
3, Scindia House,
New Delhi.
Janpath, New Delhi
PAN AAECA4094M
(Appellant) (Respondent)
Appellant by: Shri A.K. Singh, Sr. DR
Respondent by: Shri Pankaj Jain, Advocate,Shri B.L.Goel, CA
Date of hearing : 09-04-2012
Date of pronouncement : 09-04-2012
ORDER
PER K.G. BANSAL, AM:
Both these appeals of the revenue raise identical grounds in respect of accommodation bills issued by M/s. Swen Television Ltd. The amount involved in asstt. Year 2006-07 is 1,12,40,00/- and the amount involved in asstt. Year 2007-08 is ` 91,58,784/-. Due to commonality of the issues, the appeals were argued in a consolidated manner by the Ld. Senior DR and 2 ITA No. 2713/Del/10 Asstt. year 2006-07 & ITA No. 3579/Del/10 Asstt. year 2007-08 the Ld. Counsel. Therefore, the consolidated order is passed. The appeal for asstt. Year 2006-07 was argued in a detailed manner and thereafter both the parties relied on the same submissions in the appeal for asstt. Year 2007-08. In view thereof, the facts and submissions for asstt. Year 2006-07 will form the basis for both the years.
2. The fact for asstt. Year 2006-07 as mentioned in the asstt. order are that the assessee company filed its return on 24.11.2006 declaring total income of ` 56,91,902/-. Search and seizure operation was conducted at residential and business premises of one Shri S.K. Gupta on 12.12.2006. In this operation, various other persons and companies connected with him or controlled by him were also searched. The searches revealed that his companies issued accommodation bills to a number of persons in respect of consultancy charges, advertisement charges, retainership fees etc. Subsequently his statement was recorded on 27.12.2006. Answers to question No. 4, 8 and 23 have been reproduced in the asstt. order on page 2. In answer to question No. ,8, it has been deposed that the Swen Television has provided agency services for which agency commission is charged @ 15% for arranging advertisement on Jhankar TV. In answer to question No. 23 it has been deposed that as far as advertisement on Jhankar TV is concerned, the bills are genuine which can be confirmed from the TV itself. However, bills raised by another company of his, Era Advertisement and Marketing Pvt. Ltd. for retainership fee are in the nature of accommodation bills.
3ITA No. 2713/Del/10
Asstt. year 2006-07 & ITA No. 3579/Del/10 Asstt. year 2007-08 2.1 In view of the aforesaid facts, coming to the notice of the AO, survey was conducted on 27.12.2006 u/s 133A at office situated at 2nd Floor, 3 Scindia House, Janpath, New Delhi. It was found that Era Advertising and Marketing Ltd., M/s. Gupta and Rakesh Associates, M/s. B.T. Technet Ltd., M/s. Swen Television Ltd. are group companies controlled by Shri S.K. Gupta. These companies issued various bills aggregating to ` 1,38,85,200/- to the assessee company in this year. Similarly various bills aggregating to ` 1,43,62,707/- were issued in the immediately succeeding year. The assessee was confronted with the statement and the evidence gathered in searches and survey. They were also informed that in the course of search no evidence was found in respect of consultancy services and retainer-ship services rendered by any of the companies of Shri S.K. Gupta to the assessee company. When confronted with these facts, the assessee offered a sum of 26,67,300/- for taxation in this year and ` 26,93,760/- in the immediate succeeding year. The assessee was requested to reconcile the disclosure vis a vis amounts credited to the four companies of Shri S.K. Gupta. It was submitted that even as per the deposition of Shri S.K. Gupta the transactions with M/s. Swen Television Ltd, for advertising in Jhankar TV are genuine. However other bills are merely in the nature of accommodation entries. Therefore, the amounts surrendered by the assessee do not include advertisement charges paid to the companies of Shri S.K. Gupta.
4ITA No. 2713/Del/10
Asstt. year 2006-07 & ITA No. 3579/Del/10 Asstt. year 2007-08 2.2 In the light of aforesaid submissions, the assessee was required to establish the payment of advertisement charges by filing - (i) detailed rate card (ii) TRP of major programmes, (ii) sample agreements with M/s. Swen Television Ltd. The submission of the assessee was that inquires of the department itself show that advertising charges are genuine. However the aforesaid details are not available with the assessee. 2.3 In the light of aforesaid facts, it has been mentioned in the asstt. order that the assessee has not produced most vital documents i.e. rate card. The TRP rating of Jhankar TV is very low and that is why the assessee has not produced this information. The expenditure is claimed as genuine on the basis of sale bills issued by M/s. Swen Television Ltd., group company of Shri S.K. Gupta, which is engaged in providing accommodation entry. Therefore, the expenditure of ` 1,12,40,400/- has been disallowed.
3. Various submissions were made before the Ld. CIT(A), New Delhi. He also verified assessment records of M/s. Swen Television Ltd. It was found that this company showed receipt of ` 1,02,00,000/-. 85% of this amount has been debited towards expenditure as payment to M/s. Hamara Samay T.V. News Network Private Ltd. (Jhankar TV). 15% of the bill amount has been offered as commission income. It was also found that the assessee has made all the payments by way of an account payee cheques. Out of total payment of ` 1,12,40,400/-, ` 10,40,400/- represent services tax and ` 1,14,440/- represent tax deducted at source. Tax so deducted has been 5 ITA No. 2713/Del/10 Asstt. year 2006-07 & ITA No. 3579/Del/10 Asstt. year 2007-08 deposited in the credit of Central Govt. On verification of assessment record, Ld. CIT(A) also found that M/s. Swen Television Ltd. while submitting the bill for every month has enclosed the number of release of advertisements on Jhankar TV, twice a day. The assessee had also produced CD containing text of the advertisement on Jhankar TV. Therefore, it was concluded that M/s. Swen Television Ltd. has actually rendered advertising services to the assessee. Therefore, disallowance has been deleted.
4. Before us, Ld. Sr. DR referred to the portion of statement of Shri S.K. Gupta extracted on page 2 of the asstt. Order. Further he referred to three deficiencies mentioned by the AO in the asstt. Order regarding rate card, low TRP rating and the company being one of the group companies of Shri S.K. Gupta, who is engaged in providing accommodation entries. He also referred to the submission of the assessee that before finalizing the agreement with M/s. Swen Television Ltd. on 25.5.2005, the assessee had requested for rate card, TRP rating and sample agreements. However on finalisation of the agreement these documents lost any value. The assessee company was also not under obligation to keep a record of these documents. In any case the AO had power to summon these details from M/s. Swen Television Ltd. or Jhankar TV. The AO has also not brought any adverse material on record. Therefore, it had been argued that no disallowance can be made.
6ITA No. 2713/Del/10
Asstt. year 2006-07 & ITA No. 3579/Del/10 Asstt. year 2007-08 4.1 He also referred to the finding of the Ld. CIT(A) on page No. 9, wherein it is recorded that in answer to question No. 23, Shri S.K. Gupta has deposed that the bills issued to the assessee by Era Advertising & Marketing Pvt. Ltd. are in the nature of accommodation entries. Therefore, the bills received from this company are not genuine. However in respect of M/s. Swen Television Ltd., it has been clearly deposed that agency services for which it is getting 15% commission as remuneration. Thus there is nothing in the statement to suggest that the bills from M/s. Swen Television Ltd. are in the nature of accommodation entries. On these facts and the findings of lower authorities, it is argued that the Ld. CIT(A) ought to have confirmed the disallowance made by the AO.
4.2 In reply, the Ld. Counsel for the assessee relied on the impugned order.
5. We have considered the facts of the case and submissions made before us. It is seen that the revenue collected information in the course of search of Shri S.K. Gupta and his Companies that they were carrying on the business of providing accommodation entries. Thereafter his statement was recorded on 27.12.2006 which is more specific in relation to their transaction with the assessee. It has been deposed that the bills issued by M/s. Era Advertisement and Marketing Pvt. Ltd. are in the nature of accommodation entries but M/s. Swen Television Ltd. has provided advertising services to the assessee company for which agency commission @ 15% has been charged. The payments made by the 7 ITA No. 2713/Del/10 Asstt. year 2006-07 & ITA No. 3579/Del/10 Asstt. year 2007-08 assessee and received by M/s. Swen Television Ltd. have been verified from both the ends. There is no discrepancy found in this matter. The verification has also led to the fact that the payments include service tax and tax deduction at source. M/s. Swen Television Ltd. has offered the receipt for taxation in its return of income. In these circumstances, we are of the view that disallowing the expenditure on grounds of lack of rate card , TRP rating and sample agreement of M/s. Swen Television Ltd. with its client is not justified. Thus, we are in agreement with the Ld. CIT(A) that the assessee was entitled to the deduction of expenditure incurred for advertising on Jhankar TV through advertisement agent, M/s. Swen Television Ltd.
6. The facts of assessment year 2007-08 are admittedly identical to the facts of asstt. year 2006-07. Therefore, the findings given in that year (supra) are made applicable to this year also.
In the result, both the appeals are dismissed.
Sd/- sd/-
[R.P. TOLANI] [K.G. BANSAL]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated:
Veena
Copy forwarded to: -
1. Appellant
2. Respondent
8
ITA No. 2713/Del/10
Asstt. year 2006-07
& ITA No. 3579/Del/10
Asstt. year 2007-08
3. CIT
4. CIT (A)
5. DR, ITAT TRUE COPY By Order,
Deputy Registrar, ITAT