2012 (7) TMI 967 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of Rs. 10,80,000 from the value of total Fringe Benefits u/s 115WE(2) of the Income Tax Act for AY 2007-08.

Summary:
The revenue appealed against the deletion of Rs. 10,80,000 from the total value of Fringe Benefits in the case. The assessee, engaged in various business activities including distribution of television channels and programmes, entered into agreements for telecasting programmes. The Assessing Officer considered certain expenses incurred by the assessee as sales promotions involving Fringe Benefits, resulting in an increased value of Fringe Benefits. However, the Ld. CIT(A) held that the expenses were not for sales promotion but for fulfilling a contractual obligation for telecasting a specific programme, and thus deleted the addition.

The revenue contended that the tele-serial was telecasted to promote viewer-ship of programmes, justifying the treatment of expenses as sales promotion. On the other hand, the assessee argued that the expenses were for availing space to telecast its programme, not for showing advertisements in other programmes. The ITAT Delhi, after considering the contentions and submissions, concluded that the Assessing Officer misinterpreted the business transaction, clarifying that the payment was not for displaying advertisements but for telecasting the assessee's own tele-serials, which also generated advertisement revenue. Therefore, the appeal of the revenue was dismissed based on the well-reasoned order of the Ld. CIT(A).