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2017 (11) TMI 451 - AT - Income TaxAddition on account of delay payment of employees contribution to PF u/s 36(1)(va), read with section 2(24) (x) - Held that - The appellant has made payment of employee s contribution and other funds before the due date of filing return of income. In Alom Extrusions Ltd (2009 (11) TMI 27 - SUPREME COURT ), the Hon ble Supreme Court has held that the amendment to section 43B by the Finance Act, 2003 applicable w.e.f. 01/04/2004 was retrospective in nature and would operate from 01/04/1988. The Hon ble Bombay High Court in CIT vs. Ghatge Patil Transport Ltd. (2014 (10) TMI 402 - BOMBAY HIGH COURT) following Alom Extrusions Ltd (supra) held that if the payment is made before the due date of filing of return no addition can be made. - Decided in favour of assessee. Addition of transponder charges paid to Panamsat International System Inc. - Held that - CIT(A) has pointed out that transponder charges are recurring in nature and the assessee has to pay the same every year. In our considered view the findings of Ld. CIT (A) is based on the decision of Hon ble Delhi High Court rendered in Asia Satellite Communications Co. Ltd. vs. DIT (2011 (1) TMI 47 - DELHI HIGH COURT) wherein discussed the nature of the similar payment and held that payment received towards transponder charges is business income and not Royalty in the hands of the recipient. Also see Empire Jute Company vs. CIT (1980 (5) TMI 1 - SUPREME Court )- Decided in favour of assessee. Payment to sister concerns - Addition u/s 40A(2)(b) license fee, programme amortization-payment to Nimbus Communication Ltd. for matches of BCCI - Held that - Supplementary agreements between Nimbus and BCCI and between assessee and Nimbus were entered into and Nimbus transferred all the benefits to the assessee, which it received from BCCI. As per the terms of agreement the assessee was required to pay 10% over and above the license fees which was being paid by Nimbus to BCCI. CIT(A) has rightly held that the appellant has not given any amount to its sister concern by making adjustment in license fees in respect of cancelled match as alleged by the AO. Further the Ld. CIT(A) has rightly pointed that the AO has not brought any evidence on record to substantiate the allegation that the assessee has extended unreasonable favour to its sister concern Nimbus Communication. Hence, do not find any infirmity in the order of the Ld, CIT(A) to interfere with. We therefore, uphold the findings of the Ld. CIT(A) and dismiss ground of the appeal of the revenue. Non deduction of tds - claim of deduction of payment made to Bangladesh Cricket Control Board towards broadcasting rights - Held that - AO has not doubted the existence of mutual understanding between the assessee and BCCB which gave the assessee the right to telecast live matches. AO has not doubted the existence of agreement between the assessee and BCCB for live telecast of matches during the year 2006 to 2009. The AO has not made any addition for non-direction of TDS under section 40 (a) of the Act, but, held that the expenses in question are not allowable because the same have been made in the absence of any expressed agreement between the parties. In our considered view, the Ld. CIT(A) has rightly allowed the appeal of the assessee. Allowability of expenditure on dealers conference held in Malaysia - Held that - Hon ble Delhi High Court in the case of CIT vs. Salora International Ltd. (2008 (8) TMI 138 - DELHI HIGH COURT) upheld the findings of the Tribunal that the assessee had to incur expenditure for launching of its products to meet the competition in the market, therefore, the entire expenditure is allowable as revenue expenditure. The Ld. CIT (A) is of the considered view that in the present case the expenditure incurred by the assessee is for advertisement and other related expenses, which constitute part of the sale promotion expenses. Since, we do not find any reason to interfere with the order of the Ld. CIT (A), we uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the revenue.
Issues Involved:
1. Disallowance of employees' contribution to PF. 2. Disallowance of transponder charges as capital expenditure. 3. Disallowance under Section 40A(2)(b) for differential license fees. 4. Disallowance of payments made to Bangladesh Cricket Control Board. 5. Disallowance of expenses for dealers' conference and channel relaunch. 6. Disallowance of depreciation due to lack of evidence. Issue-wise Detailed Analysis: 1. Disallowance of Employees' Contribution to PF: The revenue contended that the Ld. CIT (A) erred in deleting the disallowance of ?18,54,499/- being employees' contribution to PF made after the due date prescribed under the relevant Acts. The Tribunal upheld the findings of the Ld. CIT (A), which were based on the law laid down by the Hon’ble Bombay High Court in CIT vs. Ghatge Patil Transport Ltd. 368 ITR 749 (Bom) and the Hon’ble Supreme Court in Alom Extrusions Ltd. 319 ITR 306 (SC). It was held that if the payment is made before the due date of filing of return, no addition can be made. 2. Disallowance of Transponder Charges as Capital Expenditure: The revenue argued that the payment towards Satellite space fees/Transponder Charges to Panamsat International System Inc. was capital expenditure. The Tribunal upheld the findings of the Ld. CIT (A), which held that the charges were recurring in nature and not a one-time payment, thus constituting revenue expenditure. The decision was based on the Hon’ble Delhi High Court's judgment in Asia Satellite Telecommunication Co. Ltd. vs. DIT 332 ITR 340, and the Supreme Court's decision in Empire Jute Company vs. CIT 124 ITR 1 (SC). 3. Disallowance under Section 40A(2)(b) for Differential License Fees: The revenue contended that the Ld. CIT (A) erred in deleting the addition of ?5,44,17,143/- being the differential license fees payable to sister concern M/s Nimbus. The Tribunal upheld the Ld. CIT (A)'s findings, which concluded that the appellant had not given any amount as favor to its sister concern by adjusting the license fees for canceled matches. The terms between the appellant and Nimbus were on a back-to-back basis as per the agreement with BCCI, a third party. The AO's inference of collusion was not supported by evidence. 4. Disallowance of Payments Made to Bangladesh Cricket Control Board: The revenue argued that the Ld. CIT (A) erred in directing the AO to allow the claim for deduction of payments made to Bangladesh Cricket Control Board towards broadcasting rights. The Tribunal upheld the Ld. CIT (A)'s findings that there was a mutual understanding between the assessee and BCCB for live telecast rights, and the formal agreement's delay did not negate the contractual obligations. The payments were not disallowed under section 40(a)(ia) as the ITAT had previously ruled that such payments were not in the nature of royalty. 5. Disallowance of Expenses for Dealers' Conference and Channel Relaunch: The revenue contended that the Ld. CIT (A) erred in allowing expenses incurred on dealers' conference and channel relaunch as revenue expenditure. The Tribunal upheld the Ld. CIT (A)'s findings, which relied on the Hon’ble Bombay High Court's decision in CIT vs. Asian Paints (2016) 243 Taxman 348 (Bom) and other judgments, concluding that the expenses were for advertising and sales promotion, thus revenue in nature. 6. Disallowance of Depreciation Due to Lack of Evidence: The revenue argued that the Ld. CIT (A) erred in deleting the disallowance of depreciation of ?3,40,818/- in contravention of Rule 46A, as the assessee had not produced purchase bills during the assessment proceedings. The Tribunal remanded this issue back to the AO for verification of the bills produced during the appellate proceedings, as the Ld. CIT (A) had not verified the bills nor called for a remand report. Conclusion: The appeals filed by the revenue for assessment years 2007-08, 2008-09, and 2010-11 were dismissed, while the appeal for the assessment year 2009-10 was partly allowed for statistical purposes. The Tribunal's decisions were primarily based on existing legal precedents and the factual matrix presented.
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