TaxTMI 
TaxTMI 
2024 (6) TMI 929
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..../RPR/2018 for the assessment year 2013-14, wherein the revenue has assailed the impugned order on the following grounds of appeal: "1. "Whether on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting addition of Rs. 29,15,639/- being the amount of excessive payment made to specified person covered u/s.13(3) of the Act, ignoring the findings of the fact by the Assessing Officer?" 2. "Whether on facts & circumstances of the case, the Ld. CIT(A) has erred in not appreciating the fact that the appellant failed to prove any additional service rendered by the Specified Persons covered u/s.13(3) for raising additional bills @15% over and above the actual bill for Advertisement? 3. "Whether on facts & circumstances of the case and law, the Ld. CIT(A) was justified in deleting the addition of Rs.38,26,608/- made on account of commission & brokerage when no supporting evidences were produced by assessee nor any details of evidence to prove any such services provided by the parties were produced? 4. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.2,34,92,053/- made on account of depr....
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....sible for making the artwork and planning the advertisement material, which, thus, reduced the cost of advertisement. On being queried about the nature of work performed by Red Eye Media Pvt. Ltd. (supra), viz. media services, and creative services etc., the assessee admitted that it has no evidence to produce in support of the aforesaid services provided by the specified person. On a perusal of the bills raised by M/s A.S Advertisers vis-à-vis those raised on the assessee society by Red Eye Media Pvt. Ltd. (supra), it was observed by the A.O that as Red Eye Media Pvt. Ltd. (supra) was charging substantially higher amounts on every bill, and thus, its books results could not be relied upon, denied it's claim for exemption u/s. 11 of the Act. Also the A.O. disallowed 15% of the total amount of advertisement expenses paid by the assessee society to Red Eye Media Pvt. Ltd. (supra), i.e. Rs. 29,15,639/- (15% of Rs. 1,94,37,596/-). 5. Also, observing that a sum of Rs. 38,26,608/- was debited by the assessee society on account of commission or brokerage, the A.O. called upon it to produce evidence in support thereof. As the assessee failed to produce any supporting evidence, ther....
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....sing company were related to the chairman of the assessee society. It was submitted by the Ld. AR that the advertisement expenses of Rs. 1,94,37,596/- paid to Red Eye Media Pvt. Ltd. (supra) included, viz. (i). hoarding expenses: Rs. 23,96,329/-; and (ii). newspaper and other media expenses: Rs. 1,70,41,267/-. It was submitted by the Ld. AR that all the bills of advertisements were filed before the A.O. Elaborating on the expenditure on advertisements in the newspaper, the Ld. A.R. submitted that as M/s. Red Eye Media Pvt. Ltd. (supra) had billed the assessee society the same amount that the newspaper companies had billed to M/s. Red Eye Media Pvt. Ltd., thus, the related party had not availed any profit from the assessee society. Further, it was stated by the Ld. A.R that apart from the advertisements in newspapers, M/s. Red Eye Media Pvt. Ltd. had incurred an expenditure of Rs. 23,96,329/- towards putting up hoardings, which work was handled by M/s A.S. Advertisers, Raipur. It was submitted by the Ld. AR that all the bills of M/s A.S Advertisers were filed before the A.O. Apart from that, it was submitted by the Ld. AR that as M/s. Red Eye Media Pvt. Ltd. (supra) while billing th....
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...., viz. Dainik Bhaskar the same rate which was fixed by the newspaper company, therefore, the observation of the A.O that the assessee society was unreasonably charged for the said work is found to be factually incorrect. Apropos the discount of 15% that M/s. Red Eye Media Pvt. Ltd. had received from M/s Dainik Bhaskar on the bill amount, we are of the view that as the said discount/incentive was received by M/s. Red Eye Media Pvt. Ltd. in its capacity as that of an agent of the aforesaid newspaper company, thus, the same, cannot have any bearing on determining the reasonableness of the charges that were borne by the assessee society for the advertisements in the newspapers carried out through the aforesaid specified person. We say so, for the reason that the 15% discount received by M/s. Red Eye Media Pvt. Ltd. from M/s Dainik Bhaskar was not an incentive/discount that the assessee society could have obtained if it had got the said advertisement work done either directly through the newspaper company or through some other agent. As M/s. Red Eye Media Pvt. Ltd. (supra) had billed the assessee society the same amount that the newspaper company had billed to M/s. Red Eye Media Pvt. Lt....
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....had summarily accepted the aforesaid claim of the assessee society, but in absence of any material, which would substantiate the aforesaid claim of the assessee society, i.e., M/s. Red Eye Media Pvt. Ltd. (supra) was providing additional services as stated hereinabove, we are unable to endorse the same. On being specifically queried about the nature of services which were rendered by M/s. Red Eye Media Pvt. Ltd. (supra) and to place on record documentary evidence supporting the said factual position, the Ld. AR submitted that the same were not readily available with him. Considering the aforesaid facts, we are of the view that justification given by the assessee society as regards the additional charges raised by M/s. Red Eye Media Pvt. Ltd. (supra) for carrying out advertisement through M/s. A.S. Advertiser, Raipur (supra) cannot be summarily accepted and would require necessary verification. 13. We, thus, in all fairness, restore the matter to the file of the A.O with a direction to look into the reasonableness of the advertisement expenditure in the backdrop of the claim of the assessee society that M/s. Red Eye Media Pvt. Ltd. (supra) had raised additional charges with respect....
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....ission, therefore, the expenditure so incurred being purely incidental to attain educational objects of the assessee society was well in order. The Ld. AR further submitted that complete details of the commission expenditure were filed in the course of the assessment proceedings. Rebutting the observation of the A.O, the Ld. AR submitted that the assessee's claim for deduction was disallowed by the A.O without giving any cogent reason. During the course of hearing, the Ld. AR had drawn our attention to the statement of invoices of student referral agencies for the professional services which were provided by them to the assessee society a/w. sample copies of relevant invoices and certificates of merit issued to the enrolled students, Page E1-E75 of APB. 16. Per contra, the Ld. DR relied on the order of the A.O regarding the aforesaid issue in hand. 17. Admittedly, it is a matter of fact borne from record that the A.O while disallowing assessee's claim for commission and brokerage expenses had failed to give any cogent reason. On the contrary, as stated by the Ld. AR, the assessee society had during the course of the assessment proceedings placed on record substantial docu....
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....e was no justification for the A.O to have disallowed the assessee's claim for depreciation. 20. We have thoughtfully considered the aforesaid issue in the backdrop of the contentions advanced by the Ld. authorized representatives of both the parties. The Ld. DR did not rebut the observation of the CIT(Appeals) that the assessee had at no stage claimed the cost of the asset as an application within the meaning of Section 11 of the Act. Considering the said fact, we concur with the CIT(Appeals) that now when the assessee society had not claimed the cost of asset as an application, there was no justification for the A.O to have disallowed its claim for depreciation for the reason that once the cost of asset had been claimed as an application, then it was not permissible for the assessee society to have further raised a claim for depreciation. 21. In so far the judgment of the Hon'ble High Court of Kerala in the case of Lissie Medical Institutes Vs. CIT (supra) as had been relied upon by the A.O, we find hat the same had been impliedly disapproved by the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Rajasthan and Gujrati Charitable Foundation (2018)....