INCOME TAX APPELLATE TRIBUNAL
On the facts and circumstances of the case, the ld. CIT(A) has erred in law as well as in facts in deleting the addition of `30,41,520/- made by the AO on account of sale value of free copies distributed by the assessee. On the facts and circumstances of the case, the ld. CIT(A) has erred in law as well as in facts in deleting the addition of `22,33,519/- made by the AO on account of wastage. The order of the ld. CIT(A) is perverse in law and on facts. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of the hearing of the appeal
D.C. I .T. , Cent ral Circle-6, Room no.334, ARA Centre, Jhandewalan Extension, New Delhi (Appellant) Vs. Sahara India Mass Communicat ion, 1, Kapoorthala Complex, Aliganj, New Delhi.(PAN: AAJFS 8722 L] (Respondent)
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI ‘H’ BENCH
BEFORE SHRI A.N. PAHUJA, AM AND SHRI C.M. GARG, JM
ITA No.4751/Del. /2011
With CO no.406/Del. /2011
Assessment year: 1995-96
D.C. I .T. , Cent ral Circle-6,
Room no.334, ARA Centre,
Sahara India Mass
Communicat ion, 1,
Kapoorthala Complex, Aliganj,
(PAN: AAJFS 8722 L]
Assessee by: S/Shri J.J.Mehrotra &
Revenue by: Dr. B.R.R. Kumar,DR
Date of hearing: 17-05-2012
Date of pronouncement: 17-05-2012
O R D E R
This appeal filed on 01.11.2011 by the Revenue and the corresponding cross objection[CO] filed on 29th December, 2011 by the assessee against an order dated 29.08.2011 of the CIT(A)-I, New Delhi, raise the following grounds:-
1. “The order of the ld. CIT(A) is not correct in law and facts.
2. On the facts and circumstances of the case, the ld. CIT(A) has erred in law as well as in facts in deleting the addition of `30,41,520/- made by the AO on account of sale value of free copies distributed by the assessee.
3. On the facts and circumstances of the case, the ld. CIT(A) has erred in law as well as in facts in deleting the addition of `22,33,519/- made by the AO on account of wastage.
4. The order of the ld. CIT(A) is perverse in law and on facts.
5. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of the hearing of the appeal.”
1. “ That the ld. CIT(A) is fully justified in deleting the addition of `30,41,520/- made by the AO for alleged sale value of free copy distributed by the respondent on hypothetical basis without any material on record.
2. That the ld.CIT(A) is fully justified on the facts and circumstances of the case in deleting the addition of `22,33,519/- made by the AO on account of alleged wastage without any material on record.
3. That both the above grounds are fully covered by the order of the Hon’ble ITAT in the preceding yeari.e.1994-95 and the ld. CIT(A) has rightly relied on the same while deleting the additions.
4. That the order passed by the ld. CIT(A) deserves to be upheld.
5. That the respondent craves leave to add, alter amend or withdraw any or all the grounds of cross objections on or before the date of hearing .”
2. Facts, in brief, as per relevant orders are that return declaring loss of ``17,38,86,130/- filed on 31.10.95 by the assessee, was revised on 31st October, 1996, declaring loss of ``25,03,62,280/- .Subsequently, assessment was completed on a loss of `14,69,37,860/-vide order dated 06.03.1998 u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act). Inter alia, an amount of ``36,69,000/- was disallowed on account of sale of newspapers/magazines outside the books besides disallowance of wastage of ``27,39,378/-.On appeal, the ld. CIT(A) set aside the matter to the file of AO to ascertain as to how many free copies have been distributed last year and thereafter allow 83% of the same, since 83% cost of paper has been consumed in the year under consideration vis-à-vis preceding year. In respect of wastage, the ld. CIT(A) directed the AO to verify the stock register and machine room record and thereafter work out the wastage. Though the Revenue preferred appeal before the ITAT, the same was pending at the time of completion of the set aside proceedings now before us. In the set aside proceedings, the AO allowed relief of ``6,27,480/- on account of free distribution of copies beside reduction in wastage of `7,05,859/-.
3. On appeal, the ld. CIT(A) following the decision dated 29th May, 2009 of the ITAT in I.T.A. nos.465 & 472/D/2001 in the assessee’s own case for the AY 1994-95, deleted both the additions.
4. The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A). At the outset, both the parties are agreed that the issue is covered by the decision dated 29th May, 2009 of the ITAT in I.T.A. no.465&472/D/01 in the assessee’s own case for the AY 1994-95. On further appeal before the Hon’ble High Court, the Revenue did not press ground relating to complementary distribution of copies while findings of the ITAT on the issue of wastage were upheld by the Hon’ble High Court, the ld. AR added.
5. We have heard both the parties and gone through the facts of the case as also the aforesaid decisions referred to by the ld. AR. We find that the ITAT vide their order dated 29th May, 2009 in the preceding assessment year deleted the disallowance on account of complementary distribution of copies in the following terms:-
“5,3 We have carefully considered the rival contentions and gone through the records. In our view the explanation of the assessee, in the light of the details submitted by him, should have been accepted. The assessee is in the business of publication of newspapers from Noida and Lucknow and has published about 12 editions. In the business of the assessee, the assessee is definitely required to give complementary copies and also keep sufficient number of copies as a record in the office of the publisher. The assessee has also established that the complementary copies distributed in 1994-95 is just about 2.75% of the total number of copies printed, which, in our view, is very much reasonable. The Assessing Officer has nowhere rejected the books of account. Just on the basis of certain percentages the assessee’s contention cannot be rejected. The fact that the assessee has to distribute free complementary copies, is not at all disputed. It is a business requirement. It is the way in which the publication of newspapers, magazines etc. is done for proper circulation. The assessee is having nearly 64 offices which are discussed by the CIT(A) in the order. All this, in our view, clearly show that the disallowance is totally uncalled for and is based on suspicion and surmises. The same is deleted.”
5.1 As regards issue of wastage, the ITAT concluded as under: 10.3 We have heard both the sides and gone through the elaborate records. As observed by the CIT(A) itself, the assessee has maintained quantitative records wherein full details of newsprint purchased and used are given. The assessee has also explained the reason for excessive wastage before the Assessing Officer. The Assessing Officer, however, without rejecting the contentions of the assessee, relied on the report of the Registrar of Newspapers of India, called for by him u/s 133(6) of the Act. The CIT(A), though accepted that assessee had maintained quantitative records of wastage etc., applied the wastage rate of 7%. On the facts and circumstances of the case we accept the contention of the assessee that the Registrar of Newspaper of India is an authority, entrusted with the job of allotment of quota of foreign newsprint and the actual wastage cannot be compared with fixed standard because of various factors. Thus, in our considered opinion, the CIT(A) was not justified in disturbing the book results shown by the assessee in respect of wastage of newsprint shown by the assessee. Thus, we allow the claim of the assessee on the issue in question and delete the disallowance sustained by the CIT(A).”
5.2 On further appeal, the Revenue did not press ground relating to complementary distribution of copies before the Hon’ble High Court while in respect of wastage, Hon’ble High Court concluded in their order dated 10th May, 2011 in I.T.A. nos.359 &361/2010 as under:-
“7. Having considered the rival submissions of learned counsel for the parties and on perusal of the entire records, particularly, the orders of the authorities below we are of the considered view that the CIT(A) accepted that the assessee was maintaining quantitative records of wastage but he allowed the wastage @7%. We could not persuade ourselves to the reasoning given by the authorities below in respect of restricting the wastage to 6% or 7% when the assessee was able to demonstrate that the reasons of wastage were various and in such circumstances standard of 7% wastage rate prescribed by Registrar of Newspaper could not be applied. In fact, standard of 7% may be for the purpose of raising the demand of newsprint, but the amount of wastage would depend upon various factors including the location of office, printing units, godowns, etc. Otherwise also it is a clear finding of fact and we do not see any perversity or illegality in the order of the Tribunal.”
6. Since the facts relating to disallowance on account of complementary distribution of copies and claim of wastage in the year under consideration are, indisputably, parallel to the facts and circumstances obtaining in the AY 1994-95 while the Revenue have not placed before us any material, controverting the aforesaid findings of the ld. CIT(A) so as to enable us to take a different view in the matter nor brought to our notice any contrary decision, following the view taken in the aforesaid decisions of the ITAT & Hon’ble High Court in the AY 1994-95, we reject ground nos. 2 and 3 in the appeal of the Revenue.
7. Ground nos.1 and 4 in the appeal of the Revenue being general in nature nor any submissions having been made before us on these grounds, do not require any separate adjudication while no additional ground having been raised before us in terms of residuary ground no.5 in their appeal, accordingly, all these grounds are dismissed.
8. Grounds raised in the CO being supportive in nature, become infructuous, in view our findings in the appeal of the Revenue.
9. In result, both the appeal of the Revenue and CO filed by the assessee are dismissed.
Order pronounced in open Court
(C.M. GARG) (A.N. PAHUJA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Copy of the Order forwarded to:-
2. D.C. I .T., Central Circle-6, Room no.334, ARA Centre, Jhandewalan Extension, New Delhi
3. CIT concerned
4. CIT (Appeals)-I, New Delhi.
5. The DR, ITAT,’H’ Bench, New Delhi
6. Guard File.