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TMI Blog2020 (3) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... TR. 3. Accordingly, notices u/s 143(2) and 142(1) were issued and served on the assessee. In response, AR of the assessee filed the relevant information as called for. Thereafter, AO after considering the submission of assessee, completed the assessment by making addition on deemed rent, payment made to ICOM, entertainment expenses, Non media billing having difference between sales declared for VAT and service tax and sales declared in profit and loss account and also disallowed leave salary paid. 4. Aggrieved with the above order, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the submission of assessee, partly allowed the appeal of the assessee by allowing deemed rent and leave salary paid and dismissed the other grounds raised by the assessee. 5. Aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us on the following grounds:- 1.1 On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals)-6, Mumbai had erred in law as well as on facts by unjustifiably confirming the disallowance made by the Assessing Officer of payment of Rs. 4,85,231/- being the payment made to, ICOM, a non-reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax (Appeals)-6 failed to appreciate that difference of Rs. 21.82 lakhs as per Service Tax Turnover and Book Turnover is on account of Non-Media Billing at cost. In Media Billing Turnover is calculated on the basis of commission received where in Non-Media Billing, the assessee does not receive any commission, therefore it does not form part of the Turnover in the Profit and Loss Account, however, this amount of Non-Media Billing forms part of the total Turnover in the Service Tax and Vat Tax Returns. Therefore, the difference of Rs. 21.82 lakhs is because of the total amount of Non-Media Billing which has entered into the total turnover in the Service Tax and Vat Tax Returns but the same is not a part of total Turnover as per Profit and Loss Account. 4. The assessee craves leave to add, alter, amplify, modify or delete any of the aforesaid grounds of appeal at or before the hearing of appeal. 6. With regard to ground no. 1 in respect of payment to ICOM, Ld. AR submitted before us that AO observed during the assessment proceedings that assessee made a payment of Rs. 4,85,231/- to ICOM, a non-resident company for service rendered. He further submitted that AO observed that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for subscription only, which will not fall under any of the FTS provisions. 8. On the other hand, Ld. DR argued in support of the findings of tax authorities and he opposed the case law relied by the assessee and submitted that the case relied by Ld. AR are decided on the issue of GDR, whereas the present case is on the payment of subscription charges which is distinguishable. With reference to page 24 of the paper book, he submitted that the nature of payment is not clear and assessee has utilized the services, therefore it will fall under technical services and the services were provided by the foreign entity and assessee has utilized the same. Accordingly, it will fall within the ambit of FTS. 9. Considered the rival contentions and the material placed on record, we notice from the record that ICOM is an entity based in USA and it offers services only to its members and these services are subject to only those members who have to get membership by becoming a member in the above said entity. These services are available to its 800+ members spread over 60 countries and it offers a full range of integrated marketing and media communication services. Both AO and Ld. CIT(A) are of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made to club is allowable of expenditure and he objected to the findings of Ld. CIT(A) in para no. 8 of its order. We notice that Ld. AR has not brought on any bill or copy of any voucher which clearly indicate whether this payment is actually to the Gymkhana or towards any payment on behalf of Gym as observed by the tax authorities. Since the payment involved is very small, we direct the AO to verify whether this payment is towards Gymkhana club, then the AO is directed to allow the above expenditure as entertainment expenses. Accordingly, ground raised by the assessee is allowed for statistical purposes. 13. With regard to ground no. 3, Ld. AR submitted before us that AO observed that there is a different between the sales declared in VAT and service tax return and sales declared in financial statement. He further submitted that assessee raises bills to media house and non-media houses and with regard to non-media bills are only recovery or charges and it is considered as turnover only for the purposes of sales tax, not for the purposes of income tax, since assessee does not earn any commission income, therefore assessee does not treat this as turnover. He brought to our noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rranted and without understanding the accounts maintained by the assesse. He has not understood that the amount of Rs. 21.82 lakhs has been shown in the sales as well in the purchases. In fact, the assessee has not earned any income on these sales, the assessee issued the bill to its client for this amount which he has paid to the media owners. Thus, this amount has been shown in the sales as well in the purchases (this was contra entry in the profit and loss account) and has no effect on the profits. However, the Service Tax is payable even on the sales where the assessee has not earned any profit. Thus, the profit shown for the purpose of payment of Service Tax includes the amount of Rs. 21.82 lakhs. In the assessment year 2014-15 similar issue was involved and the Assessing Officer accepted the explanation filed by the assessee (copy enclosed at pages 31 to 32 of the paper book) and no addition was made in that assessment year Copy of the order is enclosed at pages 10 to 12 of the paper book). 12. The learned CIT (A) has also not applied his mind to the issue under consideration. He has simply confirmed the findings of the AO in spite of the fact that the entire case was e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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