TMI Blog2023 (12) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, AO in the assessment order has given a number of cogent findings against the petitioner. In fact, the AO after analyzing a number of relevant facts has virtually held that the transaction between the petitioner and the foreign entity was based on reverse engineering . Keeping in view the aforesaid findings, this Court is of the view that the petitioner has not been able to make out a prima facie case in its favour. To put it mildly, the petitioner has a lot to answer in the appeal. The petitioner s plea of financial stringency based on its balance-sheet also inspires no confidence as according to the Assessing Officer, the accounts have not been properly maintained. Accordingly, the writ petition is dismissed. However, this Court clarifies that the findings given by this Court are only in the context of the present writ proceedings and shall not prejudice either of the parties at the stage of the appellate proceedings. - HON'BLE THE ACTING CHIEF JUSTICE AND HON'BLE MS. JUSTICE MINI PUSHKARNA For the Petitioner Through: Mr. Devadatt Kamat, Sr. Advocate with Mr. Rohit Sharma, Mr. Nikhil Purohit, Mr. Jatin Lalwani, Mr. Rajesh Inamdar and Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RIETARY RIGHTS: 8.1 The Newsclick agrees that during the course of provision of Services under this Agreement, the Newsclick shall fully and promptly disclose to Company, any and all inventions, improvements, discoveries, innovations, developments, processes, techniques and other technical materials, whether conceived by Newsclick independently or in conjunction with Company, during the provision of Services to the Company under this Agreement ( Work Product ). Company shall be deemed the author of such Work Product, and the Work Product, along with all intellectual property rights associated with it, and all renewals and extensions thereof (the Property Rights ), shall be from inception and thereafter remain the exclusive property of the Company as work made-for-hire . For the avoidance of doubt, to the extent the Work Product is developed in conjunction with Company, Company shall own as its exclusive property all the results and proceeds thereof, in whatever stage of completion, all of which shall be considered a work made-for-hire for Company, including all written work, research, computer programs, designs, ideas, concepts, drawings, or other tangible or intangible w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Education Fund was predetermined without any specifications about the services . 5.3.1 Further, the agreement shows that the party receiving the services is to give 90% of the Budget even before start of quarter and same is not directly linked with the quality of services to be delivered. In service industry such types of agreements are not seen generally . 5.3.2 Vide questionnaire issued u/s 142(1), the assessee was asked to make a link between the receipts and the expenses incurred especially in the view of the fact that approx 95% receipts are from one party only. In service sector if an entity is receiving such a huge part of the receipt from one entity then it is natural that the expenses incurred are geared towards delivery of those critical services and the linkage between deliverables and cost incurred can be established with relative ease. But strangely assessee is not able to correlate the expenses with the receipts when only one party is the source of majority of the receipts . 5.4.1 .out of 2628 pieces of content for which a remittance of Rs 15.53 crore was received from JEF, Assessee submitted the time stamp and date stamp of 558 links. But ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the exclusive ownership / proprietary rights over the content that was to be supplied by the assessee. But strangely, the conduct of the Assessee and other contracting party show that any such right has been thrown to the wind because the very same content was published in online space by Assessee also. Assessee has replied that the content may be used by anybody after giving credit to the Foreign party and is freely available and can be used by anybody. From such actions it is apparent that Assessee was acting more in the nature of Agent of JEF and the receivables were pre-determined and were bound to flow to Assessee. Then, only to given a colour to the remittance a fa ade of agreement was raised for receiving remittance from foreign party .. 5.7 The factual matrix related to business transaction undertaken between parties clearly establishes the fact that the funds received from the foreign entities in the form of remittances towards services is only a modus operandi to introduce unexplained funds in M/s PPK Newsclick Studio Pvt Ltd. The practice of receiving pre-determined advances is against the commercial prudency and the established practices in the field of services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case does not draw confidence to give a sense of genuineness with respect to the alleged transaction for the provisions of the services. From the perusal of service agreements and the details as submitted by assessee, it emerges that the service agreements signed for the creation and delivery of content against which a foreign remittance was received are nothing but sham/make-believe agreements. 6.6 In view of above-mentioned facts and circumstances, it is clear that the genuineness of the revenue receipts has not been not proven by the assessee (emphasis supplied) 8. Keeping in view the aforesaid findings, this Court is of the view that the petitioner has not been able to make out a prima facie case in its favour. To put it mildly, the petitioner has a lot to answer in the appeal. 9. The petitioner s plea of financial stringency based on its balance-sheet also inspires no confidence as according to the Assessing Officer, the accounts have not been properly maintained. One of the instance given by the Assessing Officer in the assessment order is reproduced hereinbelow:- 7.1 ..In one case of Sh. Anup Chakraborty, who has received salary/business rece ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
