ITAT Rejects The Claim Of NDTV To Treat Expenditure As Pre- Operative In Nature For The Assessment Year 2009- 2010

The two-member bench of Yogesh Kumar U.S. (Judicial Member) and N.K.Billaiya (Accountant Member) has observed that the expenses claimed by the assessee are not deductible as business expenditure and have been disallowed.

The assessee/appellant is NDTV Studios, which filed the return of income declaring income which was processed under section 143(1) of the Income Tax Act. The return was selected for scrutiny and notices were issued. The assessment proceedings have been initiated against the assessee and the assessee has participated through its representative. The assessment order came to be passed against the assessee by disallowing the claim of Rs. 52,25,161 made by the assessee as business expenditure.

The assessee preferred an appeal before the CIT(A). The CIT (A) dismissed the appeal of the assessee by confirming the order of the A.O.

The assessee submitted that the CIT(A) had erred in holding that the business of the assessee was not set up during the previous year relevant to Assessment Year 2009-10 and it was not in operation to procure business and deliver its service.

The assessee submitted that the CIT(A) committed an error in upholding the disallowance of Rs. 52,25,161 claimed by the assessee as an allowable business expenditure for the year under consideration. The CIT(A) has erred in not directing the A.O to capitalise the expenditure to Rs. 52,25,161 and allow the benefit of depreciation allowances.

The department, while relying on the order of A.O and CIT (A), submitted that the orders of the lower authorities are well reasoned and supported by the settled principles of the law, which requires no interference.

The tribunal observed that the assessee had also not taken the premises on rent and had not completed the setting up of the facilities for running the studio. Therefore, the assessee was not in a position to solicit customers till the end of May 2009, before the start of the Leave and Licence Agreement on 05.06.2009. The business had not been set up during the previous year relevant to Assessment Year 2009-10.

The tribunal, while dismissing the appeal of NDTV studios, said that there was no legal infirmity in the approach of the lower authorities.

Case Title: M/s. NDTV Studios Ltd. Versus Income Tax Officer

Citation: I.T.A. No. 1622/DEL/2014

Date: 10.08.2022

Counsel For Appellant: Advocates Tarandeep Singh, Pulkit Verma

Counsel For Respondent: Sr. D.R. Amit Shukla

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