WPP Media India Private Limited Vs ACIT (ITAT Mumbai)
Summary: The Income Tax Appellate Tribunal, Mumbai, in WPP Media India Private Limited Vs ACIT, decided appeals and a cross-objection concerning Assessment Years 2013-14 and 2016-17. For AY 2013-14, the assessee sought a refund of approximately ₹6.16 crore in excess Dividend Distribution Tax (DDT), contending that dividends paid to its Singapore shareholder attracted the beneficial 10% rate under Article 10 of the India-Singapore DTAA instead of the domestic DDT rate of 16.225% under Section 115-O of the Income-tax Act, 1961. Although the claim had been raised for the first time before the CIT(A), the Tribunal admitted the additional ground and restored the matter to the Assessing Officer for consideration in accordance with law after the Supreme Court larger Bench decides the issue arising from JCIT Vs Colorcon Asia (P.) Ltd. The Tribunal did not itself determine entitlement to the refund.
For AY 2016-17, the Revenue challenged the deletion of ₹14,57,87,436 disallowed under Section 37(1) towards market research and media measurement expenses. The assessee, engaged in advertising and media planning, had furnished client agreements, invoices and details explaining the business necessity of the expenditure. The Tribunal observed that the Assessing Officer had relied principally on the treatment of similar expenditure in earlier years without examining its nature, commercial expediency or business nexus. No adverse material was produced to dispute the genuineness or quantum of the expenses. Upholding the CIT(A)’s findings, the Tribunal treated the expenditure as revenue expenditure incurred for business purposes and dismissed the Revenue’s appeal. The assessee’s cross-objection, including its separate DDT refund claim of approximately ₹3.96 crore for AY 2016-17, was dismissed as infructuous. Thus, the order granted substantive relief on the expenditure issue but did not sanction either DDT refund claim.
Cases Discussed
- S.A. Builders Ltd. Vs CIT (Appeals) (2007) 288 ITR 1 (SC) – Relied upon by the CIT(A) for the principle of commercial expediency in allowing business expenditure.
- Colorcon Asia (P.) Ltd. Vs JCIT (2025) 181 taxmann.com 301; 486 ITR 476 (Bombay HC) – Concerned the applicability of treaty rates to Dividend Distribution Tax under Section 115-O. The Tribunal restored the assessee’s claim for consideration after the Supreme Court’s decision.
- Foseco India Ltd. Co. Vs ACIT, Tax Appeal No. 1123 of 2025 (Bombay HC) – Referred to in connection with the larger Bench controversy concerning the applicability of DTAA rates to DDT.
- Union Territory of Ladakh & Ors. Vs Jammu & Kashmir National Conference & Anr., Civil Appeal No. 5707 of 2023 (SC) – Cited by the assessee regarding the binding effect of judicial precedents.
- Masusmi SA Investment LLC Vs Keystone Realtors Pvt. Ltd. & Ors., Company Appeal (L) No. 47 of 2012 – Cited by the assessee concerning the precedential effect of judicial decisions.
- Union Territory of J&K Vs JTL Infra Ltd., WPC(C) 2673/2024, dated 21.04.2025 – Cited in support of following binding judicial precedent.
- CIT(C) Vs Enercon India Ltd. (2020) 121 taxmann.com 44 (SC) – Relied upon by the assessee concerning judicial precedent.
- PCIT(C) Vs Era Infrastructure India Ltd. (2022) 448 ITR 674 (Delhi HC) – Cited concerning the binding nature of judicial decisions.
- Mohan Santwani Vs Union of India (2022) 449 ITR 476 (Allahabad HC) – Relied upon by the assessee concerning the effect of judicial precedents.
- JCIT Vs Colorcon Asia Pvt. Ltd. (Supreme Court, 2026 proceedings) – The Tribunal directed the Assessing Officer to consider the assessee’s DDT refund claim in accordance with law after the Supreme Court’s larger Bench decision.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These two appeals and one cross-objection are directed against the separate orders of ld. CIT(A)/NFAC dated 04.11.2025 & 07.10.2025 for Assessment Year (AY) 2013-14 & 2016-17 respectively. First, we are taking appeal of assessee for A.Y. 2013-14 in ITA No. 9297/Mum/2025. The assessee has raised following grounds of appeal:
“On the facts and in the circumstances of the case and in law, the Ld. CIT(A)has:
Refund of excess Dividend Distribution Tax (‘DDT’) paid
1. erred in not accepting the additional claim made by the Appellant without appreciating that appellate authorities are entitled to admit additional claim/ ground when the facts are already available on record and are bound to determine the correct tax liability of an Assessee and therefore, ought to have appreciated that the additional claim is maintainable and ought to have been adjudicated upon;
2. ought to have appreciated that dividend paid by the Appellant to its Singapore shareholder, Group M Asia Pacific Holdings Pte Limited, is liable to tax as per the beneficial tax rate of 10% as per Article 10 of the India- Singapore DTAA as against tax rate of 16.225% prescribed under section 115-O of the Act and thereby ought to have allowed refund of dividend distribution tax in excess of the 10% tax rate to the Appellant;
3. The Hon’ble Tribunal should admit the aforesaid additional claim made by the Appellant since it is well within the powers provided under section 254 of the Act.”
2. Rival submissions of both the parties have been heard and record perused. The learned authorised representative (learned AR) of the assessee submits that before the learned CIT(A), the assessee has raised an additional ground of appeal. As per the additional ground of appeal, the assessee has paid Dividend Distribution Tax (DDT) at a higher rate compared to the rate applicable in respect of dividend paid to foreign shareholders. The assessee has paid DDT at the rate of 16.225 percent, whereas it should have been only 10.00 percent, as per Article 10(2) of the India-Singapore tax treaty. The provisions of Section 115-O are not applicable to dividend payable to foreign shareholders. The copy of the dditional ground of appeal and additional facts filed before the learned CIT(A) is already placed on record. As per the additional ground of appeal and the facts stated therein, the assessee was eligible for a refund of the excess DDT paid. The assessee also furnished the working of excess DDT paid amounting to Rs. 6.16 crore. The learned CIT(A), despite seeking a remand report from the Assessing Officer not admitted such ground of appeal for adjudication.
3. The learned AR of the assessee submits that the additional ground of appeal may be admitted, as the facts necessary for adjudication of the additional ground of appeal are now available on the record of the lower authorities. The learned AR of the assessee submits that he is conscious of the fact that the decision of vs Colorcon Asia (P) Ltd. vs JCIT [2025] 181 Taxmann.com 301/486 ITR 476 (Mumbai) has been challenged by the Revenue before the Hon’ble Supreme Court and the matter has been referred by the Hon’ble Supreme Court to a larger Bench in view of other decisions in Foseco India Ltd. Co. vs ACIT in Tax Appeal No. 1123 of 2025. Mere reference to a larger Bench will not restrict the power of the Tribunal to follow the binding decision of the jurisdictional High Court. To support such contention the ld AR of the assessee relied on the following decisions;
> Union Territory of Ladakh & Ors. Vs Jammu & Kashmir National Conference & Anr (Civil Appeal No. 5707 of 2023)
> Masusmi SA Investment LLC vs Keystone Realtors Pvt. Ltd. & Ors (Company Appeal (L) No. 47 of 2012)
> Union Territory of J&K vs JTL Infra Ltd. (WPC(C) 2673/2024 dated 21.04.2025
> CIT(C) vs Enercon India Ltd. (2020) 121 taxmann.com 44 (SC)
> PCIT(C) vs Era Infrastructure India Ltd. (2022) 448 ITR 674 (Delhi HC)
> Mohan Santwani vs UOI (2022) 449 ITR 476 (Allahabad HC)
4. On the other hand, the learned Commissioner of Income Tax – Departmental Representative (learned CIT-DR) for the Revenue submits that the assessee raised the additional ground of appeal for the first time before the learned CIT(A). No such claim was made by the assessee either in the return of income or by filing revise computation of income before the Assessing Officer. The learned CIT(A) thus rightly held that such fact requires investigation and cannot be admitted. In alternative submission, the learned CIT-DR for the revenue submits that, in case the Tribunal is of the view that the additional ground of appeal raised by the assessee requires adjudication, the same may be restored back to the file of the Assessing Officer with a direction to follow the ultimate decision of the Hon’ble Apex Court in JCIT vs. Colorcon Asia (P) Ltd.(supra), which has been referred to larger bench.
5. We have considered the rival submissions of both the parties and have seen the order of the learned CIT(A). We have also perused the contents of the application for additional ground of appeal and related facts filed before the learned CIT(A). Admittedly, additional ground of appeal was raised for the first time before the learned CIT(A). We find that the issue at present is pending adjudication before the Hon’ble Apex Court. Therefore, the additional ground of appeal raised by the assessee is admitted and is restored back to the file of the Assessing Officer to consider the claim of the assessee and to pass the order in accordance with law after the decision of larger bench of the Hon’ble Apex Court in JCIT vs. Colorcon Asia (P) Ltd. (supra). In the result, the ground of appeal raised by the assessee is allowed for statistical purpose.
6. In the result, the appeal of the assessee is allowed for statistical purposes.
7. In appeal for A.Y. 2016-17, in ITA No. 9197/Mumbai/2025, the Revenue has raised the following grounds of appeal.
“1. Whether on the facts and circumstances the disallowance of the case and in law, the Ld. CIT(A) erred in deleting disallowance made u/s 37(1) of the Act on account of Market Research and Media Measurement amounting to Rs. 14,57,87,436/- without appreciating the fact that the same were in the nature of development intangibles and reimbursable with appropriate marker?
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting charges made u/s 37(1) of the Act on account of Market Research and Media Measurement the nature amounting of revenue to expenditure Rs. 14,57,87,436/- without appreciating the fact that these expenses were not in the nature of revenue expenditure and therefore not eligible for deduction u/s 37(1) of the IT Act?
3. The appellant craves to leave to amend or alter any grounds or add new ground which may be necessary.”
8. On receipt of notice of memorandum of appeal by assessee, the assessee has raised its cross objection raising following grounds:
“On the facts and in the circumstances of the case and in law,
General Objection to Department’s Appeal
1. erred in objecting the order of Ld. CIT(A) deleting addition made on account of Market research and Media Measurement amounting to Rs. 14,57,87,436 without appreciating the facts of the case and submissions made by the Respondent, thereby further contesting the issue before the Hon’ble Tribunal by filing an appeal;
Disallowance of Market Research and Media Measurement expenses
2. erred in objecting to the order of Ld. CIT(A) that Market Research and Media Measurement expenses amounting to Rs. 14,57,87,436 are in the nature of development of intangibles and reimbursable with appropriate marker without considering the fact that the Respondent has explained the nature of such expenses along with the supporting evidence during the course of assessment proceedings.
C.O. No. 57/Mum/2026 (AY: 2016-17) WPP Media India Private Limited
3. erred in objecting the order of Ld. CIT(A) that Market Research and Media Measurement expenses of Rs. 14,57,87,436 incurred by the Respondent are not in the nature of revenue expenditure and therefore, not eligible for deduction under Section 37(1) of the Income-tax Act, 1961 (‘Act’) without appreciating the fact that these recurring expenses were incurred wholly and exclusively for the Respondent’s business and justified by commercial expediency, and hence allowable as revenue expenditure under Section 37(1) of the Act.
4. erred in ignoring the fact that the Respondent has submitted/ provided sufficient explanation and documents explaining the nature of such expenses and allowability of the same under Section 37(1) of the Act.
5. without prejudice to the above, erred in not granting the depreciation in respect of the Market research and Media Measurement expenditure (at the rate of 25% under block: Intangible assets) held as capital in nature
Refund of excess Dividend Distribution Tax (‘DDT’) paid
6. The Ld. CIT(A) ought to have appreciated that the dividend paid by the Respondent to its Singapore shareholder, GroupM Asia Pacific Holdings Pte Limited, is liable to tax as per the beneficial tax rate of 10% as per Article 10 of the India-Singapore DTAA as against tax rate of 20.358%(including surcharge and cess) prescribed under Section 115-0 of the Act and thereby ought to have allowed refund of dividend distribution tax in excess of the 10% tax rate to the Respondent.
7. The Ld. CIT(A) erred in not granting the refund of excess DDT paid by the Respondent amounting to Rs 3,95,92,106.
Each of the above grounds of cross-objections is without prejudice to and independent of one another.
The Respondent craves leave to add, alter, amend or delete the above grounds of cross-objections before or during the course of hearing of the Appeal, so as to enable the Hon’ble Income tax Appellate Tribunal to decide this appeal, as per law.”
9. Brief facts of the case are that the assessee is a media agency deriving its income mainly from booking of advertisement slots in media and other similar forms of advertising. The assessee filed its return of income for A.Y. 2016-17 on C.O. No. 57/Mum/2026 (AY: 2016-17) WPP Media India Private Limited 30.11.2016, declaring income of Rs. 203.24 crore. The case was selected for scrutiny. During assessment, the Assessing Officer (AO) recorded that the assessee has claimed market research and media measurement charges of Rs. 14.57 crore. The AO on the basis of the records of earlier years, took a view that the said expenses in earlier years were treated in the nature of development of intangible assets by the assessee. The AO was of the further view that no evidence was filed to prove that the expenditure was incurred wholly and exclusively for the purpose of business. The same was disallowed in earlier years. On the basis of such view, the AO disallowed the entire expenses. Before the learned CIT(A), the assessee filed detailed written submissions. The submissions of the assessee are recorded on pages 6 to 12 of the order of the learned CIT(A). The assessee, in its submissions, submitted that market research and media measurement expenses were incurred in connection with advertising services provided by the assessee to its clients for rendering advertising and media planning services to its clients. The list of services includes spot monitoring and certification, conducting surveys on behalf of their clients, searching for prospective customers based on which suitable advertising companies are designed, choosing the location, target audience and time slots, and reporting of online advertisements. The assessee furnished sample invoices received for market research and media measurement charges along with agreements with clients. The assessee also explained, with a diagram, its model which is depicted on page 7 of the order of the learned CIT(A). The assessee also relied on various case laws.
10. The learned CIT(A), on considering the submissions of the assessee, gave his finding in para 4.2 of his order. The learned CIT(A) noted that the assessee has C.O. No. 57/Mum/2026 (AY: 2016-17) WPP Media India Private Limited elaborated the nature of services in its submissions and furnished sample copies of invoices along with agreements with clients. Services provided to clients are in the nature of advertising and media planning for its clients. Services provided by the assessee to its clients appear to be directly related to service income, which helps the assessee in generating higher revenue from its clients. The learned CIT(A), by referring to the decision of the Hon’ble Apex Court in S.A. Builders vs. CIT(A), 158 Taxman 74 (SC), wherein it was held that expenditure may not be incurred under a legal obligation, yet it is allowable as business expenditure on the ground of commercial expediency, held that the expenses incurred by the assessee relating to market research and media measurement charges appear to be in the nature of commercial expediency. The AO has not doubted the genuineness and quantum of expenses incurred. Quantum of expenditure is not disproportionate to the revenue generated in the business. The expenditure incurred by the assessee is revenue in nature and is related to the business of the assessee, and the same was allowed under Section 37 of the Act. Aggrieved by the order of the learned CIT(A), the Revenue is in appeal before the Tribunal.
11. We have heard the submissions of the learned CIT-DR for the Revenue and the learned AR of the assessee. The learned CIT-DR for the Revenue submits that the AO followed his finding in the earlier year. The learned CIT(A) allowed relief to the assessee on the ground of commercial expediency. The appeal for the earlier year is still pending before the learned CIT(A). The learned CIT-DR for the Revenue, thus, supported the order of the AO.
12. On the other hand, the learned AR of the assessee supported the order of the learned CIT(A). The learned AR of the assessee submits that the expenses were incurred wholly and exclusively for the purpose of business. The assessee has C.O. No. 57/Mum/2026 (AY: 2016-17) WPP Media India Private Limited offered taxable income of more than Rs. 200 crore. The assessee incurred expenses as per agreements with various clients. The learned CIT(A) appreciated the facts and allowed relief to the assessee. The learned AR submits that complete facts in the form of agreements with clients, price rates and rates of commission were provided to the lower authorities. The AO has not disputed the factual position of reimbursement, nor disputed the genuineness and quantum of expenses. The expenses were incurred wholly and exclusively for the purpose of business. The learned AR of the assessee submits that his cross-objection is in support of the order of the learned CIT(A).
13. We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. We have deliberated on various case laws referred to by the learned CIT(A). We find that the AO made disallowance of market research and media management expenses by taking a view that similar expenditure was disallowed in earlier years. The AO has not discussed the nature of expenses and the reasonableness and business nexus of such expenses. We find that before the learned CIT(A), the assessee furnished a complete model of its business. The assessee also furnished various agreements with clients and details of invoices of various expenses. We find that the learned CIT(A), on appreciation of such evidence, held that market research and media management expenses were incurred for commercial expediency. There is nothing adverse on record from the AO’s side disputing the genuineness and quantum of expenses. The learned CIT(A) specifically held that the proportion of expenses is in consonance with the revenue generated in the business. The expenses are for the purpose of business. On independent appreciation of the facts, we find that the AO failed to bring any adverse material on record to C.O. No. 57/Mum/2026 (AY: 2016-17) WPP Media India Private Limited support his view. Thus, we do not find any justification to interfere with the finding of the learned CIT(A), which we affirm. In the result, the ground of appeal raised by the revenue is dismissed.
14. In the result, the appeal of the Revenue is dismissed.
15. Considering the fact that we have dismissed the appeal of the Revenue, therefore, the grounds raised by the assessee in its cross-objection have become academic and are dismissed as infructuous.
16. In the result, the appeal of the Revenue is dismissed and the cross-objection of the assessee is also dismissed as infructuous.
Order was pronounced in open court on 17/09/2026.
