Star Time Communication (I) Pvt. Ltd Vs CIT (Bombay High Court)
Bombay High Court held that as per the terms and conditions of the agreement, the assessee was required to pay 5% of the receipt of the assessee and not on 5% of the gross advertising bills. Accordingly, infrastructure fee deduction restricted to 5% of receipt.
Facts- The assessee entered into an agreement dated 27th July 1992 with Prime Time Media Services Pvt. Ltd. Under clause-3 of the said agreement, the assessee was required to pay Prime Time Media Services Pvt. 5% of the total receipts from advertising. The assessee filed return of income for AY 1993-94 declaring total income of Rs.7,57,746/-. AO, during the course of assessment proceedings, by order dated 14th February 1995, noticed that the assessee had claimed sum of Rs.22,36,544/- as infrastructure fee on the basis of said agreement.
The assessee disclosed the total income from advertisement at Rs.63,43,480/- in its profit and loss account. Out of said amount, a sum of Rs.4,66,068/- was shown to be outstanding as on 31st March 1993. AO, therefore, restricted the infrastructure fee to the extent of Rs.2,93,870/- being 5% of the amount of Rs.58,77,412/-.
CIT(A) partly allowed the appeal preferred by the assessee by order dated 14th December 1995. ITAT dismissed the appeal. Being aggrieved, the present appeal is filed.
