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ITAT upholds I-T dept’s Rs 450 tax demand against NDTV
MUMBAI: News broadcaster NDTV’s problems have compounded with the Income Tax Appellate Tribunal (ITAT) upholding the Income Tax Department’s tax demand of Rs 450 crore on an investment by American media company NBC Universal in NDTV Networks.
NBC had invested $150 million in NDTV Networks, which is the holding company for NDTV’s entertainment and lifestyle channels, digital media and other interests, including media products and services in 2008. The tax demand is for the assessment year 2009–10.
With ITAT uploading the order on its website today, the IT department will shortly begin the penalty proceedings in the case.
In a statement, NDTV said it is exploring all options available to it in accordance with law.
“It is important to note foremost that the ITAT has accepted that there was no round-tripping or money laundering, as was alleged by ITD and also being touted by certain sections of the social media,” the news broadcaster said in a statement.
It also said that there are numerous inconsistencies and contradictions in the ITAT order.
“Surprisingly, the ITAT has dismissed the appeal filed by the company as not being maintainable but at the same time adjudicated the appeal filed by the ITD against the same Assessment Order. It is inconceivable how appeal filed by the ITD against the Assessment Order is maintainable before the ITAT, but the company’s appeal emanating from the same order is not maintainable,” the company said.
“Secondly, the ITD gave additional evidence before the ITAT which was taken on record, but the ITAT has remanded the matter for re-examination by the AO in view of the fresh evidence adduced. However, while adjudicating the issue of addition made by the AO under Section 69A of the Income Tax Act, 1961 (the Act), instead of remanding the matter to the AO, strangely the same additional evidence has been used to sustain the order of the AO.
The addition under Section 69A of the Mt has been computed at Rs 642 crore. It is, indeed, unfortunate that on one issue the same evidence is used for remand, but on another question the same evidence which was used for remand has been used to sustain the addition under Section 69A of the Act,” it added.
It further stated that the ITAT has upheld the addition under Section 69A of the Act, purely on conjectures and surmises, ignoring the evidence adduced by the company, including the annual reports of the investors.
“The legal advice received is that a consistent view has to be taken and it appears that the order has been passed in a haste and the above inconsistencies have arisen because of a hurried order (a 400-page order in four days). We have been advised that Section 69A of the Act is applicable only when money is found in possession of a taxpayer but not accounted for in the books of accounts. However, the said Section has no application in the present case since admittedly, investment made by NBC Universal (admittedly then subsidiary of the GE Group) through its step-down subsidiary, Universal Studios International BV, was duly recorded in the books of accounts of the company’s subsidiary, viz., NDTV Networks International Holdings BV,” it stated.
The company also said that the ITD’s appeal has been dismissed in its entirety, whereas other issues raised in the company’s cross appeal have been set aside to the file of the AO/transfer pricing officer for fresh adjudication.