ACIT 11(1), MUMBAI V. SAIRA BANU KHAN, MUMBAI

ITA 1100/MUM/2011

• Counselvise Citation: 110019914 RSA 2011
• Duration Of Justice: 3 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 23-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 07-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P BAIRAGRA
• Assessee Lawyers: SONIA KUMAR
• Keywords: Tax effect
• Section: 143(3)

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI .. , ; BEFORE SHRI P.M. JAGTAP, AM AND SHRI VIVEK VARMA, J M ./ I.T.A. NO.1100 /MUM/2011 ( / ASSESSMENT YEAR : 2006-2007 ASSTT. COMMISSIONER OF INCOME TAX 11(1), ROOM NO. 439, AAYAKAR BHAVAN, M.K.ARG, MUMBAI 20. / VS. MRS. SAIRA BANU KHAN , 34-B PALLI HILL, DR. NARGISH DUTT ROAD, BANDRA (W), MUMBAI 400 050. ./ PAN : ABHPK 7703 Q ( # / APPELLANT ) .. ( $%# / RESPONDENT ) A PPELLANT BY SHRI J.P. BAIRAGRA R E SPONDENT BY : MS. SONIA KUMAR ) * / DATE OF HEARING : 23-1-14 ) * / DATE OF PRONOUNCEMENT :28-2-2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) - 3, MUMBAI DATED 16-11-2010 WHEREBY SHE ALLOWED THE CLAIM OF THE ASSESSEE FOR LOSS OF RS. 9,84,072/- IN THE PROPRIETARY CONCE RN OF M/S SHARP FOCUS. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO FILED THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30-10-20 06 DECLARING TOTAL INCOME OF RS. 9,28,760/-. IN THE SAID RETURN, LOSS OF RS. 9,86,332/- WAS CLAIMED BY THE ASSESSEE ON ACCOUNT OF VARIOUS EXPEN SES INCURRED IN HER PROPRIETARY CONCERN OF M/S SHARP FOCUS. DURING THE COURSE OF ASSESSMENT ITA 1100/M/11 2 PROCEEDINGS, IT WAS NOTICED BY THE A.O. THAT THE AS SESSEE HAS NOT OFFERED ANY INCOME OF THE SAID PROPRIETARY CONCERN TO TAX FOR T HE YEAR UNDER CONSIDERATION. IN THE ABSENCE OF SUCH INCOME OFFER ED BY THE ASSESSEE, THE ENTIRE EXPENSES CLAIMED BY THE ASSESSEE RESULTING I NTO LOSS OF RS. 9,86,332/- WAS DISALLOWED BY THE A.O. IN THE ASSESSMENT COMPLE TED U/S 143(3) OF THE ACT VIDE AN ORDER DTD. 24-10-2008. 3. AGAINST THE ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND THE FOLLOWING SUBMISSION WAS MADE ON BEHALF OF THE ASSESSEE BEFOR E THE LD. CIT(A) IN SUPPORT OF ITS CLAIM FOR LOSS OF RS. 9,86,332/- SHO WN IN THE PROPRIETARY CONCERN M/S SHARP FOCUS. 3. THE AO HAS DISCUSSED THE ISSUE IN PARA 3 OF HIS ORDER AND ALSO DISALLOWED THE SAID LOSS WITHOUT DISCUSSING AND CON SIDERING THE WRITTEN SUBMISSIONS GIVEN VIDE OUR LETTER DATED 23-10-2006 DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, COPY OF WHICH IS AT PAGE NOS. 10 - 11 OF THE COMPILATION. 4. THE ASSESSEE IS THE PROPRIETOR OF M/S. SHARP FOC US AND ENGAGED IN THE PRODUCING OF T. V SERIALS. DURING THE YEAR, THE RE WERE THREE T. V SERIALS IN PROGRESS. HOWEVER, ONLY THE T. V. SERIAL KABHI FILM KABHI LIFE WAS COMPLETED DURING THE YEAR AND HENCE, THE PROFIT/LOSS IS COMPUTED IN THAT SERIAL. THE OTHER TWO SERIALS I.E. AB TA BANJA SAJNA HAMAR & STREE WERE STILL IN PROGRESS AND THEREBY THE COST OF THESE SERIALS WERE SHOWN AS WORK IN PROGRESS AND NO PROFI T/LOSS IS COMPUTED ON THE SAME. THE ASSESSEE HAS PREPARED SEPARATE PRO FIT & LOSS A/C. OF ALL THE THREE SERIALS AND FINALLY, THE ASSESSEE HAS PREPARED THE PROFIT & LOSS A/C. OF THE PROPRIETARY FIRM M/S. SHARP FOCUS IN WHICH THERE IS LOSS INCURRED DURING THE YEAR OF RS. 9,84,071/-. TH E SAID LOSS IS ON ACCOUNT OF VARIOUS ESTABLISHMENT EXPENSES WHICH ARE NOT DIRECTLY CONNECTED WITH A PARTICULAR T. V. SERIAL AND THE LO SS INCURRED IN T V. SERIAL KABHI FILM KABH LIFE. 5. THE ASSESSEE IS THE PROPRIETOR OF M/S SHARP FOCU S FOR THE LAST NUMBER YEARS, WHICH IS ENGAGED IN THE BUSINESS OF P RODUCING OF T. V SERIALS AND, THEREFORE, LOSS INCURRED IN THE PROPRI ETARY FIRM IS CLEARLY ALLOWABLE AS BUSINESS LOSS DURING THE YEAR. ITA 1100/M/11 3 6. EVEN IN EARLIER YEARS, THE INCOME/LOSS FROM APPE LLANTS PROPRIETARY CONCERN M/S. SHARP FOCUS IS BEING INCLU DED IN THE HANDS OF THE ASSESSEE. 4. AFTER CONSIDERING THE ABOVE SUBMISSION, THE ASSE SSEE WAS CALLED UPON BY THE LD. CIT(A) TO EXPLAIN AS TO WHY THERE WAS NO CLOSING WORK-IN-PROGRESS OF THE SERIAL KABHI FILM KABHI LIFE OR ANY RECEIPTS ON ACCOUNT OF THE SAID SERIAL. IN REPLY, IT WAS EXPLAINED BY THE ASSESSEE THAT THE SAID SERIAL WAS TELECASTED BY DOORDARSHAN ON FIXED TELECAST FEES AG AINST FREE COMMERCIAL TIME. IT WAS SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH M/S REASONABLE ADVERTISING PVT. LTD. TO COLLECT ADVERTI SEMENTS AGAINST 15% COMMISSION. BUT THE SAID CONCERN COULD COLLECT ADVE RTISEMENTS ONLY FOR 1455 SECONDS AS AGAINST THE TOTAL 2400 SECONDS ALLOTTED. IT WAS SUBMITTED THAT THE ASSESSEE THUS INCURRED NET LOSS OF RS. 1,16,630/- A FTER CONSIDERING THE REVENUE FROM TELECAST OF EPISODES LESS TELECAST FEE S AND 15% COMMISSION. IT WAS SUBMITTED THAT THE SAID SERIAL WAS MADE IN A JO INT VENTURE AND AFTER SHARING THE LOSS WITH THE JOINT VENTURE PARTNER SHR I SULTAN AHMED, THE ASSESSEE CLAIMED SHARE OF LOSS OF RS. 3,26,692/- AG AINST THE SERIAL KABHI FILM KABHI LIFE BY THE ASSESSEE. THIS EXPLANATION OF THE ASSESSEE WAS FOUND ACCEPTABLE BY THE LD. CIT(A) AND KEEPING IN VIEW TH E SAME AS WELL AS THE OTHER SUBMISSIONS MADE BY THE ASSESSEE, THE LD. CIT(A) AL LOWED THE CLAIM OF THE ASSESSEE FOR LOSS OF RS. 9,86,332/- OBSERVING THAT THE SAID LOSS WAS DISALLOWED BY THE A.O. WITHOUT ASCERTAINING ANY FACTS AND WITH OUT GIVING ANY REASONS IN SUPPORT OF HIS ACTION. AGGRIEVED BY THE ORDER OF T HE LD. CIT(A), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE TAX EFFECT INVOLVED IN THIS APPEA L FILED BY THE REVENUE IS LESS THAN THE MONETARY LIMIT OF RS. 3 LACS FIXED BY THE CBDT FOR FILING THE APPEAL BEFORE THE TRIBUNAL AND THIS APPEAL FILED BY THE RE VENUE IN CONTRAVENTION OF ITA 1100/M/11 4 THE CBDT CIRCULAR IS NOT MAINTAINABLE. EVEN OTHERW ISE, WE FIND THAT THE CLAIM OF THE ASSESSEE FOR LOSS OF RS. 9,86,332/- IN THE PROPRIETARY CONCERN WAS DISALLOWED BY THE A.O. WITHOUT ASCERTAINING THE REL EVANT FACTS AND WITHOUT GIVING ANY COGENT OR CONVINCING REASONS AS RIGHTLY OBSERVED BY THE LD. CIT(A). ON THE OTHER HAND, DETAIL SUBMISSION WAS MADE BY TH E ASSESSEE BEFORE THE LD. CIT(A) TO SUPPORT AND SUBSTANTIATE HER CLAIM FOR TH E SAID LOSS AND AFTER HAVING SATISFIED WITH THE SAID SUBMISSION, THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE FOR THE SAID LOSS. AT THE TIME OF HEARING BEFORE US, THE LD. D.R. HAS NOT BEEN ABLE TO REBUT OR CONTROVERT THE FINDINGS R ECORDED BY THE LD. CIT(A) WHILE ALLOWING THE CLAIM OF THE ASSESSEE FOR THE SA ID LOSS. WE, THEREFORE, FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNE D ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THE ISSUE UNDER CO NSIDERATION EVEN ON MERIT AND UPHOLDING THE SAME, WE DISMISS THE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEB. 2014. . ) 0 1 28-2-2014 ) SD/- SD/- (VIVEK VARMA) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 DATED 286262014 [ .../ RK , SR. PS ITA 1100/M/11 5 ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $%# / THE RESPONDENT. 3. : () / THE CIT(A)3, MUMBAI. 4. : / CIT 11 MUMBAI 5. $> , * > , / DR, ITAT, MUMBAI H BENCH 6. / GUARD FILE. / BY ORDER, % $ //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI