DCIT, CHENNAI V. R.Madhavan, Mumbai

ITA 1299/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4699 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 1299/MDS/2013 ASSESSMENT YEAR 2009-10 DEPUTY COMMISSIONER OF INCOME TAX, MEDIA CIRCLE-I, CHENNAI-34 VS SHRI R. MADHAVAN, NO.2701, B-WING, OBEROI GARDENS, THAKUR VILLAGE, KANDIVALI (EAST) MUMBAI-400 101 [PAN: AAGPR 6579 F] I.T.A. NO. 1526/MDS/2013 ASSESSMENT YEAR 2008-09 ASST. COMMISSIONER OF INCOME TAX, MEDIA CIRCLE-I, CHENNAI-34 VS SHRI R. MADHAVAN, NO.2701, B-WING, OBEROI GARDENS, THAKUR VILLAGE, KANDIVALI (EAST) MUMBAI-400 101 [PAN: AAGPR 6579 F] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHAJI P. JACOB, ADDL.CIT ASSESSEE BY : SHRI Y. SRIDHAR, CA DATE OF HEARING : 13-11-2013 DATE OF PRONOUNCEMENT : 21-11-2013 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEALS HAVE BEEN FILED BY THE REVENU E AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-V I, CHENNAI I.T.A. NOS. 1299/MDS/2013 & 1526/MDS/2013 :- 2 -: DATED 30-01-2013 FOR THE ASSESSMENT YEAR (AY) 2009- 10 & DATED 25-03-2013 FOR THE AY. 2008-09. 2. IN ITA NO. 1299/2013 FOR THE AY. 2009-10, THE RE VENUE HAS RAISED FOUR GROUND OF APPEAL. GROUND NOS. 1 & 4 AR E GENERAL IN NATURE THUS, THE EFFECTIVE GROUNDS ARE GROUND NOS. 2 & 3. IN GROUND NO.2, THE REVENUE HAS ASSAILED THE ORDER OF CIT(APPEALS) DELETING THE DIS-ALLOWANCE OF EXPENDIT URE INCURRED UNDER THE HEAD PHYSICAL TRAINING AND FITNESS EXPEN SES AND IN GROUND NO.3, THE REVENUE HAS ASSAILED THE ORDER OF CIT(APPEALS) IN DELETING THE DIS-ALLOWANCE OF COMMI SSION ` 4,60,000/- PAID TO MR. NAZIR HUSSAIN. 3. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY. 2009-10 ON 30-09-2009 DECLARING HIS INCOME AS ` 1,95,56,284/-. SUBSEQUENTLY, THE ASSESSEE FILED REVISED RETURN OF INCOME DECLARING HIS INCOME AS ` 1,98,64,800/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE WAS I SSUED TO THE ASSESSEE U/S.143(2) OF THE ACT (HEREIN AFTER REFERR ED TO AS THE I.T.A. NOS. 1299/MDS/2013 & 1526/MDS/2013 :- 3 -: ACT) ON 18-08-2010. DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE ASSESSING OFFICER MADE CERTAIN ADD ITIONS/DIS- ALLOWANCES IN THE INCOME RETURNED BY THE ASSESSEE. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 02-12- 2011, THE ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) VIDE IMPUGNED ORDER, PARTLY ALLOWED TH E APPEAL OF THE ASSESSEE. AGAINST THE ORDER OF CIT(APPEALS), T HE REVENUE HAS COME IN APPEAL BEFORE THE TRIBUNAL. 4. SHRI SHAJI P. JACOB, REPRESENTING THE DEPARTMENT SUBMITTED THAT THE EXPENDITURE ON PHYSICAL TRAINING AND FITNE SS CLAIMED IN THE AY. 2009-10 HAS NOT BEEN INCURRED DURING THE RE LEVANT FINANCIAL YEAR. THE MATCHING PRINCIPLE OF ACCOUNTI NG HAS NOT BEEN FOLLOWED BY THE ASSESSEE. AS REGARDS COMMISSI ON PAID TO MR. NAZIR HUSSAIN, THE LD.DR SUBMITTED THAT THE ASS ESSEE HAS NOT OBTAINED CONFIRMATION FROM MR. NAZIR HUSSAIN. THE DEDUCTION OF TAX AT SOURCE WHILE MAKING PAYMENT DOES NOT PROVE T HE GENUINENESS OF THE EXPENDITURE. THE ASSESSEE HAS P LACED ON I.T.A. NOS. 1299/MDS/2013 & 1526/MDS/2013 :- 4 -: RECORD APPOINTMENT LETTER DATED 01-04-2007, BUT THE SAME IS NEITHER SIGNED BY THE ASSESSEE NOR BY MR. NAZIR HUS SAIN. 5. ON THE OTHER HAND, SHRI Y. SRIDHAR, APPEARING ON BEHALF OF THE ASSESSEE STRONGLY SUPPORTING THE ORDER OF THE C IT(APPEALS) SUBMITTED THAT THE ASSESSEE WAS ASKED BY THE FILM P RODUCERS TO REDUCE WEIGHT. THE ASSESSEE UNDERWENT WEIGHT LOSS PROGRAMME TO LOOK LIKE A COLLEGE STUDENT TO PLAY ONE OF THE L EAD CHARACTERS IN A HINDI FILM. IN RESPECT OF COMMISSION PAID TO MR. NAZIR HUSSAIN, THE LD.AR SUBMITTED THAT THE COMMISSION PAYMENTS WERE M ADE TO MR. NAZIR HUSSAIN IN HIS CAPACITY AS MANAGER/SECRETARY TO THE ASSESSEE. SINCE THE RELATIONS BETWEEN MR. NAZIR H USSAIN AND THE ASSESSEE ARE GOING THROUGH ROUGH PATCH, MR. NAZ IR HUSSAIN, REFUSED TO ACKNOWLEDGE THE RECEIPT OF THE PAYMENTS. HOWEVER, THE PAYMENTS HAVE BEEN MADE ON DIFFERENT DATES THRO UGH CHEQUES AND TDS HAS BEEN DEDUCTED ON ALL THE PAYMEN TS MADE. THE DETAILS VIZ., PAN AND ADDRESS OF MR. NAZIR HUSS AIN WERE PROVIDED TO THE ASSESSING OFFICER AND REQUEST WAS M ADE TO THE I.T.A. NOS. 1299/MDS/2013 & 1526/MDS/2013 :- 5 -: ASSESSING OFFICER TO SUMMON HIM FOR SEEKING CONFIRM ATION, BUT THE ASSESSING OFFICER CHOSE NOT TO SEEK ANY CONFIRM ATION FROM MR. NAZIR HUSSAIN. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE REVENUE HAS RAISED FOUR GROUNDS IN APPEAL FOR THE AY.200-10. GROUND NO. 1 & 4 ARE GEN ERAL IN NATURE AND HENCE REQUIRE NO ADJUDICATION. GROUND NO.2 REL ATES TO DELETING OF DIS-ALLOWANCE UNDER THE HEAD PHYSICAL TRAINING AND FITNESS EXPENSES. THE ASSESSEE HAS FILED PAPER BO OK. AT PAGE NO.17 OF THE PAPER BOOK, THE ASSESSEE HAS PLACED ON RECORD A COPY OF INVOICE DATED 10-03-2009 ISSUED BY BIO-RESU RGE, THAILAND. AT PAGE NO.18, THE ASSESSEE HAS PLACED O N RECORD A CERTIFICATE ISSUED BY THE PRODUCERS OF THE FILM WHE REIN IT IS CONFIRMED THAT THE ASSESSEE WAS REQUIRED TO REDUCE WEIGHT TO LOOK LIKE A COLLEGE STUDENT DURING THE YEAR 2008 TO PLAY ONE OF THE LEAD CHARACTERS IN HINDI FILM AS A COLLEGE STUDENT. I.T.A. NOS. 1299/MDS/2013 & 1526/MDS/2013 :- 6 -: 7. WE ARE SATISFIED THAT THE ASSESSEE HAD INDEED IN CURRED EXPENDITURE ON HIS PHYSICAL FITNESS AND WEIGHT LOSS TO FULFIL HIS PROFESSIONAL COMMITMENT. THUS, THE EXPENDITURE INC URRED ON WEIGHT LOSS PROGRAMME IS ALLOWABLE. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE CIT(APPEALS) ON THIS ISSUE. THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 8. THE SECOND ISSUE IN THE APPEAL RELATES TO THE PA YMENT OF COMMISSION ` 4,60,000/- TO MR. NAZIR HUSSAIN. THE ASSESSEE HAS PLACED ON RECORD, AT PAGE NO.19 OF THE PAPER BOOK A COPY OF LETTER APPOINTING MR. NAZIR HUSSAIN AS SECRETARY TO THE ASSESSEE. A PERUSAL OF THE APPOINTMENT LETTER DATED 01-04-200 8 SHOWS THAT THE LETTER IS NEITHER SIGNED BY THE ASSESSEE NOR BY MR. NAZIR HUSSAIN. THEREFORE, RELIANCE CANNOT BE PLACED ON T HE UN-SIGNED DOCUMENT. THE STAND OF THE ASSESSEE IS THAT MR. NA ZIR HUSSAIN IS NOT WORKING WITH HIM ANYMORE, THEREFORE, HE IS NOT CO-OPERATING IN PROVIDING CONFIRMATION OF THE AMOUNT RECEIVED. THE ASSESSEE HAD PROVIDED VITAL INFORMATION VIZ. PAN, PAYMENT DETAIL S ETC., IN RESPECT OF MR. NAZIR HUSSAIN, BUT THE ASSESSING OFF ICER MADE NO EFFORT TO EITHER SUMMON HIM OR SEEK CONFIRMATION FR OM HIS I.T.A. NOS. 1299/MDS/2013 & 1526/MDS/2013 :- 7 -: JURISDICTIONAL COUNTERPART. THE ASSESSEE HAS MADE PAYMENTS TO MR. NAZIR HUSSAIN, THROUGH CHEQUES. TAX HAS BEEN D EDUCTED AT SOURCE AT THE TIME OF MAKING PAYMENTS. THERE IS NO REASON TO DOUBT THE EXPENDITURE CLAIMED BY THE ASSESSEE TOWAR DS COMMISSION PAYMENT TO MR. NAZIR HUSSAIN. IT IS A T RAIT LAW THAT DEDUCTION OF TAX AT SOURCE ON PAYMENTS MADE WILL NO T AUTOMATICALLY RENDER PAYMENTS TO QUALIFY FOR CLAIMI NG EXPENSES. BUT THE ASSESSING OFFICER HAS FAILED TO EXERCISE HI S AUTHORITY TO SEEK CONFIRMATION. THERE IS NO REASON TO INTERFERE WITH THE IMPUGNED ORDER ON THIS ISSUE. THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOI D OF MERIT. I.T.A. NO. 1526/MDS/2013 (AY.2008-09): 9. IN APPEAL NO. 1526/MDS/2013, THE REVENUE HAS RAI SED FOUR ISSUES. ISSUE NOS. 1 & 4 ARE GENERAL IN NATURE. G ROUND NO.2 RELATE TO THE COMMISSION PAYMENTS AMOUNTING TO ` 8.34 LAKHS TO MR. NAZIR HUSSAIN AND THE ISSUE NO.3 RELATES TO RES TRICTION OF DIS- I.T.A. NOS. 1299/MDS/2013 & 1526/MDS/2013 :- 8 -: ALLOWANCE AT 10% AS AGAINST 20% ON EXPENSES CONSIDE RED AS HAVING PERSONAL ELEMENT SUCH AS TRAVELLING AND CONV EYANCE, TELEPHONE, INTERNET & COMMUNICATION CHARGES, CAR MAINTENANCE, MEDICAL AND YOGA TRAINING CHARGES TOTA L AMOUNTING TO ` 6.27 LAKHS. 10. AS REGARDS COMMISSION PAYMENTS TO MR. NAZIR HUS SAIN, WE HAVE ALREADY ADJUDICATED THIS ISSUE IN APPEAL OF TH E REVENUE FOR THE AY.2009-10 IN PARA NO.8 HEREIN ABOVE. THIS ISS UE IN APPEAL OF THE REVENUE FOR THE AY.2008-09 IS ALSO DISMISSED FOR THE SAME REASONS. 11. THE NEXT ISSUE IN APPEAL IS RESTRICTION OF DIS- ALLOWANCE AT 10% AS AGAINST 20% IN RESPECT OF EXPENSES SUCH AS T RAVELLING AND CONVEYANCE, TELEPHONE, INTERNET & COMMUNICATION CHARGES, CAR MAINTENANCE, MEDICAL AND YOGA TRAINING CHARGES. WE ARE OF THE CONSIDERED OPINION THAT SINCE THE ASSESSEE I S IN SHOW BUSINESS, ACTING AND MODELING. IT IS INCUMBENT UPO N HIM TO MAKE SUCH EXPENDITURE TO KEEP IN LINE WITH HIS PROFESSIO N. THE I.T.A. NOS. 1299/MDS/2013 & 1526/MDS/2013 :- 9 -: RESTRICTION OF DIS-ALLOWANCE TO 10% IS REASONABLE. WE DO NOT INTEND TO INTERFERE WITH THE ORDER OF CIT(APPEALS) ON THIS GROUND. THE APPEAL OF THE REVENUE IS DISMISSED. TO CONCLUDE, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 21 ST NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (VIKAS AWASTHY) JUDICIAL MEMBER DATED: 21 ST NOVEMBER, 2013 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR