ACIT 11(1), MUMBAI V. ULTRA MOVIE CHANNEL LTD, MUMBAI

ITA 1582/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8812 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 13-01-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 02-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Keywords: Business income; Depreciation; Revenue expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI. BEFORE SHRI R.V.EASWAR, PRESIDENT AND SHRI P.M. JAGTAP, AM I.T.A. NO.1582/MUM/2010 (ASSESSMENT YEAR : 2003-04) THE ASSISTANT COMMISSIONER OF INCOME TAX-11(1), 439, AAYAKAR BHAVAN, M.K.MARG, MUMBAI-400 020. VS. M/S. ULTRA MOVIE CHANNEL LTD. 2-C, THAKKAR IND. ESTATE, N.M.JOSHI MARG, LOWER PAREL(E), MUMBAI-400 011. PAN:AAACU2478D (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. ASHIMA GUPTA, DR RESPONDENT BY : MR. VISHWAS MEHENDALE O R D E R PER R.V.EASWAR, PRESIDENT: THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN THIS APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING TO ALLOW THE LOSS ARISEN OUT OF SALE OF AUDIO RIGHTS I.E. COPYRIGHTS AS REVENUE EXPENDITURE WITHOUT APPRECIATING THE FACT THAT AS PER THE PROVISIONS OF SECTION 50 OF THE I.T.ACT, LOSS ARISEN OUT OF SALE OF AUDIO RIGHTS IS TO BE DETERMINED UNDER THE HEAD CAPITAL GAIN. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. THE ASSESSMENT YEAR IS 2003-04. THE ASSESSEE IS A COMPANY. WHILE COMPLETING THE ASSESSMENT UNDER SECT ION 143(3) READ WITH SECTION 263, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD SOLD CERTAIN ASSETS BEING AUDIO RI GHTS AND ITA NO.1582/MUM/10 2 CLAIMED LOSS OF RS.17,28,722/- ON THE SAME. ACCORDI NG TO THE ASSESSING OFFICER, SECTION 50 OF THE INCOME TAX ACT WAS APPLICABLE AND THE LOSS WAS REQUIRED TO BE DETERMIN ED UNDER THE HEAD CAPITAL GAINS. HE HELD THAT EVEN OTHERWISE T HE LOSS BEING CAPITAL IN NATURE WAS REQUIRED TO BE ADDED BACK WHI LE COMPUTING THE BUSINESS INCOME. IN THIS VIEW OF THE MATTER, HE DISALLOWED THE LOSS AND ADDED BACK THE SAME TO THE ASSESSEES INCOME. 3. ON APPEAL THE ASSESSEE CONTENDED THAT OUT OF THE LOSS OF RS.17,28,722/-, ONLY RS.95,080/- CAN BE DISALLOWED AS CAPITAL LOSS AND THE BALANCE OF RS.16,33,642/- SHOULD BE AL LOWED ON THE BASIS OF SECTION 35A(3) OF THE INCOME TAX ACT. THE CIT(A) ACCEPTED THE SUBMISSION ON THE BASIS OF THE DETAILS FILED BY THE ASSESSEE. HE NOTED THAT NOT ALL THE ASSETS SOLD WER E DEPRECIABLE ASSETS AS HELD BY THE ASSESSING OFFICER IN ORDER TO INVOKE SECTION 50 AND THAT PART OF THE CLAIM WAS IN RESPECT OF THE ASSETS ON WHICH AMORTISATION HAS BEEN CLAIMED AND ALLOWED UND ER SECTION 35A(3). HE THEREFORE HELD THAT THE LOSS ON ACCOUNT OF AMORTISED ASSETS WHICH CAME TO RS.16,33,642/- IS ALLOWABLE UN DER SECTION 35A(3). 4. THE REVENUE IS IN APPEAL. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. SECTION 50 OF THE ACT CAN APPLY ONLY I N THE CASE OF DEPRECIABLE ASSETS ON WHICH DEPRECIATION HAD BEEN C LAIMED. THE FACTS OF THE CASE SHOW THAT IN RESPECT OF THE PART OF THE ASSETS SOLD NO DEPRECIATION HAD BEEN ALLOWED BUT ONLY AMOR TISATION ITA NO.1582/MUM/10 3 UNDER SECTION 35A(3) HAD BEEN CLAIMED AND ALLOWED IN THE EARLIER YEARS. IN SUCH A CASE, IT CANNOT BE SAID TH AT DEPRECIATION WAS ALLOWED IN ORDER TO INVOKE SECTION 50 OF THE AC T. THE CIT(A) IS THEREFORE RIGHT IN SAYING THAT LOSS ON AMORTISED ASSETS AMOUNTING TO RS.16,33,642/- IS ALLOWABLE BY VIRTUE OF SECTION 35A(3). WE ACCORDINGLY CONFIRM HIS ORDER AND DISMIS S THE APPEAL FILED BY THE REVENUE WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 19 TH DAY OF JANUARY, 2011. SD/- ( P.M. JAGTAP ) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 19 TH JANUARY, 2011. SOMU COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-11, MUMBAI. 4. THE CIT(A)-3 , MUMBAI 5. THE DR F BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR, I.T.A.T, MUMBAI