M/s. Trident Movies, CHENNAI V. ACIT, CHENNAI

ITA 184/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0942 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-01-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T T DURAIRAJ KANDIAR
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NO. 184/MDS/2012 ASSESSMENT YEAR : 2008-09 M/S. TRIDENT MOVIES, NO.1-D, HARI MANSION JP AVENUE, DR. RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI-600 004. V. THE ASST. COMMISSIONER OF INCOME-TAX, MEDIA CIRCLE-II, CHENNAI. (PAN :AADFT4684Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.T. DURAIRAJ KANDIAR, CA RESPONDENT BY : SHRI GURU BASHYAM, JCIT DATE OF HEARING : 07.0 1.2013 DATE OF PRONOUNCEMENT : 17.01.201 3 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(APPEALS)-VI, CHENNAI DATED 25-11-2011 FO R THE ASSESSMENT YEAR 2008-09. ITA 184/MDS/2012 : 2 : 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL), HAD PREJUDICED IN CONFIRMING THE DISALLOWANCE OF CASH EXPENSES TO THE TUNE OF ` 6,88,366/- IGNORING THE FACT THAT THEY WERE WEEKLY PAYMENTS MADE AT THE SHOOTING SITE AT REMOTE PLACES WHICH WERE SQUARELY EXEMPTED UNDER RULE 6DD OF THE INCOME TAX RULES. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO ALLOW THE CASH EXPENSES OF ` 6,88,366/- ERRONEOUSLY DISALLOWED U/S 40A(3) OF THE ACT, CONSIDERING EXEMPTION UNDER RULE 6DD OAF THE INCOME TAX RULES. 3. BRIEF FACTS ARE THAT THE ASSESSEE IS A FIRM AND I S IN THE BUSINESS OF FILM DISTRIBUTION AND PRODUCTION OF TEL EVISION SERIALS. THE ASSESSEE HAD FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION BY ADMITTING TO TAL INCOME OF ` 41,43,170/-. THE RETURN FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE INC OME TAX ACT, 1961 ('THE ACT' FOR SHORT). THEREAFTER THERE WAS A SURVEY IN ITA 184/MDS/2012 : 3 : THE CASE OF ONE MR. R. PANEERSELVAM, OWNER OF ROHIN I GROUP OF THEATRES AND IN THIS CONNECTION M/S. TRIDENT MOVIES WHO TOOK THESE THEATRES ON LEASE WAS ALSO SURVEYED. DURING THE COURSE OF SURVEY AN AMOUNT OF ` 31,56,800/- WAS OFFERED FOR TAXATION. ON PERUSAL OF BOOKS OF ACCOUNT, THE ASSESSING OFFI CER OBSERVED THAT THE ASSESSEE HAD MADE PAYMENTS IN CAS H TO PARTIES AND WHEN ASKED IT STATED THAT FOR THE PURPO SE OF TELE- SERIAL SHOOTING ON FAR-OFF LOCATIONS, AND WHEN THEY INSISTED FOR PAYMENT IN CASH, THOSE PAYMENTS WERE MADE BECAUSE O F BUSINESS COMPULSIONS. THE ASSESSING OFFICER FURTHE R OBSERVED THAT WHEN INSISTED THE ASSESSEE CAME FORWARD FOR TA XATION U/S 40A(3) OF THE ACT AND ACCORDINGLY AN ADDITION OF ` 6,88,366/- WAS MADE. 4. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE THE CIT(APPEALS). IT WAS SUBMITTED BEFORE T HE CIT(APPEALS) THAT THE ABOVE AMOUNT WAS NOT VOLUNTAR ILY OFFERED FOR TAXATION AND THAT THESE ARE LEGITIMATE PAYMENTS PAID AT THE SHOOTING SITES AND THEREFORE SECTION 40 A(3) OF THE ACT HAS NO APPLICATION. THE LEARNED COUNSEL FOR TH E ASSESSEE RELIED ON CLAUSE (G) OF RULE 6DD. HOWEVER, THE LEA RNED ITA 184/MDS/2012 : 4 : CIT(APPEALS) NOT AGREEING WITH THE SUBMISSIONS OF THE ASSESSEE DISMISSED THE APPEAL. 5. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE ASSESSEE IS IN THE PRODUCTION OF TV SERIAL. FOR THAT PURPOSE THE TEAM WENT TO FAR OFF PLACES WH ERE THERE WERE NO BANK FACILITIES AVAILABLE AND THE ARTISTS A ND TECHNICIANS INSISTED FOR PAYMENT ON THE SPOT AND IN CASH. HE A LSO FILED STATEMENTS WHICH SHOWED THE PAYMENT MADE TO VARIOUS PERSONS LIKE TECHNICIANS FOR TWO DAYS, MUSIC DIRECT OR FOR ONE DAY, HOTEL BILLS, VEHICLE HIRE CHARGES, TECHNICIANS BATA, ARTISTS REMUNERATION, ADVANCE PAID TO THE PARTIES ETC. HE FURTHER SUBMITTED THAT AS PER SECTION 40A(3A) PROVISO IS AN EXCEPTION TO SEC. 40A(3) OF THE ACT. THEREFORE, HIS CASE IS COVERED BY THE PROVISO. 6. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T ADMITTEDLY THE EXPENSES MADE BY THE ASSESSEE IS MOR E THAN ` 20,000/- AND THEREFORE SECTION 40A(3) APPLIES AND H E RELIED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT V. A.D. JAYAVEERAPANDIA NADAR & SONS (2007) 162 TAX MAN 195 (MAD). ITA 184/MDS/2012 : 5 : 7. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IS IN THE BUSINESS OF PRODUCTION OF TV SER IALS AND THE TEAM WENT TO FAR OFF PLACES. THE ASSESSEE HAD TO P AY CASH PAYMENTS ON THE SPOT FOR ONE OR TWO DAYS OR ONE WEE K TO DIFFERENT PARTIES AND TECHNICIANS. THESE PAYMENTS WERE NOT DOUBTED BY THE ASSESSING OFFICER. ACCORDING TO THE ASSESSING OFFICER AND THE LEARNED CIT(APPEALS), SECTION 40A(3 ) HAS BEEN VIOLATED AND ACCORDINGLY DISALLOWANCE HAS BEEN MADE . FOR THE SAKE OF CONVENIENCE, WE EXTRACT SECTION 40A(3) AND 40A(3A) HEREUNDER : 40A(3) WHERE THE ASSESSEE INCURS ANY EXPENDITURE I N RESPECT OF WHICH A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAW N ON A BANK OR ACCOUNT PAYEE BANK DRAFT, EXCEEDS TWENTY THOUSAN D RUPEES, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPEN DITURE. (3A) WHERE AN ALLOWANCE HAS BEEN MADE IN THE ASSESS MENT FOR ANY YEAR IN RESPECT OF ANY LIABILITY INCURRED BY THE AS SESSEE FOR ANY EXPENDITURE AND SUBSEQUENTLY DURING ANY PREVIOUS YE AR (HEREINAFTER REFERRED TO AS SUBSEQUENT YEAR) THE AS SESSEE MAKES PAYMENT IN RESPECT THEREOF, OTHERWISE THAN BY AN AC COUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, THE PAYMENT SO MADE SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS INCOME OF THE SUBSEQUENT YEAR IF THE PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, EXCEEDS TWENTY THOUSAND RUPEE S: ITA 184/MDS/2012 : 6 : PROVIDED THAT NO DISALLOWANCE SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSI NESS OR PROFESSION UNDER SUB-SECTION (3) AND THIS SUB-SECTI ON WHERE A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON I N A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, EXCEEDS TWENTY THOUSAND R UPEES, IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCR IBED, HAVING REGARD TO THE NATURE AND EXTENT OF BANKING FACILITI ES AVAILABLE, CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER REL EVANT FACTORS. AS PER THE PROVISO TO SECTION 40A(3), NO DISALLOWAN CE CAN BE MADE UNDER SECTION 40A(3) TAKING INTO CONSIDERATION THE BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS. IN THE PRESENT CASE THE ASSESSEE AND ITS TEAM WENT TO A FA R AWAY PLACE FOR THE PURPOSE OF TV SERIAL SHOOTING. THE A SSESSEE HAD MADE CASH PAYMENTS TO VARIOUS PARTIES, TECHNICIANS, ARTISTS ETC. FOR THE PERIOD OF 2 TO 6 DAYS UNDER BUSINESS C OMPULSIONS. WE FIND THAT THE ABOVE PAYMENT WAS MADE UNDER BUSIN ESS COMPULSIONS AND THEREFORE BY CONSIDERING ALL THE FA CTS AND CIRCUMSTANCES OF THE CASE AND ALSO TAKING INTO CONS IDERATION THE BUSINESS EXPEDIENCY, WE ARE OF THE OPINION THA T SECTION 40A(3) HAS NO APPLICATION TO THE FACTS OF THE ASSES SEES CASE. INSOFAR AS THE CASE LAW RELIED ON BY THE LEARNED DR IS CONCERNED, IT HAS NO APPLICATION TO THE FACTS OF TH E PRESENT ITA 184/MDS/2012 : 7 : CASE. IN VIEW OF THE ABOVE, WE REVERSE THE ORDER PASSED BY THE LEARNED CIT(APPEALS) AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 17 TH OF JANUARY, 2013. SD/- SD/- (ABRAHAM P. GEORGE) (V.DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 17 TH JANUARY, 2013. H. COPY TO: ASSESSEE/AO/CIT(A)/CIT/D.R./GUARD FILE