ACIT 11(1), MUMBAI V. LATA MANGESHKAR, MUMBAI

ITA 1907/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3370 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 12-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 08-03-2013
• Court: TRIBUNAL
• Department Lawyers: SANGRAM GAIKWAD
• Assessee Lawyers: V G GINDE
• Keywords: Fair market value; Tax effect

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ./ ITA NO. 1181 / MUM/20 1 3 ( / ASSESSMENT YEAR : 200 6 - 2007 ) MS. LAT A DINANATH MANGESHKAR, 101, PRABHU KUNJ, PEDDER ROAD, MUMBAI - 400026 VS. ACIT, CIRCLE - 11(1), MUMBAI ./ ./ PAN/GIR NO. : A A EPM 4424 E ( / APPELLANT ) .. ( / RESPONDENT ) AND ./ ITA NO. 19 07 / MUM/20 1 3 ( / ASSESSMENT YEAR : 2006 - 200 ) ACIT, CIRCLE - 11(1), MUMBAI VS. MS. LATA DINANATH MANGESHKAR, 101, PRABHU KUNJ, PEDDER ROAD, MUMBAI - 400026 ./ ./ PAN/GIR NO. : A AEPM 4424 E ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI V.G.GINDE /REVENUE BY : SHRI SANGRAM GAIKWAD / DATE OF HEARING : 02 /0 6 /2016 / DATE OF PRONOUNCEMENT 09 / 06 /201 6 / O R D E R PER R.C.SHARMA (A.M) : T H ESE ARE THE APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A), MUMBAI, FOR THE ASSESSMENT YEAR 200 6 - 2007 , IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 263 OF THE I.T.ACT. 2. AT THE OUTSET, LD. AR POINTED OUT THAT TAX EFFECT IN THE AP PEAL OF REVENUE (I.E. ITA NO.19 07 /MUM/2013) IS LESS THAN RS.10 LAKHS, INSOFAR AS ITA NO. 1181&1907/13 2 ADDITION DELETED BY CIT(A) AMOUNTS TO RS.13.04 LAKHS IN RESPECT OF DISALLOWANCE DELETED U/S.40A(2) AND RS.4.12 LAKHS IN RESPECT OF DISALLOWANCE DELETED U/S.14A OF THE I.T.ACT. 3. IN VIEW OF THE CBDT CIRCULAR NO.21/2015, DATED 10 - 12 - 2015, SINCE THE TAX EFFECT IN THE APPEAL OF REVENUE IS LESS THAN RS.10 LAKHS, WE DISMISS THE APPEAL (I.E. ITA NO.1907/MUM/13) FILED BY THE REVENUE. 4. THE ASSESSEE IN ITS APPEAL (I.E. ITA NO. 1181/ MUM /2013) IS AGGRIEVED FOR UPHOLDING THE ADDITION OF RS.21.99 LAKHS MADE BY THE AO U/S.40A(2) OF THE I.T.ACT. 5. RIVAL CONTENTIONS HAVE BEEN HEARD RECORD PERUSED. D URING THE COURSE OF ASSESSMENT THE AO HAS DISALLOWED ASSESSEES CLAIM OF COMPENSATION AND MADE ADDITION U/S.40A(2) AMOUNTING TO RS.34.03 LAKHS. BY THE IMPUGNED ORDER THE CIT(A) RESTRICTED THE DISALLOWANCE TO RS.21.99 LAKHS. THE ASSESSEE IS IN FURTHER APPEAL FOR THE DISALLOWANCE SO UPHELD BY THE CIT(A). 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FO UND THAT ASSESSEE IS A RENOWNED SINGER, WHO HAS BEEN AWARDED HIGHEST CIVILIAN AWARD BHARAT RATNA BY GOVERNMENT OF INDIA. DURING THE YEAR UNDER CONSIDERATION, ASSESSEE CLAIMED COMPENSATION OF RS.2.47 CRORES PAID TO MUSICURRY RECORDS AND ENTERTAINMENT PVT. LTD. (IN SHORT MREPL) FOR CANCELLATION OF CONTRACT. AS PER AOS VIEW SINCE THE COMPANY COMES WITHIN THE PURVIEW OF 40A(2), THE COMPENSATION SO PAID WAS NOT REASONABLE, THEREFORE, HE DISALLOWED A SUM OF RS.34,03,159/ - . THE AO OPINED THAT MREPL WOULD HAVE GOT NOT MORE THA N RS.2,88,76,841/ - . HOWEVER, THE ASSESSEE HAS ITA NO. 1181&1907/13 3 PAID MREPL TO RS.3,22,80,000/ - (RS.75,00,000/ - IN A.Y.2002 - 03 AND RS.2,47,80,000/ - IN A.Y.2006 - 07) I.E. THUS SHE HAS MADE EXCESS PAYMENT OF RS.34,03,159/ - TO MREPL OVER AND ABOVE WHAT MREPL WOULD HAVE ACTUALLY GOT. ACCORDINGLY, RS.34,03,159/ - WAS DISALLOWED OUT OF COMPENSATION PAID TO MREPL OF RS.2,47,80,000/ - HOLDING THE SAME TO BE UNREASONABLE AND EXCESSIVE U/S. 40A(2)(B) OF THE I.T.ACT. BY THE IMPUGNED ORDER THE CIT(A) DELETED THE ADDITION TO THE EXTENT OF RS .12,03,557/ - AFTER RECORDING HIS FINDING AT PARA 1.3 OF HIS APPELLATE ORDER. WE FOUND THAT DISALLOWANCE U/S.40A(2) IS REQUIRED TO BE MADE WHEN PAYMENT MADE BY ASSESSEE AND CLAIMED AS EXPENDITURE IS IN EXCESS OF THE FAIR MARKET VALUE. ONUS IS ON THE REVENU E TO BRING ON RECORD THAT WHATEVER THE EXPENDITURE HAS BEEN CLAIMED BY THE ASSESSEE IS UNREASONABLE AS COMPARED TO THE FAIR MARKET VALUE. HOWEVER, NOWHERE THE AO HAS BROUGHT ANY MATERIAL ON RECORD TO SUGGEST THAT FAIR COMPENSATION TO BE PAID BY THE ASSESSE E AMOUNTS TO ONLY RS.2.88 LAKHS IN PLACE OF 3.22 LAKHS. IN THE ABSENCE OF ANY COGENT MATERIAL ON RECORD, WE DO NOT FIND ANY JUSTIFICATION FOR THE ADDITION SO MADE BY THE AO. ACCORDINGLY WE DIRECT THE AO TO DELETE THE ADDITION SO MADE U/S.40A(2) OF THE ACT. 7 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED, WHEREAS APPEAL OF REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 09/06 / 201 6 . SD/ - ( RAM LAL NEGI ) S D/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACC OUNTANT MEMBER MUMBAI ; DATED 09/06 /201 6 . . /PKM , . / PS ITA NO. 1181&1907/13 4 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBA I. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//