DCIT, Central Circle-2(1), Hyd, Hyderabad V. R.R.Movie Makers, Hyd, Hyderabad

ITA 211/HYD/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6041 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2021
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 25-02-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 24-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ EEV RANKA
• Section: 40A(3); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 211/HYD/2016 ASSESSMENT YEAR: 2012-13 DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), HYDERABAD VS M/S.R.R. MOVIE MAKERS, HYDERABAD [PAN: AAIFR0164J] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAJEEV RANKA, DR FOR ASSESSEE : NONE DATE OF HEARING : 25-02-2021 DATE OF PRONOUNCEMENT : 21-04-2021 O R D E R PER S.S.GODARA, J.M. : THIS REVENUES APPEAL FOR AY.2012-13 ARISES FROM THE CIT(A)-12, HYDERABADS ORDER DATED 20-11-2015 PASSED IN CASE NO.1114/2014-15, IN PROCEEDINGS U/S.143(3) OF THE IN COME TAX ACT, 1961 [IN SHORT, THE ACT]. CASE CALLED TWICE. NONE APPEARED AT ASSESSEES BEHE ST. IT IS ACCORDINGLY PROCEEDED EX-PARTE. ITA NO. 211/HYD/2016 :- 2 -: 2. THE REVENUES TWIN SUBSTANTIVE GROUNDS RAISED IN T HE INSTANT APPEAL CHALLENGE CORRECTNESS OF THE CIT(A)S OR DER DELETING SECTION 40A(3) DISALLOWANCE OF CASH PAYMEN TS TO THE TUNE OF RS.3,68,75,000/- AND SECTION 40(A)(IA) DISAL LOWANCE OF RS.12,73,03,175/-; RESPECTIVELY MADE IN THE COURSE OF THE ASSESSING OFFICERS ASSESSMENT FRAMED ON 31-03-2014. 3. LEARNED CIT-DR TOOK US TO THE CIT(A)S DETAILED DISCUSSION ON THE FORMER SECTION 40A(3) DISALLOWANCE READING AS UNDER: 5.0 ADDITION ON ACCOUNT OF INCOME DECLARED U/S.132 (4) BUT NOT ADMITTED IN RETURN OF INCOME - RS.4,50,00,000/-. THOUGH THE APPELLANT DID NOT RAISE A SPECIFIC GROUN D AGAINST THE ADDITION OF RS.4,50,00,000/- GROUND NO.1 DEAL WITH THE SUBJECT, AS IT REFER TO THE ASSESSMENT ORDER, WHICH IS STATED TO B E NOT BASED ON FACTS. AS FAR AS THE ADDITION OF RS.4,50,00,000/- I S CONCERNED, THE AMOUNT CONSISTS OF TWO COMPONENTS, ONE BEING THE AM OUNTS PAID TO ARTISTS IN CASH, TO THE EXTENT OF RS.3,68,75,000/-, WHICH WERE NOT REFLECTED IN BOOKS. BALANCE AMOUNT OF RS.81,25,000/ - WAS REPRESENTING THE UNVERIFIABLE NATURE OF CERTAIN EXP ENSES CLAIMED AS PRODUCTION COST. IN THIS REGARD, IT MAY BE PERTINEN T TO MENTION HERE THAT, THE ASSESSEE FIRM WHILE RECASTING THE PRODUCT ION ACCOUNT OF MOVIE, 'BUSINESSMAN', HAS TAKEN THE TOTAL COST OF T HE SAID MOVIE AT RS.36,67,18,183/-, WHICH INCLUDED THE AMOUNT OF RS. 3,68,75,000/- BEING THE AMOUNTS PAID TO ARTISTS, BUT NOT ACCOUNTE D IN BOOKS. SIMILARLY, THE TOTAL/GROSS RECEIPTS/COLLECTIONS OF SAID MOVIE WAS TAKEN AT RS.30,61,68,183/- WHICH ALSO INCLUDED THE SAID A MOUNT OF RS.3,68,75,000/-. HAVING ACCEPTED THE RETURNED LOSS , BASED ON SUCH ACCOUNTS, THERE WAS NO NEED FOR SEPARATE ADDITION O F RS.3,68,75,000/- BEING MADE BY THE AO IN ASSESSMENT ORDER, WHERE THE SAID AMOUNTS WERE FORMING PART OF THE GROSS REC EIPTS AS WELL. HENCE, I HAVE THE CONSIDERED OPINION THAT THERE IS NO BASIS FOR MAKING SEPARATE ADDITION OF RS.3,68,75,000/-. HOWEVER, THE ASSESSEE DID NOT INCLUDE THE AMOUNTS OF RS.81,25,000/-, AS THE A MOUNTS ADMITTED IN TOTAL INCOME, HAVING DECLARED THE SAME U/S.132(4 ) OF I.T.ACT. THIS AMOUNT WAS IN FACT REPRESENTING THE UNVERIFIABLE NA TURE OF CERTAIN EXPENSES THAT FORMED PART OF PRODUCTION COST OF MOV IE 'BUSINESSMAN', ITA NO. 211/HYD/2016 :- 3 -: WHOSE ACCOUNTS WERE UNDER QUESTION/INVESTIGATIONS, FOR THE YEAR UNDER REFERENCE. THE ASSESSEE NEITHER COULD RETRACT SUCH DECLARATION U/S.132(4), NOR EXPLAIN THE VERIFIABLE NATURE OF EX PENDITURE, WITH REQUIRED INFORMATION/EVIDENCE. UNDER THE CIRCUMSTAN CES, THE ADDITION OF RS.81,25,000/- REPRESENTING THE UNVERIFIABLE EXP ENSES/RELATED TO PRODUCTION COST IS HELD TO BE SUSTAINED AND THIS GR OUND OF APPEAL TREATED AS PARTLY ALLOWED. 3.1. A PERUSAL OF THE ABOVE EXTRACTED DETAILED DISCUSSI ON SUGGESTS THAT THE CIT(A) HAS DELETED THE IMPUGNED DISALLOWANCE FOR THE PRECISE REASON THAT THE IMPUGNED SUM ALREADY STOOD INCLUDED IN THE GROSS-RECEIPTS/COLLECTION S OF THE MOVIE BUSINESSMAN AMOUNTING TO RS.30,61,68,183/-. THERE IS NOT EVEN AN INDICATION IN THE REVENUES PLEADINGS R EBUTTING THIS CLINCHING ASPECT OF DOUBLE DISALLOWANCE/ADDITION OF THE VERY SUM. WE THUS SEE NO REASON TO RESTORE THE INSTANT I SSUE BACK TO THE CIT(A) FOR HIS AFRESH ADJUDICATION ON THIS COUNT ALONE. THIS FORMER GROUND IS REJECTED. 4. COMING TO REVENUES LATTER ISSUE OF SECTION 40(A)(IA ) DISALLOWANCE OF RS.12,73,03,175/-, WE NOTE THAT THE C IT(A) HAD FOLLOWED THIS TRIBUNALS SPECIAL BENCHS DECISION IN MERILYN SHIPPING AND TRANSPORT LTD., VS. ACIT REPORTED AS (201 2) [136 ITD 23] (SB)(VISAKHA.)(TRIB.) HOLDING THAT SECTION 40( A)(IA) APPLIED ONLY QUANTUM AMOUNTS PAYABLE ON THE CLOSING D AY OF THE RELEVANT ACCOUNTING YEAR THAN THOSE PAID EARLIER. H ONBLE APEX COURTS RECENT DECISION IN PALAM GAS SERVICE VS . CIT [394 ITR 300] (SC) HAS NOW SETTLED THE LEGAL QUESTION THAT S ECTION 40(A)(IA) APPLIES TO BOTH SUMS WHETHER THEY HAVE PAID AS WELL AS REMAIN PAYABLE AS ON THE CLOSING DATE IN ABOVE TERM S. WE ITA NO. 211/HYD/2016 :- 4 -: THUS DIRECT THE CIT(A) TO DECIDE THE INSTANT ISSUE ON MER ITS AS PER LAW WITHIN THREE EFFECTIVE OPPORTUNITIES OF HEARIN G. 5. THIS REVENUES APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 21-04-2021 TNMM ITA NO. 211/HYD/2016 :- 5 -: COPY TO : 1.THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CI RCLE- 2(1), HYDERABAD. 2.M/S.R.R.MOVIE MAKERS, 8-2-273/82/HE/16A/1, VALLEY VIEW ENCLAVE, ROAD NO.70, JOURNALIST COLONY, JUBILE E HILLS, HYDERABAD. 3.CIT(APPEALS)-12, HYDERABAD. 4.PR.CIT-CENTRAL, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.