ROBIN NANA BHAI BHATT, MUMBAI V. A.C.I.T. 11(1), MUMBAI

ITA 2456/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71779 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 07-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 12-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJIV M SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI B.R. MITTAL (JM) & SHRI SANJAY ARORA (AM ) I.T.A. NO. 2456/MUM/2012 (ASSESSMENT YEAR : 2008-09) MR. ROBIN NANA BHAI BHATT 4, SHASTRI SMRUTI BAR BANGLOW M.G.ROAD, VILLE PARLE EAST MUMBAI-400 057. VS. ACIT 11(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. PAN/GIR NO . AAASPB0354L ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI SANJIV M. SHAH DEPARTMENT BY : SHRI SANJEEV JAIN DATE OF HEARING : 21 . 1 1 . 2013 DATE OF PRONOUNCEMENT : 27 .11 .2013 O R D E R PER B.R. MITTAL (JM) : THE ASSESSEE HAS FILED THIS APPEAL FOR A.Y. 2008-09 AGAINST THE O RDER OF LEARNED CIT(A) DATED 23.2.2012 DISPUTING CONFIRMATION OF ADDITION OF RS. 10,00,000/- ON THE GROUND THAT SAID AMOUNT OUGHT TO HAVE BEEN DECLARED UNDER CASH METHOD OF ACCOUNTING. 2. RELEVANT FACTS GIVING RISE TO THIS GROUND OF APPEAL ARE THAT THE ASSESSEE IS A STORY AND SCREEN PLAY WRITER. HE IS A PROPRIETOR OF M/ S. BHATT PRODUCTIONS AND ENGAGED IN THE BUSINESS OF SALE OF RIGHTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED FROM THE BALANCE-SHEET AS ON 31.3.2008 THAT THE ASSESSEE HAD SHOWN RS. 10,00,000/- UNDER TH E HEAD CURRENT LIABILITIES. THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE I S FOLLOWING CASH METHOD OF ACCOUNTING. THE ASSESSING OFFICER ASKED THE A SSESSEE TO EXPLAIN WHY SAID ADVANCE AMOUNT SHOULD NOT BE CONSIDERED AS INCOME OF THE ASSESSEE. THE ASSESSEE FILED REPLY STATING INTER-ALIA THAT SAID AM OUNT OF RS. MR. ROBIN NANA BHAI BHATT 2 10,00,000/- WAS RECEIVED FROM RED CHILLIES ENTERTAINMENT PVT. L TD. FOR PURCHASE OF NEGATIVE RIGHTS OF HIS FILM CHAHAT WHICH IS ADVANCE RECEIPT AND WAS TO BE ADJUSTED BY RED CHILLIES ENTERTAINMENT PVT. LTD. ON SIGNING FORMAL AGREEMENT. THE ASSESSING OFFICER DID NOT ACCEPT CONTENTION OF THE ASSESSEE ON THE GROUND THAT ASSESSEE IS FOLLOWING CASH METHOD OF ACCOUNTING. HEN CE, ADVANCE SO RECEIVED IS RECEIPT IN NATURE OF INCOME IRRESPECTIVE OF THE FA CT THAT WHEN AND HOW SERVICES ARE GOING TO BE PERFORMED. THE ASSESSING OFFICER M ADE THE ADDITION OF THE SAID AMOUNT OF RS. 10,00,000/- TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLAT E AUTHORITY. 3. ON BEHALF OF THE ASSESSEE IT WAS CONTENDED THAT THE ASSESSEE HAD RECEIVED SAID AMOUNT OF RS. 10,00,000/- FROM RED CHILLIES ENT ERTAINMENT PVT. LTD. VIDE INDENT DATED 10.6.2004 AS TOKEN MONEY IN CONNECT ION WITH ACQUIRING THE NEGATIVE RIGHTS OF CHAHAT FILM, WHICH WAS SHOWN AS REVENUE ADVA NCE. IT WAS FURTHER CONTENDED THAT EVEN IN CASH BASIS, RECEIPT CANNOT PARTA KE THE CHARACTER OF INCOME AS THE ASSESSEE ONLY RECEIVED RS. 10,00,000/- AS EAR NEST MONEY. IT WAS ALSO CONTENDED THAT THE ASSESSEE HAS TO RETURN BACK T HE ADVANCE VIDE LETTER DATED 11.9.2011. LEARNED CIT(A) DID NOT A CCEPT CONTENTION OF THE ASSESSEE AND CONFIRMED THE ACTION OF THE ASSESSING OFFICER. HENCE, THIS APPEAL BEFORE THE TRIBUNAL. 4. DURING THE COURSE OF HEARING IT WAS CONTENDED THAT SAID AMO UNT WAS RECEIVED IN A.Y. 2005-06 AND WAS ALSO APPEARING IN THE BALANCE -SHEET AS ON 31.3.2005. LEARNED AUTHORISED REPRESENTATIVE REFERRED PAGE NO. 42 OF THE PAPER BOOK TO SUBSTANTIATE HIS SUBMISSION. HE SUBMITTED THAT IF SAID AMOUNT IS TO BE TREATED AS INCOME ON RECEIPT BASIS, IT COULD BE CONSIDERED AS INCOME IN A.Y. 2005-06 AND NOT IN ASSESSMENT YEAR UNDER CONSIDERATION. HE FURTHER SUBMITTED THAT SAID AMOUNT IN THE ASSESSMENT YEAR UNDER CONSIDERAT ION APPEARING AS AN ADVANCE TOWARDS LIABILITIES SIDE. LEARNED DEPARTM ENTAL MR. ROBIN NANA BHAI BHATT 3 REPRESENTATIVE HAS NOT DISPUTED ABOVE FACTS OF THE ASSESSEE, SAVE AND EXCEP T RELYING ON THE ORDER OF LEARNED CIT(A). 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE REPRESENTATIVE O F THE PARTIES AND ORDERS OF THE AUTHORITIES BELOW. WE OBSERVE THAT THE SAID AMOUNT OF RS.10,00,000/- WAS RECEIVED AS AN ADVANCE BY ASSESSEE IN T HE COURSE OF ITS BUSINESS IN THE ASSESSMENT YEAR 2005-06. EVEN IF THE ASSESSEE FOLLOWING CASH SYSTEM OF ACCOUNTING, THE SAID ADVANCE OF RS.10,00 ,000/- WOULD BE CONSIDERED AS INCOME OF THE ASSESSEE, IN THE YEAR IN WHICH THE ASSESSEE HAS PERFORMED THE WORK. THERE IS NO MATERIAL ON RECORD THA T THE ASSESSEE HAS COMPLETED THE WORK IN THE ASSESSMENT YEAR UNDER CONSIDERATION VIZ ASSESSMENT YEAR 2008-09. IN VIEW OF ABOVE, WE CONSIDER IT PRUD ENT THAT THIS ISSUE BE SET ASIDE TO THE FILE OF AO TO CONSIDER AS TO WH ETHER THE INCOME HAS ACCRUED TO THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION VIZ ASSESSMENT YEAR 2008-09 IN RESPECT OF SAID ADVANCE AMOUNT RECEIVED BY ASSESSEE IN ASSESSMENT YEAR 2005-06. THE AO WILL ALLOW DUE OPP ORTUNITY OF HEARING TO THE ASSESSEE AND DECIDE THE ISSUE AFRESH AFTER CONSIDERIN G SUCH EVIDENCES AS MAY BE FURNISHED BY ASSESSEE BY A REASONED ORDER AS PER LAW. HENCE, GROUND OF APPEAL TAKEN BY ASSESSEE IS ALLOWED FOR STATISTICA L PURPOSES BY RESTORING THE ISSUE TO THE AO. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 27TH DAY OF NOVEMBER, 2013. SD (SANJAY ARORA) ACCOUNTANT MEMBER SD (B.R. MITTAL) JUDICIAL MEMBER MUMBAI; DATED : 27/11/2013 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MR. ROBIN NANA BHAI BHATT 4 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS