AVM Productions, CHENNAI V. ITO, CHENNAI

ITA 2671/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7578 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 15-09-2016
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED MUSTAFA
• Assessee Lawyers: R VISWANATHAN
• Keywords: Depreciation; Commercial expediency; Revised return
• Section: 143(3); 142(1)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER I.T.A. NO S . 266 9 , 2670 AND 2671 /MDS/2016 ASSESSMENT YEAR S : 20 09 - 1 0, 20 - 11 AND 2012 - 13 M/S. AVM PRODUCTIONS, NO. 38, ARCOT ROAD, VADAPALANI, CHENNAI 600 0 3 4 . [PAN:A ADFA1418R ] VS. THE INCOME TAX OFFICER , MEDIA WARD I, CHENNAI 6 00 034 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI R. VISWANATHAN , C.A. / RESPONDENT BY : SHRI MOHAMMED MUSTAFA , JCIT / DATE OF HEARING : 0 7 . 12 .201 6 / DATE OF P RONOUNCEMENT : 03 . 0 3 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH E S E THREE APPEAL S FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDER S OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 14 , CHENNAI, ALL DATED 0 8 .0 7 .201 6 RELEVANT TO THE ASSESSMENT YEAR S 20 09 - 1 0, 2010 - 11 AND 2012 - 13 . THE ONLY EFFECTIVE GROUND RAISED IN ALL THE APPEALS OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF DEPRECIATION ON COMPENSATION PAID BY THE ASSESSEE TOWARDS EASEMENT RIGHTS AND CAPITALIZED ALONG WITH THE COST OF CONSTRUCTION OF THE OFFICE BLOCK. I.T.A. NO S . 2669 - 2671 /M/ 16 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PRODUCTION AND DISTRIBUTION OF FEATURE FILMS, PRODUCTION OF TV SERIALS, SHOR T FILMS AND FINANCING. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 ADMITTING NIL INCOME. LATER, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 22.03.2010 ADMITTING NIL INCOME AFTER AVAILING CHAPTER VI A DEDUCTION. THE RETURN FIL ED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] WAS ISSUED ON 24.08.2010. NOTICE UNDER SECTION 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ALSO ISSUED TO THE ASSESSEE ON 11.10.201 1. IN RESPONSE THERETO, THE ASSESSEE FILED ALL THE DETAILS. AFTER EXAMINING THE PARTICULARS FILED BY THE ASSESSEE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ASSESSING TOTAL INCOME OF THE ASSESSEE AT .19,40,490/ - AF TER MAKING DISALLOWANCE OF DEPRECIATION OF .25,60,557/ - AS CLAIMED BY THE ASSESSEE. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). BY FOLLOWING THE DECISION OF THE LD. CIT(A) AS WELL AS THE DECISION OF THE TRIBUNAL IN ASSESSEE S OW N CASE FOR THE EARLIER ASSESSMENT YEARS, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. FOR THE ASSESSMENT YEAR 2010 - 11 AND 2012 - 13 ALSO, O N SIMILAR FACTS AND CIRCUMSTANCES , THE LD. CIT(A) DISMISSED THE APPEALS OF THE ASSESSEE. I.T.A. NO S . 2669 - 2671 /M/ 16 3 4. ON BEING A GGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL FOR THE ABOVE THREE ASSESSMENT YEARS. THE LD. COUNSEL FOR THE ASSESSEE HAS VEHEMENTLY ARGUED THAT AGAINST THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09, THE ASSESSEE PREFERRED APPEALS BEFORE THE HON BLE MADRAS HIGH COURT AND THE CASE HAS BEEN ADMITTED IN T.C. NO. 283 & 284/MDS/2013 AND THEREFORE, HE PRAYED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) SHOULD BE DELETED /REJECTED. 5. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ISSUE INVOLVED IN THESE APPEALS ARE SQUARELY COVERED AGAINST THE ASSESSEE IN VIEW OF THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR EARLIER ASSESSMENT YEARS AND THE SAME SHOULD BE FOLLOWED IN THE SUBSEQUENT ASSESSMENT YEARS. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO PERUSED THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESS MENT YEARS 2007 - 08 & 2008 - 09 IN I.T.A. NO. 982 & 983/MDS/2012 DATED 05.09.2012, WHEREIN THE COORDINATE BENCHES OF THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: 9. WE HAVE HEARD BOTH THE PARTIES AT LENGTH AND ALSO PERUSED THE RELEVANT FINDINGS, CONTENTS OF PAPER BOOK REFERRED AS WELL AS THE CASE LAW (SUPRA). IT TRANSPIRES THAT MB HAD INSTITUTED A WRIT PETITION AGAINST ONE M. SARAVANAN (MS) IN THE HON BLE MADRAS HIGH COURT ALLEGING THEREIN THAT THE CONSTRUCTION SOUGHT TO BE RAISED ON THE LAND IN QUESTION I.T.A. NO S . 2669 - 2671 /M/ 16 4 WAS UNAUTHORISED. WE FIND THAT IN THE ARRAY OF RESPONDENTS IN THE PETITION, THE ASSESSEE S NAME NOWHERE FIGURES OUT. THE OTHER RESPONDENTS IN THE WRIT PETITION ARE COMMISSIONER, CORPORATION OF CHENNAI AND MEMBER SECRETARY, CHENNAI METROPOLITAN DEVELOPMENT AUT HORITY. SINCE COPY OF INJUNCTION ORDER DATED 27.4.2006 IS ALSO AVAILABLE ON RECORD, WE FURTHER OBSERVE THAT THE ASSESSEE IS NOWHERE MENTIONED IN THE SAME. THEREAFTER, THE WRIT PETITION WAS WITHDRAWN ON 8.2.2007 (COPY OF THE ABOVE SAID PROCEEDINGS ARE AVAIL ABLE AT PAGE 4 TO 8 OF THE PAPER BOOK). THEN, NB AND MS (SUPRA) ENTERED INTO A COMPROMISE ON 25.1.2007 WHEREIN MS PAID F 3 CRORES TO MB THROUGH BANKERS CHEQUE. THE MEMORANDUM OF COMPROMISE WHICH IS AVAILABLE AT PAGE 21 TO 24 OF THE PAPER BOOK READS AS UNDE R : - NOW THIS MEMORANDUM OF COMPROMISE WITNESSETH AS UNDER: (1) THE MS GROUP HEREBY AGREES TO COMPENSATE THE MB GROUP FOR THEIR LOSS OF EASMENTARY RIGHTS ON ACCOUNT OF THE MS GROUP PUTTING UP OF A CONSTRUCTION ADJOINING THE PREMISES AND TO GIVE UP THEI R EASEMENTARY RIGHTS, IF ANY, TO ENABLE THE MS GROUP TO OBTAIN NECESSARY SANCTIONS/APPROVALS FROM THE STATUTORY AUTHORITIES IN RESPECT OF THE SAID CONSTRUCTION. THE SAID COMPENSATION HAS BEEN MUTUALLY AGREED TO BE A SUM OF .3,00,00,000 (RUPEES THREE CRORES ONLY). (2) THE PARTY OF SECOND PART AGREES TO RECEIVE THE AFORESAID SUM OF RUPEES THREE CRORES IN FULL QUITS OF ALL CLAIMS OF THE MB GROUP AGAINST THE MS GROUP IN THE CONSTRUCTION PUT UP BY THEM. THE MB GROUP CONSEQUEN TLY HEREBY EXPRESSES AND CONFIRM THEIR NO OBJECTION TO THE MS GROUP IN OBTAINING NECESSARY SANCTIONS APPROVALS FROM THE STATUTORY AUTHORITIES AND THE GOVERNMENT OF TAMILNADU IN RESPECT OF THE SUBJECT CONSTRUCTION AT THE B & C BLOCK (DELINEATED IN RED IN THE PLAN ATTACHED TO THE ANNEXURE TO THIS AGREEMENT). (3) THE AFORESAID COMPENSATION OF F3.00 CRORES HAS THIS DAY BEEN TENDERED BY MS GROUP VIDE BANKER S CHEQUE NO.871255 DATED 24TH JANUARY 2007 DRAWN IN FAVOUR OF M. BALASUBRAMANIAN ON INDIAN OVERSEAS B ANK, KODAMBAKKAM, CHENNAI 600 024 AND MB GROUP HEREBY AGREES TO UNCONDITIONALLY WITHDRAW THE W.P. NO.5670/2006 AS WELL AS THE CONTEMPT PETITION I.T.A. NO S . 2669 - 2671 /M/ 16 5 NO.529/2006 PRESENTLY PENDING ON THE FILE OF THE HON BLE MADRAS HIGH COURT. THE AFORESAID DEMAND DRAFT HAS THIS DAY BEEN HANDED OVER TO THE MEDIATOR MR. L. SURESH OF ANANDA FILMS, WHO WILL HAND OVER THE SAME TO MB GROUP ON RECEIVING THE ORDERS IN ORIGINAL FROM THE HON BLE HIGH COURT OF MADRAS IN CONFIRMATION THAT THE ABOVE MENTIONED W.P. NO.5670/2006 AND CONTEMPT PE TITION NO.526/2006 HAVE BEEN UNCONDITIONALLY WITHDRAWN. AFTER PERUSING THE TERMS AND CONDITIONS OF PAYMENT AS WELL AS MODE OF PAYMENT, IT BECOMES CRYSTAL CLEAR THAT MS HAD MADE THE PAYMENT THROUGH CHEQUE AND THE ASSESSEE S NAME NOWHERE FINDS MENTION. THE REFORE, ONCE IT DOES NOT FIND ANY MENTION QUA THE PROOF OF PAYMENT IN THE TERMS OF COMPROMISE NOTE, WE ARE UNABLE TO ACCEPT THE CONTENTION THAT THE ASSESSEE HAD MADE ANY PAYMENT AT ALL TO MB. HENCE, WE ARE CONSTRAINED TO HOLD THAT NO PAYMENT HAD BEEN MADE BY THE ASSESSEE TO MB. 10. WITHOUT PREJUDICE TO OUR ABOVE CONCLUSION REGARDING PAYMENT MADE BY THE ASSESSEE, EVEN IF WE ACCEPT THE CLAIM THAT IT HAD MADE THE PAYMENT, THEN ALSO, IN OUR OPINION, THERE IS NO COMMERCIAL EXPEDIENCY INVOLVED, BECAUSE AS ALREA DY STATED THE WRIT PETITION WAS WITHDRAWN MUCH BEFORE THE TERMS OF COMPROMISE (SUPRA). ONCE THE PETITION WAS WITHDRAWN, THE INJUNCTION GRANTED BY THE HON BLE HIGH COURT IMMEDIATELY STOOD VACATED. THEREAFTER, THERE IS NO JUSTIFICATION AS TO WHY THE ASSESSEE IN COMMERCIAL EXPEDIENCY (WHICH IS ORDINARY BUSINESS PRUDENCE) WOULD HAVE MADE PAYMENT OF . 3 CRORES TO MB THAT TOO AFTER A PERIOD OF ABOUT 7 MONTHS FROM THE DATE OF WITHDRAWAL OF THE PETITION. HENCE, WE ALSO HOLD THAT THERE WAS NO COMMERCIAL EXPEDIENCY INVOLVED IN ASSESSEE MAKING THE ALLEGED PAYMENT IN QUESTION. AS FAR AS CASE LAW CITED BY THE ASSESSEE IS CONCERNED, WE NOTICE THAT THE SAID PRECEDENT OF HON BLE SUPREME COURT AS WELL AS VARIOUS HON BLE HIGH COURTS DO NOT HELP THE ASSESSEE S CONTENTIONS BEI NG DISTINGUISHABLE IN VIEW OF OUR DISCUSSION AS ABOVE. THEREFORE, WE SEE NO REASON TO INTERFERE IN THE WELL REASONED FINDINGS OF THE CIT(APPEALS). ACCORDINGLY, THE APPEAL IS DISMISSED. 11. SINCE BOTH PARTIES ARE AD IDEM WITH OUR FINDINGS HEREIN ABOVE QU A ITA NO.982/MDS/2012 (SUPRA) ALSO COVER THE SOLE ISSUE INVOLVED IN THIS CASE, WE DISMISS THIS APPEAL. I.T.A. NO S . 2669 - 2671 /M/ 16 6 6.1 THE LD. COUNSEL FOR THE ASSESSEE HAS NOT FILED ANY ORDER OF THE HIGHER COURTS, HAVING MODIFIED OR REVERSED THE ABOVE DECISION OF THE COORDINATE BEN CHES OF THE TRIBUNAL IN ASSESSEE S OWN CASE. JUST BECAUSE THE HON BLE MADRAS HIGH COURT HAS ADMITTED THE APPEALS FILED BY THE ASSESSEE, WE CANNOT TAKE A DIFFERENT VIEW IN THE PRESENT APPEALS FILED BY THE ASSESSEE. HENCE, RESPECTFULLY FOLLOWING THE ABOVE DE CISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR EARLIER ASSESSMENT YEARS, THE APPEALS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2009 - 10, 2010 - 11 AND 2012 - 13 ARE DISMISSED. 7 . IN THE RESULT, ALL THE APPEAL S FILED BY THE ASSESSEE ARE DISMISSED . ORD ER PRONOUNCED ON THE 03 RD MARCH, 201 7 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 03 . 0 3 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.