GREEN COMMUNICATION P. LTD, MUMBAI V. ITO WD 8(1)-4, MUMBAI

ITA 2675/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9058 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 17-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 07-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: CHETAN KARIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G , MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 2675/M/2011 ASSESSMENT YEAR : 2007-08 GREEN COMMUNICATION PVT. LTD. C/O., HITEN & JITEN CHARTERED ACCOUNTANTS 9-10, VASANT VIHAR, 2 ND FLOOR 17, NEW NAGARDAS CROSS ROAD ANDHERI (E) MUMBAI-400 069. PAN NO. AACCG 6014 H VS. INCOME TAX OFFICER WARD 8(1)-4 AAYAKAR BHAVAN CHURCHGATE MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI CHETAN KARIA RESPONDENT BY : SHRI MOHIT JAIN DATE OF HEARING : 17.12.2012 DATE OF PRONOUNCEMENT : 21.12.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 3.1.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2007-08 THE ASSESSEE IN THIS APPEAL HAS RAISED DISPUTES ON TWO DIFFERENT GROUND S. 2. THE FIRST DISPUTE IS REGARDING DISALLOWANCE OF EXPEN SES INCURRED TOTALING RS.17,13,655/- ON ACCOUNT OF PAYMENT MADE TO VARIOUS ARTISTS ITA NO.2675/M/11 A.Y. (07-08) 2 AND TECHNICIANS. IN RESPECT OF THESE PAYMENTS, TAX HAD BEEN DEDUCTED IN THE MONTH OF JANUARY AND FEBRUARY 2007 AND DUE D ATE OF PAYMENT TO THE GOVERNMENT ACCOUNT WAS 31.3.2007 BUT PAYMENT HA D BEEN MADE IN APRIL AND MAY 2007. THE AMOUNT RELATING TO THE ARTISTS WAS RS.6,10,426/- AND THAT RELATING TO TECHNICIANS WAS RS.11, 03,229/- TOTALING TO RS.17,13,655/-. THE AO DISALLOWED THE CLAI M UNDER SECTION 40(A)(IA) ON THE GROUND THAT THE AMOUNT HAD NOT BEE N DEPOSITED WITH THE CENTRAL GOVERNMENT WITHIN THE DUE DATE. IN APPEA L, ASSESSEE SUBMITTED THAT IN VIEW OF THE AMENDMENT TO SECTION 40( A)(IA) BY FINANCE ACT, 2010, NO DISALLOWANCE COULD BE MADE UNDER SE CTION 40(A)(IA) IF TAX IS PAID BEFORE THE DUE DATE OF FILI NG RETURN OF INCOME. CIT(A), HOWEVER DID NOT ACCEPT THE CONTENTION ON THE G ROUND THAT AMENDMENT IN FINANCE ACT WAS PROSPECTIVE IN NATURE AND N OT APPLICABLE TO ASSESSMENT YEAR UNDER CONSIDERATION. HE OBSERV ED THAT AS PER EXISTING PROVISION IN THAT YEAR, AMOUNT PAID/ T DS IN RESPECT OF CREDITED BEFORE LAST MONTH OF PREVIOUS YEAR HAD TO B E PAID BY 31.3.2007 OF PREVIOUS YEAR WHICH HAD NOT BEEN DONE IN THIS CASE. CIT(A), THEREFORE, CONFIRMED THE DISALLOWANCE MADE AGG RIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDIN G DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF PAYMENT MADE TO ARTISTS A ND TECHNICIANS ITA NO.2675/M/11 A.Y. (07-08) 3 ON THE GROUND THAT TAX DEDUCTED HAD NOT BEEN DEPOSITE D WITH THE CENTRAL GOVERNMENT WITHIN DUE DATE AS PROVIDED UNDER SECTION 40(A)(IA). UNDER THE PROVISIONS OF SECTION 40(A)(IA) WH ICH WERE IN FORCE PRIOR TO AMENDMENT BY FINANCE ACT, 2010, TAX DEDUCTED IN RESPECT OF AMOUNT PAID/CREDITED BEFORE LAST MONTH OF THE PREVIOU S YEAR WERE REQUIRED TO BE DEPOSITED BY THE ASSESSEE WITH THE CENTRAL GOVERNMENT BY THE END OF PREVIOUS YEAR. HOWEVER, AS PER AMENDMENT BY FINANCE ACT, 2010, IRRESPECTIVE OF THE MONTH OF CREDITING OR P AYMENT THE TAX DEDUCTED COULD BE DEPOSITED BEFORE DUE DATE OF FILING OF RETURN OF INCOME. THESE AMENDMENTS HAD EARLIER BEEN HELD TO BE P ROSPECTIVE IN NATURE BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CAS E OF BHARTI SHIPYARD LTD. (132 ITD 53). THE DECISION OF THE SPECIA L BENCH HAS HOWEVER NOT BEEN UPHELD BY THE HON'BLE HIGH COURT OF CALCUTTA IN CASE OF VIRGIN CREATIONS IN THE JUDGMENT DATED 23.11.201 1 IN WHICH IT HAS BEEN HELD THAT AMENDMENT IS RETROSPECTIVE IN NATURE . SAME VIEW HAS BEEN TAKEN BY THE HON'BLE HIGH COURT OF GUJARAT VIDE JUDGMENT DATED 18.7.2011 IN CASE OF M/S. J.K. CONSTRUCTION COMPANY. RESP ECTFULLY FOLLOWING THESE JUDGMENTS, WE HOLD THAT AMENDED PROVI SIONS WERE APPLICABLE IN CASE OF THE ASSESSEE AND ACCORDINGLY THERE IS N O VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) AS AMOUNT HAD BEEN D EPOSITED WITH CENTRAL GOVERNMENT BEFORE DUE DATE OF FILING OF RET URN OF INCOME. THE ORDER OF CIT(A) IS, THEREFORE, SET ASIDE AND CLAIM OF ASSESSEE ALLOWED. ITA NO.2675/M/11 A.Y. (07-08) 4 4. THE SECOND DISPUTE IS REGARDING ADDITION OF RS.10.00 LACS ON ACCOUNT OF EXPENDITURE INCURRED FOR PURCHASE OF VARIOUS ITEMS/MATERIALS FOR THE SHOOTING OF T.V. SERIAL EPISOD ES. THE AO NOTED THAT THE ASSESSEE COMPANY HAD PURCHASED VARIOUS COSTLY MATERIAL/ITEMS FOR SHOOTING PURPOSES WHICH INCLUDED DVDS A ND CDS , FURNITURE AND FIXTURES AND CAMERAS, CHAIRS, DRESSING TABLE , MIRRORS, CARPETS, SOFA, DINNING TABLE, ELECTRICAL ITEMS ETC. AN D THE TOTAL EXPENSE ON ACCOUNT OF SHOOTING WAS RS.42,46,644/- AS PER DETAILS GIVEN BELOW :- PARTICULARS ( RS RSRS RS .) SHOOTING EXPENSES 3636174 PILOT SHOOTING EXPENSES 610470 TOTAL 4246644 BREAK-UP OF THE ABOVE COSMETIC MATERIALS/BEAUTY PRODUCTS 597624 ELECTRICAL ITEMS 742041 PROPS & OTHER FURNITURE ITEM 1232568 COMPUTED, SHOOTING MATERIAL PURCHASE 530546 MISC. CASH EXP. IN PILOT SHOOTING NOT INVOLVING ANY MATERIAL PURCHASED 207419 MISC. CASH EXP. IN SCHEDULE 1 TO 8 936446 TOTAL 4246644 4.1 THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY PART O F THE MATERIAL HAD NOT BEEN SHOWN IN THE CLOSING STOCK AND WH Y ESTIMATED ADDITIONS SHOULD NOT BE MADE. THE ASSESSEE EXPLAINED THAT IN CASE PROGRAMME IS NOT APPROVED BY THE CHANNEL, THE EXPENDI TURE INCURRED FOR PURCHASE OF VARIOUS MATERIALS IS WRITTEN OFF AS DEAD INVESTMENT. IT ITA NO.2675/M/11 A.Y. (07-08) 5 WAS ALSO SUBMITTED THAT 80% OF THE MATERIAL IS EITHER CO MPLETELY DESTROYED OR RENDERED COMPLETELY USELESS/UNUSABLE AND RE MAINING 20% WHICH IS ALSO NOT IN VERY GOOD CONDITION IS DUMPED IN THE STUDIO. THEREFORE, THESE ITEMS WERE NOT SHOWN IN THE CLOSING ST OCK. THE AO HOWEVER DID NOT ACCEPT THE EXPLANATION THAT THE MATER IAL BECAME OBSOLETE AND WAS NOT USEABLE. IT WAS OBSERVED BY HIM TH AT SOME MATERIAL MUST HAVE BEEN SHOWN IN CLOSING STOCK WHICH WAS N OT DONE. HE, THEREFORE MADE ESTIMATED ADDITION OF RS.10.00 LACS. IN APPEAL CIT(A) NOTED THAT THE ASSESSEE HAD PURCHASED COSMETIC MATERI AL, BEAUTY PRODUCTS AMOUNTING TO RS.5,97,624/-; ELECTRICAL ITEMS LIKE CABLES, LAMPS ETC. AMOUNTING TO RS.7,42,041/-; FURNITUR E AND OTHER ITEMS OF RS.12,32,568/-; COMPUTER AND SHOOTING MATERIAL AMOUNTING TO RS.5,30,546/-. THE ITEMS LIKE ELECTRICAL CABLES, FURNI TURE AND COMPUTER ETC. WHICH WERE VALUED AT ABOUT RS.24.00 LACS CO ULD NOT BE CONSIDERED TOTALLY OBSOLETE AND USED . THESE MATERIAL CO ULD ALSO BE USED IN OTHER SERIALS. CIT(A), THEREFORE, UPHELD THE E STIMATED ADDITION OF RS.10.00 LACS AGGRIEVED BY WHICH THE ASSESSEE IN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT, AS MENTIONED BEFORE LOWER AUTHORITIES, THE EXPENDITURE IS WRITTEN OFF ONCE THE PROGRAMME IS NOT APPROVED BY THE CHANNELS. IT WAS A DMITTED BY HIM THAT SOME OF THE ELECTRICAL ITEMS ARE USED IN OTHER SERIALS BUT ITA NO.2675/M/11 A.Y. (07-08) 6 ITEMS LIKE FURNITURE AND FIXTURE WHICH HAVE BEEN ESPECI ALLY MADE FOR A PARTICULAR SCENES HAVE NO USAGE IN OTHER SERIALS AND HAVE TO BE DISCARDED. IT WAS ARGUED THAT CONSIDERING THE NATURE O F INDUSTRY THE ESTIMATED ADDITION MADE BY AO WAS QUITE HIGH. THE LD . DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND STRONGLY SUPPORTED T HE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING ESTIMATED ADDITION ON ACCOUNT OF VARIOUS MATERIAL /ITEMS PURCHASED BY THE ASSESSEE IN CONNECTI ON WITH SHOOTING OF TV SERIALS AS NO SUCH ITEM HAS BEEN SHOWN IN C LOSING STOCK. THE TOTAL EXPENDITURE WAS RS.42,46,644/- OUT OF THIS, ITEMS WHICH WERE NON-PERISHABLE IN NATURE RELATING TO ELECTR ICAL ITEMS, FURNITURE AND COMPUTER ETC. WERE WORTH RS.24.00 LACS. TH E AO HAS ESTIMATED THE VALUE OF ITEMS REMAINING IN THE CLOSING STOCK AT RS .10.00 LACS WHICH HAS BEEN UPHELD BY CIT(A). THE CASE O F THE ASSESSEE IS THAT ONLY ELECTRICAL ITEMS ARE OF SOME USE IN OTH ER SERIALS. FURNITURE ETC. WHICH HAVE BEEN MADE FOR A PARTICULAR SCENE IN A SERIAL CAN NOT BE USED IN OTHER SERIALS. THEREFORE ESTIMATION O F VALUE OF RS.10.00 LACS IN RESPECT OF VARIOUS ITEMS WAS HIGHLY EXCESSIVE . IN OUR VIEW THE ADDITION MADE IS PURELY ON ESTIMATION AND ON THE FACTS OF THE CASE IT WOULD MEET THE ENDS OF JUSTICE IF THE ADDITION IS RESTRICTED TO ITA NO.2675/M/11 A.Y. (07-08) 7 RS.6.00 LACS. ACCORDINGLY ORDER OF CIT(A) IS SET ASIDE AND ADDITION IS UPHELD TO THE EXTENT OF RS.6.00 LACS. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21.12.2012. SD/- SD/- ( VIVEK VARMA ) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 21.12. 2012. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.