DY. COMMISSIONER OF INCOME TAX-1(1)(1), MUMBAI V. SMT. SMITA JAYEDEV THACKERAY, MUMBAI

ITA 3115/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0388 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY R SINGH AR I T A NO MUM
• Keywords: Condonation of delay
• Section: 143(3); 148

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE HONBLE SHRI SANDEEP GOSAIN, JM & HONBLE SHRI N. K. PRADHAN, AM ./ I.T.A. NO . 3115/MUM/2016 ( / ASSESSMENT YEAR: 20 06 - 07 ) DCIT 1(1 )(1) ROOM NO. 579 , AAYAKAR BHAVAN , M.K. ROAD, MUMBAI - 400 020 . / VS. SMT SMITA JAYEDEV THACKERAY, PLOT NO. 70, LAXMI, N.S. ROAD NO. 8, HATKESH SOCIETY, J. V. P. D. SCHEME, VILE PARLE (W), MUMBAI - 400 049 ./ ./ PAN/GIR NO. ABWPT1026G ( / APPELLANT ) : ( / RESPONDENT ) C.O. N O . 308 /MUM / 2016 ( / ASSESSMENT YEAR: 20 06 - 07 ) SMT SMITA JAYEDEV THACKERAY, PLOT NO. 70, LAXMI, N.S. ROAD NO. 8, HATKESH SOCIETY, J. V. P. D. SCHEME, VILE PARLE (W), MUMBAI - 400 049 / VS. DCIT 1(1)(1) ROOM NO. 579, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020. ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI MANOJ KUMAR SINGH, DR / RESPONDENTBY : SHRI AJAY R. SINGH , AR 2 I.T.A. NO. 3115/MUM/2016 AND C.O. NO. 308/MUM/2016 SMT SMITA JAYEDEV THACKERAY, / DATE OF HEARING : 28/08 /201 8 / DATE OF PRONOUNCEMENT : 26/11/2018 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT A PPEAL AS WELL AS CROSS OBJECTION HAVE BEEN FILED BY THE REVENUE AS WELL AS ASSESSEE ARE AGAINST THE ORDER OF COMMISS I ONER OF INCOME TAX (APPEALS) - 2, MUMBAI DATED 29.01.16 FOR AY 2006 - 07 . 2. SINCE, THE FACTS RAISED IN THIS APPEAL AS WELL AS C.O. FILED BY THE REVENUE AND THE ASSESSEE ARE IDENTICAL, THEREFORE FOR THE SAKE OF CONVENIENCE; THEY ARE CLUBBED, HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. FIRST OF ALL WE TAKE UP APPEAL IN ITA NO. 3115 /MUM /201 6 FILED BY REVENUE FOR AY 2006 - 07 . 3 I.T.A. NO. 3115/MUM/2016 AND C.O. NO. 308/MUM/2016 SMT SMITA JAYEDEV THACKERAY, 4. AT THE VERY OUTSET, LD. D R APP EARING ON BEHALF OF THE REVENUE DRAWN OUR A TTENTION TOWARDS LETTER DATED 10.05.18 WHICH RELATES TO CONDONATION OF DELAY IN FILING APPEAL BEFORE HONBLE ITAT. LD. AR SUBMITTED THAT THE PRESENT APPEAL WAS FILED WITHIN THE TIME AS MENTIONED IN THE SAID APPLICATION. 5 . ON THE OTHER HAND, LD. A R REQUESTED FOR DISMISSAL OF THE SAID APPLICATION. 6 . WE HAVE HE ARD THE COUNSELS FOR BOTH THE PARTIES ON THE APPLICATION FOR SEEKING CONDONATION OF DELAY AND WHILE TAKING INTO CONSIDERATION THE CONTENTS OF A PPLICATION FILED BY THE REVENUE , WE FIND THAT ALTHOUGH THE REGISTRY HAD POINTED OUT THAT THERE WAS DELAY IN FILIN G APPEAL, BUT VIDE LETTER DATED 10/05/18, THE REVENUE EXPLAINED THAT ON VERIFICATION OF RECORDS, IT WAS FOUND THAT ORDER OF FAA WAS RECEIVED ON 25.02.16 AND APPEAL WAS FILED ON 25.04.16 AND IN THIS WAY, THERE WAS NO DELAY IN FILING THE APPEAL. HENCE, THIS APPLICATION IS ALLOWED AND APPEAL IS ADMITTED TO BE HEARD ON MERITS. 7 . AS PER THE FACTS OF THE PRESENT CASE, THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 27.10.2006 DECLARING TOTAL LOSS OF 4 I.T.A. NO. 3115/MUM/2016 AND C.O. NO. 308/MUM/2016 SMT SMITA JAYEDEV THACKERAY, RS. 2,85,90,573/ - . SUBSEQUENTLY, THE CASE WAS REOPENED BY ISSUE OF NOTICE U/S 148 OF THE I.T. ACT ON 07.11.08 ACCEPTING THE RETURNED INCOME. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND AFTER SERVING STATUTORY NOTICES AND SEEKING REPLY OF THE ASSESSEE, ORDER OF ASSESSM ENT U/S 143(3) R.W.S. 147 OF THE I.T. ACT WAS PASSED ON 19.12.11 , THEREBY DETERMINING THE TOTAL INCOME /LOSS AT RS. ( - ) 1,42,50,692/ - . IN THE ASSESSMENT ORDER THE AO MADE DISALLOWANCE UNDER RULE 9A OF RS. 1,43,39,881/ - TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW BEFORE US, THE REVENUE AS WELL AS ASSESSEE HAVE PR EFERRED THEIR RESPEC TIVE APPEAL/ CROSS OBJECTION . FIRSTLY WE ARE DEALING WITH THE APPEAL FILED BY THE REVENUE. 8 . THE SOLITARY GROUND RAISED BY THE REVENUE IS AGAINST CHALLENGING THE ORDER OF LD. CIT(A) IN ALLOWING THE COST OF PRODUCTION IN ACCORDANCE WITH RULE 9A(4) OF T HE RULE, WHILE IGNORING RULE 9A(5) OF THE I.T. ACT. 5 I.T.A. NO. 3115/MUM/2016 AND C.O. NO. 308/MUM/2016 SMT SMITA JAYEDEV THACKERAY, 9 . WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 1 TO 4 OF ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) IS CONTAINED IN PARA NO. 4(4.1 TO 4.4) OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 4.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER DATED 19 - 12 - 2011, WHEREIN THE LD. AO HAD ADDED A SUM OF RS.1,43,39,881/ - TO THE LOSS OF RS.2,85,90,573/ - OF THE APPELLANT AND THEREBY ARRIVED TOTAL INCOME / LOSS OF ( - ) RS.1,42,50,692/ - . FURTHER, AS PER PROVISIONS OF SECTION 9A(7)(II) AND 9A(4) OF THE INCOME - TAX RULES 1962, THE APPELLANT IS NOT ELIGIBLE TO CLAIM UNDER CENSORSHIP ACT AND NO RIGHT OF EXHIBITION ARE SO LD, IN SUCH CASE THE COST OF PRODUCTION CANNOT BE ALLOWED AND THE SAME WILL BE ALLOWED IN THE NEXT YEAR. 4.2 AGAINST THIS THE AR OF THE APPELLANT ARGUES THAT THE CENSOR CERTIFICATE OBTAINED BY THE APPELLANT ON 08 - 09 - 2004 I.E., DURING THE F.Y.2004 - 05 RELEVANT TO 6 I.T.A. NO. 3115/MUM/2016 AND C.O. NO. 308/MUM/2016 SMT SMITA JAYEDEV THACKERAY, A.Y.2005 - 06. ACCORDINGLY, AS PER RULE 9A(4) THE APPELLANT IS ELIGIBLE TO CLAIM THE COST OF PRODUCTION IN THE A.Y.J2006 - 07. WHILE PASSING THE ORDER IN THE A.Y.2006 - 07, THE AO HAS NOT ALLOWED THE COST OF PRODUCTION. MEANWHILE WHILE FILING THE RET URN OF INCOME FOR A.Y.2007 - 08 UNDER ABANDONED CAUTION THE APPELLANT COMPANY HAS CLAIMED THE COST OF PRODUCTION AS DEDUCTION WHILE COMPUTING THE INCOME WHEREIN ALSO THE AO HAS NOT ALLOWED THE COST OF PRODUCTION AS A DEDUCTIBLE ONE. 4.3 I HAVE GONE THROUGH THE RULE 9A(4) AND THE RULE STIPULATE THAT EVEN AFTER GETTING THE CENSOR CERTIFICATE, IF THE FILM HAS NOT BEEN RELEASED OR SOLD, THE COST OF PRODUCTION SHALL BE CARRIED FORWARD AS DEDUCTION IN THE NEXT YEAR. IN THE APPELLANT CASE, THE CENSOR CERTIFICATE WA S OBTAINED IN THE A.Y.2005 - 06 ACCORDINGLY, THE APPELLANT IS ELIGIBLE TO CLAIM COST OF PRODUCTION IN THE A.Y.2006 - 07. HOWEVER, IT WAS NOT ALLOWED BY THE LD.AO. FURTHER, THE AO HAS RELIED ON SUB - RULE 9A(7)(II). 4.4 FROM THE ABOVE FACTS ONE THING IS VERY CLE AR THAT THE COST OF PRODUCTION WAS NOT ALLOWED TO THE APPELLANT IN THE YEAR PRODUCTION I.E., IN THE F.Y.2004 - 05 RELEVANT TO A.Y.2005 - 06. FURTHER, AS PER RULE 9A(4), THE APPELLANT HAS CLAIMED COST OF PRODUCTION IN THE F.Y.2005 - 06 RELEVANT TO A.Y.2006 - 07, WH ICH WAS NOT ENTERTAINED BY THE AO. IN THE MEANWHILE THE APPELLANT WHILE FILING THE RETURN OF INCOME FOR A.Y.2007 - 08, HAS CLAIMED THE SAID 7 I.T.A. NO. 3115/MUM/2016 AND C.O. NO. 308/MUM/2016 SMT SMITA JAYEDEV THACKERAY, PRODUCTION COST AND THE SAME WAS NOT CONSIDERED AS DEDUCTION. AS A MATTER OF ACCOUNTING PRINCIPLE WHEN INCOME HAS BEEN OFFERED THE COST OF PRODUCTION HAS TO BE ALLOWED. AS PER RULE 9A(4), THE APPELLANT HAS RIGHTLY CLAIMED THE COST OF PRODUCTION IN THE A.Y.2006 - 07, WHICH IS SUPPOSED TO BE ALLOWED BY THE AO. THEREFORE, I AM IN AGREEMENT WITH THE ARGUMENT OF THE APPELLANT AN D ACCORDINGLY, I DIRECT THE AO TO GIVE NECESSARY DEDUCTION FOR THE COST OF PRODUCTION AS PER RULE 9A4) OF THE INCOME - TAX RULES 1962. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AN D SUBMISSIONS MADE BY BOTH THE PARTIES, WE FIND AS PER THE FACTS OF THE PRESENT CASE THAT ALTHOUGH IT IS AN UNDISPUTED FACT THAT NO RECEIPTS IN RESPECT OF EXHIBITION AND SALE OF RIGHTS OF THE FILM WERE CREDITED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS, BUT THE AO WHILE MENTIONING THE PROVISIONS OF RULE 9A(7)(II) AND 9A(4) OF THE ACT HAD STATED THAT WHERE AS FILM IS CERTIFIED AND RELEASE BY THE CENSOR IN ANY YEAR, BUT NO RIGHTS OF EXHIBITION ARE SOLD, THEN IN THAT EVENTUALITY, THE COST OF PRODUCTION BE ALLOW ED AS A DEDUCTION IN THE YEAR OF CERTIFICATION, BUT ALLOWED IN THE NEXT YEAR 8 I.T.A. NO. 3115/MUM/2016 AND C.O. NO. 308/MUM/2016 SMT SMITA JAYEDEV THACKERAY, AS A DEDUCTION. THE AO NOWHERE MENTIONED IN CLEAR TERMS AS TO HOW THE PROVISIONS OF RULE 9A(7)(II) AND 9A(4) OF THE ACT ARE APPLICABLE TO THE FACTS OF THE PRESENT CASE. WHEREAS ON THE CONTRARY, LD. CIT(A) IN ITS VERY CLEAR TERMS HAS CATEGORICALLY MENTIONED THAT CENSOR CERTIFICATE WAS OBTAINED BY THE ASSESSEE ON 08.09.04 I.E. DURING FY 2004 - 05 RELEVANT TO A.Y.200 5 - 06 AND A CCORDINGLY, AS PER RULE 9A(4) THE ASSESSEE IS ELIGIBLE TO CLAIM THE COST OF PRODUCTION IN THE A.Y. 2006 - 07. IT WAS CORRECTLY HELD THAT AS A MATTER OF ACCOUNTING PRINCIPLE WHEN INCOME HAS BEEN OFFERED THE COST OF PRODUCTION HAS TO BE ALLOWED AND THEREFORE WHILE RELYING UPON RULE 9A(4), THE ASSESSEE HAS RIGHTLY CLAIMED THE COST OF PRODUCTION IN THE YEAR UNDER CONSIDERATION. MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, WE SEE NO REASON S TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD.CIT(A). HENCE , CONSIDERING THE FACTS OF THE CASE AS WELL AS FOLLOWING THE DECISION OF THE COORDINATE BENCHES AND IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY, WE ARE OF THE CONSIDERED V IEW THAT 9 I.T.A. NO. 3115/MUM/2016 AND C.O. NO. 308/MUM/2016 SMT SMITA JAYEDEV THACKERAY, THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED . N OW WE TAKE UP C.O. NO. 308/MUM/2016 FILED BY ASSESSEE . 10 . SINCE WE HAVE ALREADY DE CIDED THE APPEAL FIL ED BY REVENUE IN ITA NO. 3115/MUM/2016 ON MERITS . THEREFORE FOLLOWING OUR OWN DECISION IN ITA NO. 3115/MUM/2016 , WE HOLD THAT SINCE THE ADDITIONS MADE BY THE AO HAS ALREADY BEEN DELETED ON MERITS, THEREFORE THERE IS NO NEED TO DECIDE THE C.O. FI LED BY THE ASSESSEE ON MERITS MORE PARTICULARLY WHEN THE SAME WERE NOT PASSED BEFORE LD. CIT(A) 11 . IN THE NET RESULT , THE APPEAL AS WELL AS CROSS OBJECTION FILED BY THE REVENUE AND ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH NOV , 20 1 8 SD/ - SD/ - ( N. K. PRADHAN ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 26 .11 .201 8 SR.PS . DHANANJAY 10 I.T.A. NO. 3115/MUM/2016 AND C.O. NO. 308/MUM/2016 SMT SMITA JAYEDEV THACKERAY, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI