AVM PRODUCTIONS, CHENNAI V. ACIT NON CORPORATE CIRCLE 20(1), CHENNAI

ITA 3131/CHNY/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3661 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 16-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AR V SRINIVASANJCITD R
• Assessee Lawyers: R VISVANATHANC A
• Keywords: Depreciation; Rule of consistency; Commercial expediency
• Section: 143(2)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI . . . , !' , # '$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S.JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS.3131 & 3132/CHNY/2018 % &% /ASSESSMENT YEARS: 2011-12 & 2014-15 M/S.AVM PRODUCTIONS , 38, ARCOT ROAD,VADAPALANI, CHENNAI 600 034. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 20(1), CHENNAI 600 034. [ PAN: A ADFA 1418 R ] ( '( /APPELLANT) ( )*'( /RESPONDENT) '( + , / APPELLANT BY : MR.R.VISVANATHAN,C.A )*'( + , /RESPONDENT BY : MR. AR.V.SRINIVASAN,JCIT,D.R - + .# /DATE OF HEARING : 20.02.2020 /0& + .# /DATE OF PRONOUNCEMENT : 04.03.2020 / O R D E R PER S.JAYARAMAN, ACCOUNTANT MEMBER: THESE TWO APPEALS FILED BYTHE ASSESSEE ARE DIRECTE D AGAINST THE SEPARATE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS)-14, CHENNAI IN ITA NO.01/CIT(A)-14/2013-14, DATED 29.08 .2018 FOR THE ITA NOS.3131 & 3132/CHNY/2018 :- 2 -: ASSESSMENT YEAR 2011-12 & I.T.A. NO. NO.210/CIT(A)- 14/2016-17 DATED 29.08.2018 FOR ASSESSMENT YEAR 2014-15. 2. THE SOLE ISSUE IN BOTH THE APPEALS OF THE ASSES SEE IS THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF D EPRECIATION ON COMPENSATION PAID BY THE ASSESSEE TOWARDS EASEMENT RIGHTS AND CAPITALIZED ALONG WITH THE COST OF CONSTRUCTION OF THE OFFICE BLOCK. 3. THE ASSESSEE, M/S.AVM PRODUCTIONS IS ENGAGED IN THE BUSINESS OF PRODUCTION AND DISTRIBUTION OF FEATURE FILMS, PRODU CTION OF TV SERIALS, SHORT FILMS AND FINANCING. THE ASSESSEE FILED ITS RETURNS OF INCOME FOR THE ASSESSMENT YEARS 2011-12 & 2014-15. THE RETURNS FI LED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICES UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT] WAS ISSUED FOR BOTH THE ASSESSMENT YEARS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED AS TO WHY THE DEPRECIATION CLAIMED TOWARDS EASEMENT RI GHTS AMOUNTING TO 3 CRORES (A.Y.2011-2) & 15,14,607(A.Y.2014-15) SHOULD NOT BE DISALLOWED. IN RESPONSE, THE ASSESSEE STATED BEFORE THE LD. A.O. THAT THE ASSESSEE FILED APPEALS BEFORE THE HONBLE JURISDICT IONAL HIGH COURT FOR THE ASSESSMENT YEARS 2009-10 & 2010-11 AGAINST THE TRIB UNALS DECISION IN FAVOUR OF DEPARTMENT. THE CASE HAS BEEN ADMITTED AN D IS PENDING. 3.1 THE ASSESSING OFFICER HAS COMPLETED THE ASSESS MENTS FOR THE IMPUGNED ASSESSMENT YEARS UNDER SECTION 143(3), INT ER ALIA, DISALLOWING ITA NOS.3131 & 3132/CHNY/2018 :- 3 -: DEPRECIATION CLAIMED BY THE ASSESSEE ON COMPENSATIO N PAID TOWARDS EASEMENT RIGHTS, WHICH WAS CAPITALIZED WITH COST OF CONSTRUCTION OF THE OFFICE BLOCK FOR BOTH THE ASSESSMENT YEARS. ON APPE ALS, THE LD. CIT(A) FOLLOWING HIS PREDECESSOR AS WELL AS THE DECISION O F THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR S, DISMISSED THE APPEALS FILED BY THE ASSESSEE ON IDENTICAL FACTS AN D CIRCUMSTANCES. 4. ON BEING AGGRIEVED, THE ASSESSEE IS ON APPEALS BEFORE THE TRIBUNAL FOR THE ABOVE TWO ASSESSMENT YEARS. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT AGAINST THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09, THE ASSES SEE PREFERRED APPEALS BEFORE THE HONBLE MADRAS HIGH COURT AND TH E CASE HAS BEEN ADMITTED IN T.C. NO. 283 & 284/MDS/2013 AND THEREFO RE, HE PLEADED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) MAY BE DELETED. 5. PER CONTRA, LD. D.R. SUBMITTED THAT THE LEARNED CIT(A) FOLLOWING THE PRINCIPLE OF CONSISTENCY AND JUDICIAL DISCIPLINE, H AS UPHELD THIS ISSUE. THE LD. D.R. FURTHER RELIED ON THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. ITA NOS.3131 & 3132/CHNY/2018 :- 4 -: 6. WE HEARD THE RIVAL SUBMISSIONS. THE RELEVANT PO RTION OF THE ORDER IN I.T.A. NOS.2669,2670 AND 2671/MDS./2016 FOR ASSESSM ENT YEARS 2009-10, 2010-11 & 2012-13 DATED 03.03.207 IS EXTRACTED AS U NDER:- WE HAVE ALSO PERUSED THE ORDER OF THE TRIBUNAL IN A SSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2007-08 & 2008-09 IN I.T.A . NO. 982 & 983/MDS/2012 DATED 05.09.2012, WHEREIN THE COORDINA TE BENCHES OF THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: 9. WE HAVE HEARD BOTH THE PARTIES AT LENGTH AND A LSO PERUSED THE RELEVANT FINDINGS, CONTENTS OF PAPER BO OK REFERRED AS WELL AS THE CASE LAW (SUPRA). IT TRANSPIRES THAT MB HAD INSTITUTED A WRIT PETITION AGAINST ONE M. SARAVANAN (MS) IN THE HONBLE MADRAS HIGH COURT ALLEGING THEREIN THAT THE CONSTRUCTION SOUGHT TO BE RAISED ON THE LAND IN QUE STION WAS UNAUTHORISED. WE FIND THAT IN THE ARRAY OF RESPONDE NTS IN THE PETITION, THE ASSESSEES NAME NOWHERE FIGURES OUT. THE OTHER RESPONDENTS IN THE WRIT PETITION ARE COMMISSIONER, CORPORATION OF CHENNAI AND MEMBER SECRETARY, CHENNAI METROPOLIT AN DEVELOPMENT AUTHORITY. SINCE COPY OF INJUNCTION ORD ER DATED 27.4.2006 IS ALSO AVAILABLE ON RECORD, WE FURTHER O BSERVE THAT THE ASSESSEE IS NOWHERE MENTIONED IN THE SAME. THER EAFTER, THE WRIT PETITION WAS WITHDRAWN ON 8.2.2007 (COPY O F THE ABOVE SAID PROCEEDINGS ARE AVAILABLE 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 COMPROMIS E WHICH IS AVAILABLE AT PAGE 21 TO 24 OF THE PAPER BO OK READS AS UNDER :- 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 THEIR EASEMENTARY RIGHTS, IF ANY, TO ENABLE THE MS GROUP TO OBTAIN NECESSARY SANCTIONS/APPROVALS FROM THE STATUTORY AUTHORITIES IN RESPECT OF THE SA ID CONSTRUCTION. THE SAID COMPENSATION HAS BEEN MUTUALLY AGREED TO BE A SUM OF .3,00,00,000 (RUPEES THREE CRORES ONLY). ITA NOS.3131 & 3132/CHNY/2018 :- 5 -: (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 CONSEQUENTLY 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 TH E ANNEXURE TO THIS AGREEMENT). (3) THE AFORESAID COMPENSATION OF F3.00 CRORES HAS THIS DAY BEEN TENDERED BY MS GROUP VIDE BANKERS CHEQUE NO.871255 DATED 24TH JANUARY 2007 DRAWN IN FAVOUR OF M. BALASUBRAMANIAN ON INDIAN OVERSEAS BANK, KODAMBAKKAM, CHENNAI 600 024 AND MB GROUP HEREBY AGREES TO UNCONDITIONALLY WITHDRAW THE W.P. NO.5670/2006 AS WELL AS THE CONTEMPT PETITION NO.529/2006 PRESENTLY PENDING ON THE FILE OF THE HONBLE 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 HONBLE HIGH COURT OF MADRAS IN CONFIRMATION THAT THE ABOVE MENTIONED W.P. NO.5670/2006 AND CONTEMPT PETITION 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 H AD MADE THE PAYMENT THROUGH CHEQUE AND THE ASSESSEES NAME NOWHERE FINDS MENTION. THEREFORE, 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 ASSESS EE HAD MADE ANY PAYMENT AT ALL TO MB. HENCE, WE ARE CONSTR AINED TO HOLD THAT NO PAYMENT HAD BEEN MADE BY THE ASSESSEE TO MB. 10. WITHOUT PREJUDICE TO OUR ABOVE CONCLUSION REGA RDING PAYMENT MADE BY THE ASSESSEE, EVEN IF WE ACCEPT THE CLAIM ITA NOS.3131 & 3132/CHNY/2018 :- 6 -: THAT IT HAD MADE THE PAYMENT, THEN ALSO, IN OUR OPI NION, THERE IS NO COMMERCIAL EXPEDIENCY INVOLVED, BECAUSE AS AL READY STATED THE WRIT PETITION WAS WITHDRAWN MUCH BEFORE THE TERMS OF COMPROMISE (SUPRA). ONCE THE PETITION WAS WITHDR AWN, THE INJUNCTION GRANTED BY THE HONBLE HIGH COURT IMMEDI ATELY STOOD VACATED. THEREAFTER, THERE IS NO JUSTIFICATION AS T O WHY THE ASSESSEE IN COMMERCIAL EXPEDIENCY (WHICH IS ORDINAR Y 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 THA T THERE WAS NO COMMERCIAL EXPEDIENCY INVOLVED IN ASSESSEE MAKIN G THE ALLEGED PAYMENT IN QUESTION. AS FAR AS CASE LAW CIT ED BY THE ASSESSEE IS CONCERNED, WE NOTICE THAT THE SAID PREC EDENT OF HONBLE SUPREME COURT AS WELL AS VARIOUS HONBLE HI GH COURTS DO NOT HELP THE ASSESSEES CONTENTIONS BEING DISTIN GUISHABLE IN VIEW OF OUR DISCUSSION AS ABOVE. THEREFORE, WE SEE NO REASON TO INTERFERE IN THE WELL REASONED FINDINGS OF THE C IT(APPEALS). ACCORDINGLY, THE APPEAL IS DISMISSED. 11. SINCE BOTH PARTIES ARE AD IDEM WITH OUR FINDIN GS HEREIN ABOVE QUA ITA NO.982/MDS/2012 (SUPRA) ALSO COVER TH E SOLE ISSUE INVOLVED IN THIS CASE, WE DISMISS THIS APPEAL . 6.1 THE LD. COUNSEL FOR THE ASSESSEE HAS NOT FILED ANY ORDER OF THE HIGHER COURTS, HAVING MODIFIED OR REVERSED THE ABOV E DECISION OF THE COORDINATE BENCHES OF THE TRIBUNAL IN ASSESSEES OW N CASE. JUST BECAUSE THE HONBLE MADRAS HIGH COURT HAS ADMITTED THE APPE ALS FILED BY THE ASSESSEE, WE CANNOT TAKE A DIFFERENT VIEW IN THE PR ESENT APPEALS FILED BY THE ASSESSEE. HENCE, RESPECTFULLY FOLLOWING THE ABO VE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER ASSESSM ENT YEARS, THE APPEALS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2009 -10, 2010-11 AND 2012-13 ARE DISMISSED. ITA NOS.3131 & 3132/CHNY/2018 :- 7 -: FOLLOWING THE CO-ORDINATE BENCH DECISION, SUPRA, WE FIND MERIT IN THE ARGUMENT OF THE LD. D.R. THEREFORE, THE CORRESPOND ING GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2011-12 & 2014-15 ARE DISMISSED. ORDER PRONOUNCED ON THE 04 TH MARCH,2020 IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) (S. JAYARAMAN) # /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 04 TH MARCH,2020. K S SUNDARAM + ).23 43&. /COPY TO: 1. '( /APPELLANT 4. - 5. /CIT 2. )*'( /RESPONDENT 5. 36 ). /DR 3. - 5. ( ) /CIT(A) 6. 9% : /GF