ACIT RG 11(1), MUMBAI V. DREAM MERCHANTS ENTERPRISE, MUMBAI

ITA 3243/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7888 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 15-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI A.L. GEHLOT, A.M. AND SMT. P. MADHAVI DEVI, J.M. ITA NO. 3243 AND 3245/M/2009 ASSESSMENT YEARS: 2006-07 AND 2004-05 ASST. COMMISSIONER OF INCOME-TAX, APPELLANT ROOM NO. 439, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. M/S DREAM MERCHANTS ENTERPRISE, RESPONDENT LENS VIEW, 6 TH FLOOR, VEERA DESAI ROAD, EXTN. ANDHERI (W), MUMBAI 11. APPELLANT BY : MR. MOHD. USMAN RESPONDENT BY : MR. DEEPAK TRALSHAWALA ORDER PER A.L. GEHLOT, A.M.: BOTH THESE APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST THE ORDERS OF CIT(A) FOR THE ASSESSMENT YEARS 2006-07 AND 2004-05. SINCE COMMON ISSUES ARE INVOLVED IN THESE TWO APPEA LS, THEY WERE HEARD TOGETHER AND, THEREFORE, WE FIND IT CONVENIEN T TO DISPOSE OF THESE APPEALS BY WAY OF THIS CONSOLIDATED ORDER. 2. THE COMMON GROUND RAISED IN THESE APPEALS READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES IN THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW EXPENDIT URE INCURRED ON ABANDONED FILM AS REVENUE AS AGAINST STOCK IN TRADE TREATED BY THE AO. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASS ESSEE HAD CLAIMED RS. 1,33,66,151/- FOR AY 2006-07 AND RS. 9, 10,984/- FOR AY 2004-05 AS A COST OF ABANDONED FILM PRODUCTION NO.3 AND FILM PRODUCTION NOS. 5 & 6 RESPECTIVELY. BEFORE THE AO, THE ASSESSEE RELIED ITA NO. 3243 & 3245/M/09 M/S DREAM MERCHANTS ENTERPRISE 2 UPON THE DECISIONS OF ITAT IN THE CASE OF RAJESH KH ANNA IN ITA NO. 4804/BOM/2000 FOR AY 1992-93 ORDER DATED 17 TH JANUARY, 2003 AND IN THE CASE OF M/S J. RADICAL ENTERTAINMENT (I) PVT . LTD. FOR AY 1998- 99 IN ITA NO. 4550/M/2004 ORDER DATED. 31 ST JANUARY, 2007. THE AO MADE THE ADDITION ON THE GROUND THAT THE DEPARTMENT HAD NOT ACCEPTED THE ORDER OF ITAT AND AN APPEAL HAD BEEN F ILED AGAINST THAT ORDER OF ITAT U/S 260A OF THE ACT. THE CIT(A) FOLLO WED THE ORDERS OF THE ITAT AND DELETED THE DISALLOWANCE BY OBSERVING AS UNDER(FROM THE ORDER OF CIT(A) FOR AY 2006-07):- 3. DURING APPEAL HEARING, THE APPELLANT FILED COPY OF THE DECISION IN RAJESH KHANNA CASE BEING ITA NO. 4804/B OM/2000, ASST. YR. 2002-03, DATED 17.01.2003. THE JURISDICTI ONAL TRIBUNAL SUBSEQUENTLY IN THE CASE OF M/S J. RADJICAL ENTERTA INMENT (I) P. LTD. (ITA NO. 4550/M/2004, ASST. YR. 1998-99, DATED 31.01.07, FOLLOWED THE DECISION OF THE RAJESH KHANNA CASE AS ABOVE. THE APPELLANT SUBMITTED COPY OF THE SAID DECISION OF M/ S J. RADICAL ENTERTAINMENT (I) PVT. LTD. THE APPELLANT HAS ALSO FILED COPY OF THE DECISION OF THE JURISDICTIONAL TRIBUNAL IN C BENC H IN THE CASE OF ITO-13(8) VS. B.K. SOOD, BEING ITA NO. 1463/BOM/90, DATED 30.10.1995, IN WHICH, FOLLOWING BOARDS CIRCULAR NO . 178/IT/37, DATED 13/5/1937 IT WAS STATED THAT THE FILM IN THE HANDS OF A FILM PRODUCER BE TREATED AS STOCK-IN-TRADE. THE APP ELLANT THROUGH THE LEARNED AR ARGUED THAT THE ONLY CONTENTION OF T HE AO FOR MAKING THE DISALLOWANCE WAS THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE TRIBUNAL IN THE CASE O F RAJESH KHANNA SUPRA. 3.1 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIALS ON RECORD. IT IS SEEN THAT THE ONLY BASIS FOR DISAL LOWANCE IS THAT THE DEPARTMENT IS IN APPEAL BEFORE HIGH COURT IN TH E RAJESH KHANNA CASE SUPRA. THERE IS NO OTHER FINDING OF FAC T ON RECORD. THE AO HAS NOT STATED AS TO WHETHER THERE IS ANY OR DER FROM THE HONBLE HIGH COURT, INTERIM OR FINAL, IN THIS CASE. WE HAVE NOTED ABOVE THAT THE JURISDICTIONAL TRIBUNAL HAS FOLLOWED THE RATIO OF THE RAJESH KHANNA DECISION IN THE CASE OF M/S J. RADICA L ENTERTAINMENT (I) P. LTD. ALSO. IN THE B.K. SOOD CA SE SUPRA, THE TRIBUNAL HELD THAT IN CASE OF FILM PRODUCERS, FILMS ARE STOCK-IN- TRADE. IN THE FACE OF SUCH CONSISTENT DECISIONS BY THE JURISDICTIONAL TRIBUNAL IN DIFFERENT CASES, ONLY BE CAUSE THE DEPARTMENT IS IN APPEAL IN ONE CASE, CANNOT BE A GR OUND FOR DISALLOWANCE SUSTAINABLE IN APPEAL. THE DISALLOWANC E DESERVES TO BE DELETED. 4. THE LEARNED DR HAS RELIED UPON THE ORDERS OF THE AO WHEREAS THE LEARNED AR HAS RELIED UPON THE ORDERS OF THE CI T(A). ITA NO. 3243 & 3245/M/09 M/S DREAM MERCHANTS ENTERPRISE 3 5. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE CIT(A) DELETED THE DISALLOWANCE MADE BY THE AO FOLLOWING THE ORDERS OF ITAT. THEREF ORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF CIT(A). THUS, THE GR OUNDS RAISED BY THE REVENUE IN BOTH THE ASSESSMENT YEARS UNDER CONSIDER ATION ARE DISMISSED. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. PRONOUNCED ON THIS 9 TH DAY OF FEBRUARY, 2010 SD/- SD/- (P. MADHAVI DEVI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED: 9 TH FEBRUARY, 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV S.NO. DESCRIPTION DATE INTLS ITA NO. 3243 & 3245/M/09 M/S DREAM MERCHANTS ENTERPRISE 4 1. DRAFT DICTATED ON 08.02.10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 09.02.10 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER