Multimedia Frontiers Limited, Ahmedabad V. The ACIT, Gandhinagar Circle, Gandhinagar

ITA 3265/AHD/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5919 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 08-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P D SHAH
• Keywords: Question of law; Reassessment proceedings
• Section: 142(1); 10AA; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE JUSTICE P.P. BHATT, PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ITA NO.3265/AHD/2014 ( / ASSESSMENT YEAR : 2007-08) MULTIMEDIA FRONTIERS LIMITED C/O.MEHTA LODHA & CO. 105, SAKAR-I, ASHRAM ROAD AHMEDABAD / VS. THE ACIT GANDHINAGAR CIRCLE GANDHINAGAR ./ ./ PAN/GIR NO. : AABCM 2994 D ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI P.D. SHAH, AR / RESPONDENT BY : SHRI VINOD TANWANI, SR.DR / DATE OF HEARING 03/01/2019 !'# / DATE OF PRONOUNCEMENT 21 /01/2019 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS), GANDHINAGAR [CIT(A) IN SHORT] VIDE APPEA L NO.CIT(A)GNR/170/2013-14 DATED 12/09/2014 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) R.W.S.148 OF THE INCOME TAX ACT, 1961(HERE IN AFTER REFERRED TO AS 'THE ACT') DATED 25/02/201 3 RELEVANT TO ASSESSMENT YEAR (AY) 2006-07. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- ITA NO.3265/AHD/2014 MULTIMEDIA FRONTIERS LTD. VS. ACIT ASST .YEAR - 2007-08 - 2 - 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND FACTS BY CONFIRMING THE REOPENING ASSESSMENT PROCEEDINGS U/S.147 OF THE ACT AND DISALLOWANCES MA DE THERE IN AND THEREFORE THE REASSESSMENT PROCEEDINGS SHOULD B E QUASHED AND ACCORDINGLY THE DISALLOWANCES MADE THEREIN BE D ELETED IN FULL. 2. WITHOUT PREJUDICE TO GROUND NO.1, THAT THE ADDITION CONFIRMED BY THE LEARNED CIT(A) IN RESPECT OF THE PRIOR PERIO D EXPENSES OF RS.72,14,576/- AND THEREFORE THE LEARNED ASSESSING OFFICER SHOULD BE DIRECTED TO DELETE THE SAID ADDITION MADE . 3. AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE HAD BEEN INSTRUCTED NOT TO PRESS GROUND NO.1 CHALLENGIN G THE REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT. THEREFORE, WE D ISMISS THE SAME AS NOT PRESSED. 4. THE SECOND GRIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER FOR S USTAINING THE ADDITION OF RS.72,14,576/- ON ACCOUNT OF PRIOR PERIOD EXPENS ES. 5. BRIEFLY STATED FACTS OF THE CASE IS THAT THE ASS ESSEE IN ITS PROFIT & LOSS ACCOUNT HAS CLAIMED PRIOR PERIOD INCOME AND PR IOR PERIOD EXPENSES AMOUNTING TO RS. 3,00,649/- AND RS.72,14,576 RESPEC TIVELY. 5.1. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PRIOR PERIOD EXPENSE OF RS.72,14,576/- DOES NOT PERTAIN TO THE Y EAR UNDER CONSIDERATION. THEREFORE HE PROPOSES TO MAKE DISAL LOWANCE OF THE SAME. ACCORDINGLY, A NOTICE U/S 142(1) WAS SERVED UPON TH E ASSESSEE, BUT THERE WAS NO COMPLIANCE. THEREFORE, THE ASSESSING OFFIC ER DISALLOWED THE ITA NO.3265/AHD/2014 MULTIMEDIA FRONTIERS LTD. VS. ACIT ASST .YEAR - 2007-08 - 3 - PRIOR PERIOD EXPENSES OF RS.72,14,576/ AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(A) WHO HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 7. BEING AGGRIEVED BY THE ORDER OF THE LD.CIT(A), T HE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LD.AR BEFORE US SUBMITTED THAT THE ISSUE STA NDS COVERED IN FAVOR OF THE ASSESSEE BY THE ORDER OF THIS HONBLE TRIBUNAL IN THE CASE OF SEQUAL LOGISTICS PVT.LTD. VS. DCIT IN ITA NO.2238/A HD/2014 FOR AY 2010-11 VIDE ORDER DATED 18/04/2018. 9. ON THE OTHER HAND, THE LD.DR SUBMITTED THAT THE ASSESSEE FAILED TO ESTABLISH THAT THESE EXPENSES WERE CRYSTALLIZED IN THE YEAR UNDER CONSIDERATION. THEREFORE, THE LD. DR PRAYED TO CON FIRM THE ORDERS OF AUTHORITIES BELOW. 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 11. AT THE OUTSET, WE FIND THAT THE IMPUGNED ISSUE HAS BEEN DECIDED IN FAVOR OF THE ASSESSEE BY THIS TRIBUNAL IN THE CASE OF SEQUAL LOGISTICS PVT. LTD. (SUPRA) BY OBSERVING AS UNDER: ITA NO.3265/AHD/2014 MULTIMEDIA FRONTIERS LTD. VS. ACIT ASST .YEAR - 2007-08 - 4 - 6. WE FIND THAT THIS ISSUE HAS BEEN DECIDED IN FAV OUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COUR T VIDE ORDER DATED 20.07.2017 IN THE CASE OF PRI. CIT VS. ADANI ENTERP RISES LTD IN TAX APPEAL NO. 573 OF 2016, WHEREIN THE HONBLE GUJARAT HIGH COURT HAS HELD AS UNDER:- REVENUE HAS FILED THIS APPEAL RAISING THE FOLLOWING QUESTIONS FOR OUR CONSIDERATION: (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN WAS RIGHT IN CONFIRMING OF DISALLOWANCE OF PRIOR PERIOD EXPENDITURE OF RS.3,07,53,106/- BY THE LD. CIT(A)? (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN CONFIRMI NG THE DISALLOWANCE OF RS.50,31,149/- OUT OF EXEMPTION CLA IMED U/S. 10AA OF THE ACT? INSOFAR AS QUESTION (A) IS CONCERNED, IN A SEPARATE TAX APPEAL BEING TAX APPEAL NO.566/2016, AGAINST THE SAME ASSESSEE, WE M ADE THE FOLLOWING OBSERVATIONS : '2. MAIN QUESTION IS SUM OF RS.67.88 IACS (ROUNDED OFF) WHICH THE ASSESSING OFFICER AND CIT(APPEALS) DISALLOWED T REATING THE EXPENDITURE AS A PRIOR PERIOD EXPENDITURE. THE TRIB UNAL REVERSED THE FINDINGS OF THE REVENUE AUTHORITIES PRIMARILY O N TWO GROUNDS. FIRSTLY, THAT THE ASSESSEE BEING A COMPANY WAS CHAR GED UNIFORMLY FOR ALL YEARS AND WOULD THEREFORE, HAVE N O REVENUE IMPLICATION OF WHETHER THE EXPENDITURE WAS RECOGNIS ED IN THIS ASSESSMENT YEAR OR EARLIER YEAR. THE SECOND GROUND WAS THAT IN ANY CASE, THE REVENUE HAD RECOGNISED THE PRIOR PERI OD INCOME. IF THAT BE SO, ACCORDING TO THE TRIBUNAL, IT WOULD BE UNFAIR NOT TO RECOGNISE THE EXPENDITURE ALSO OF THE PRIOR PERIOD. 3. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES AND HAVING PERUSED THE DOCUMENTS ON RECORD, WE SEE NO REASON T O INTERFERE. FIRSTLY, THE EXPENDITURE OF RS.67.881ACS IS A FRACT ION OF THE TOTAL INCOME OF THE ASSESSEE COMPANY DECLARED AT RS.105.8 8 CRORES. FURTHER, EVEN THE REVENUE DOES NOT DISPUTE THAT THE COMPANY WOULD BE TAXED AT THE SAME RATE IN THE PRESENT ASSE SSMENT YEAR ITA NO.3265/AHD/2014 MULTIMEDIA FRONTIERS LTD. VS. ACIT ASST .YEAR - 2007-08 - 5 - OR DURING EARLIER YEAR. IT IS ALSO NOT DISPUTED THA T PRIOR PERIOD INCOME WAS DECLARED BY THE ASSESSEE DURING THE CURR ENT YEAR WHICH IS ALSO ACCEPTED BY THE REVENUE. NO QUESTION OF LAW THEREFORE, ARISES.' SO FAR AS QUESTION (B) IS CONCERNED, WE NOTICE THAT THE TRIBUNAL HAS MERELY REMANDED THE ISSUE. NO QUESTION OF LAW ARISES. TAX APPEAL IS DISMISSED. 7. RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF ADANI ENTERPRISES LTD (SU PRA), WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AMOUNTING TO RS.2,18,090/- TOWARDS PRIOR PERIOD EXPENDITURE. 12.1. THE FACTS OF THE INSTANT CASE ARE CLOSE TO TH E FACTS OF THE CASE AS DISCUSSED ABOVE. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE DO NOT WANT TO DEVIATE FROM THE AFORESAID JUDGMENT. HENCE , WE REVERSE THE ORDERS OF THE AUTHORITIES BELOW AND ALLOW THE GROUN D OF APPEAL OF THE ASSESSEE. 13. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. THIS ORDER PRONOUNCED IN OPEN COURT ON 21/01/2019 SD/- SD/- ( JUSTICE P.P. BHATT ) ( WASEEM AHMED ) PRESIDENT ACCOUNTANT MEMBER AHMEDABAD; DATED 21/01/2019 &.., .(.. / T.C. NAIR, SR. PS ITA NO.3265/AHD/2014 MULTIMEDIA FRONTIERS LTD. VS. ACIT ASST .YEAR - 2007-08 - 6 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-GANDHINAGAR 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) $%, / ITAT, AHMEDABAD 1. DATE OF DICTATION 03.01.2018(DICTATION PAD 8- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07.01.2019 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.25.1.2019 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25.1.2019 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER