M/S BEST FILAM CORPORATION, LUDHIANA V. D.C.I.T, CENTRAL CIRCLE-II, JALANDHAR

ITA 327/ASR/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8391 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-08-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 29-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP C HAUHAN LD
• Assessee Lawyers: ASHRAY SARNA LD
• Section: 142(1); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL AMRITSAR BENCH, AMRITSA R BEFORE SH. B.R. BASKARAN, ACCOUNTANT MEMBER AN D SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.327(ASR)/2017 ASSESSMENT YEAR:2012-13 BEST FILM CORPORATION 31, 2 ND FLOOR SANT ISHAR SINGH NAGAR PAKHOWAL ROAD LUDHIANA [PAN:AAKFB 1288K] VS. DY. CIT CENTRAL CIRCLE-II JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ASHRAY SARNA (LD. CA) RESPONDENT BY: SH. SANDEEP CHAUHAN (LD. CIT- DR) DATE OF HEARING: 29.08.2019 DATE OF PRONOUNCEMENT: 09.10.2019 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 21.03.2017 IMPUGNED PASSED BY THE LD. CIT(A)-5, LUDHIANA U/S 250(6) OF INCOME TAX ACT, 1961 (HEREINAF TER CALLED AS THE ACT) WHEREBY THE LD. CIT(A) PARTLY AFFIRMED TH E ASSESSMENT ORDER PASSED U/S 153(C)/143(3) OF THE I.T. ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT ON THE BASIS OF SEA RCH AND SEIZURE OPERATION U/S 132 OF THE ACT CARRIED OUT ON 5.1 2.2012, ITA N0.327/ASR/ 2017 (A. Y: 2012 -13 ) M/S BEST FILM CORPORATION VS. DCIT 2 STATUTORY NOTICES U/S 142(1) & 153A OF THE ACT WERE ISSUE D TO THE ASSESSEE, IN PURSUANCE TO WHICH THE ASSESSEE HAD FILED ITS RETU RN OF INCOME DECLARING NET INCOME OF RS.11,33,290/- VIDE ITR DATED 19.02.2015 WHICH WAS SUBSEQUENTLY REVISED ON DATED 07.03 .2015 BY DECLARING THE RETURNED INCOME OF RS.24,73,790/- WHICH W AS PROCESSED BY THE ASSESSING OFFICER AND THE ASSESSING OFFICER FRAMED THE ASSESSMENT BY DETERMINING THE INCOME OF THE ASSESSEE AT RS.82,43,678/- AGAINST THE RETURNED INCOME OF RS.24,73, 791/- AND CONSEQUENTLY, MADE AN ADDITION OF RS.57,69,887/- I.E. RS.37,27,522/- QUA DIFFERENCE BETWEEN THE MINIMUM GUA RANTEE OF OVERSEAS THEATRICAL RIGHTS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AS PER AGREEMENT FOUND DURING THE COURSE OF SEAR CH AND RS.20,42,365/- QUA DISALLOWANCE OF EXPENSES CLAIMED BY TH E ASSESSEE ON ADHOC AND ESTIMATION BASIS. THE ASSESSEE CHALLENGED THE SAID ADDITIONS BEFORE THE LD. CIT(A) WHO VIDE ITS ORDER D ATED 21.03.2017 THOUGH SUSTAINED THE ADDITION OF RS.37,27,522/- ON ACCO UNT OF DIFFERENCE BETWEEN THE MINIMUM GUARANTEE OF OVERSEAS T HEATRICAL RIGHTS AS MENTIONED IN THE AGREEMENT FOUND DURING TH E COURSE OF SEARCH, HOWEVER, DELETED THE ADDITION OF RS.20,42,365/ - ON ACCOUNT OF DISALLOWANCE OF EXPENSES CLAIMED BY THE ASSESSEE ON ADHOC AND ESTIMATION BASIS. 3. THE ASSESSEE, BEING AGGRIEVED AGAINST THE AFFIRMATION O F ADDITION OF RS.37,27,522/- STATED ABOVE, PREFERRED TH E INSTANT APPEAL ON THE FOLLOWING GROUNDS. 1. THAT THE ORDER PASSED BY THE WORTHY CIT(A), LUDHIAN A DATED 21.03.2017, IS AGAINST THE LAW AND FACTS OF THI S CASE. 2A). THAT THE WORTHY CIT(A), LUDHIANA WAS ERRED IN LAW AND FACTS IN UPHOLDING THE ADDITION OF RS.37,27,522/- IGNORING T HE FACT THAT ASSESSEE RECEIVED ONLY RS.70,72,478/- AGAINST THE M INIMUM ITA N0.327/ASR/ 2017 (A. Y: 2012 -13 ) M/S BEST FILM CORPORATION VS. DCIT 3 GUARANTEE OF RS.1,08,00,000/- AS MENTIONED IN THE A GREEMENT FOUND DURING THE SEARCH. 2B). THAT THE WORTHY CIT(A), LUDHIANA ERRED IN LAW AND FACTS IN UPHOLDING ADDITION OF RS.37,27,522/- BY RELYING UPO N THE AGREEMENT FOUND & SEIZED DURING SEARCH WITHOUT ANY CORROBORATIVE MATERIAL WHICH PROVES THAT ASSESSEE R ECEIVED THE CONSIDERATION MORE THAN THAT DECLARED IN RETURN OF INCOME. 4. HAVING HEARD THE PARTIES AT LENGTH AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD . THE ASSESSEE IS AGGRIEVED AGAINST THE ADDITION OF RS.37,27,522/- MADE BY THE ASSESSING OFFICER QUA SUPPRESSION OF RECEIPTS IN THIS CASE. AN AGREEMENT (MOU) WAS EXECUTED BE TWEEN M/S DREAM WORLD ENTERTAINMENT AND THE ASSESSEE QUA OVERSEAS THEATRICAL RIGHTS FOR OVERSEAS TERRITORIES (EXCEPT UK) FOR THE MOV IE DHARTI BY VIRTUE OF WHICH THE ASSESSEE WAS SUPPOSED TO GET TOTAL CONSID ERATION AMOUNT OF AUSTRALIAN DOLLARS RS.2,40,000/- AT A MINIMU M RATE OF 45 PER DOLLAR THEREBY TOTALING TO RS.1,08,00,000/-. THE ASSESSEE CLAIMED DURING THE ASSESSMENT PROCEEDINGS THAT PICTURE WAS FLOP A ND COLLECTION OF THE FILM WAS NOT UP TO THE SATISFACTION OF THE DISTRIBUTOR SO DISTRIBUTOR PAID ONLY RS.70,72,478.06 ONLY AND DEDU CTED THE BALANCE AMOUNT AS REBATE AND DISCOUNT. FURTHER THE MONE Y RECEIVED FROM SALE OF OVERSEAS THEORETICAL RIGHTS FOR OVERSEAS TERR ITORIES AMOUNTING TO RS.47,97,116/- AND RS.22,76,362.06 WAS CRE DITED IN THE RESPECTIVE ACCOUNTS OF THE RESPECTIVE PERSONS. THE ASSESSEE ALSO SUBMITTED THE CONFIRMATION IN THE SHAPE OF E-MAIL RECEI VED FROM THE SECOND PARTY OF THE MOU I.E. M/S DREAM WORLD ENTERTAIN MENT. BOTH THE AUTHORITIES BELOW OBSERVED THAT AS PER AGREEMENT T HE ASSESSEE WAS SUPPOSED TO GET MINIMUM GUARANTEED AMOUNT OF RS.1,08,00,000/- (INDIAN RUPEES) AND FULL AMOUNT TO B E PAID BY 15 TH APRIL, 2011 AND MODE OF PAYMENT HAS NOT BEEN PRESCRIBE D IN THE MOU ITA N0.327/ASR/ 2017 (A. Y: 2012 -13 ) M/S BEST FILM CORPORATION VS. DCIT 4 AND IN THE MOU IT IS NOWHERE MENTIONED THAT IN CASE OF LOSS, THE MINIMUM GUARANTEE AMOUNT WOULD BE REDUCED. WITH REGA RD TO THE CONFIRMATION THROUGH E-MAIL BY THE SECOND PARTY, IT WA S OBSERVED BY THE AUTHORITIES BELOW THAT E-MAIL CONFIRMATION FROM T HE DISTRIBUTORS/SECOND PARTY IS A SELF SERVING DOCUMENT HAVIN G NO EVIDENTIARY VALUE. THE ASSESSEE CLAIMED BEFORE US THAT THOUGH AS PER AGREEME NT THE MINIMUM GUARANTEE AMOUNT HAS BEEN PRESCRIBED, HOWE VER AS THE PICTURE WAS FLOP AND COLLECTION OF THE FILM WAS NOT UPTO THE SATISFACTION OF THE DISTRIBUTOR/SECOND PARTY, THEREFORE, SECOND PARTY PAID ONLY RS.70,72,478.06/- AND DEDUCTED THE BALANCE A MOUNT AS REBATE AND DISCOUNT AS PER MUTUAL UNDERSTANDING. WE HAV E ANALYZED THE ORDERS PASSED BY THE AUTHORITIES BELOW SPECIFICALLY T HE IMPUGNED HEREIN, THE LD. CIT(A) HAS OBSERVED THAT IN THE AGRE EMENT THE MODE OF PAYMENT HAS NOT BEEN MENTIONED AND THEREFORE THER E WAS NO BAR OF PAYMENT OF CASH OR ANY OTHER MODE IF THE AMOUNT WA S RECEIVED THROUGH ANY OTHER MODE, IT WAS NOT NECESSARY THAT THE E VIDENCE REGARDING THE SAME WOULD BE FOUND DURING THE SEARCH. T HE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE COULD HAVE RECEIVED THE PAYMENT OVERSEAS AND UTILIZED IT THEN AND THERE OR IT MAY HAV E RECEIVED PAYMENT IN SOME OTHER ACCOUNT WHICH DID NOT COME TO THE KNOWLEDGE OF THE DEPARTMENT AT THE TIME OF SEARCH. FURTHER THE POINT REGARDING THE CLAIM OF REBATE AND LOSS IS ALSO NOT FOUND ACCEPTABLE SINCE THE ASSESSEE HAS NOT SHOWN, FIRSTLY THE TOTAL BOX OFFICE COLLECTI ON FROM THE EXHIBITION OF THE FILM OVERSEAS AND SECONDLY NO PROOF/ DOCUMENT HAS BEEN FILED TO SHOW THAT IT HAD MADE THE LEGAL CLAIM S AGAINST THE DISTRIBUTOR FOR RECOVERY OF THE PENDING AMOUNT AND T HE ENFORCEMENT OF THE MOU DATED 3 RD FEB., 2011. THE LD. CIT(A) FURTHER OBSERVED THAT ITA N0.327/ASR/ 2017 (A. Y: 2012 -13 ) M/S BEST FILM CORPORATION VS. DCIT 5 THE RECEIPTS FROM THE FILM HAVE TO BE TAKEN AT LEAST TO THE EXTENT OF MINIMUM GUARANTEE AMOUNT ASSUMING THAT THERE WAS NO OV ERFLOW PROFIT WHICH WAS TO BE SHARED IN THE RATIO OF 60:40. IN OUR CONSIDERED VIEW, THE OBSERVATION OF THE LD. CIT(A) BASED ON NO DOCUMENTS OR MATERIAL, AS THE ASSESSEE HAS CLAIM ED THAT THE PARTIES TO THE AGREEMENT HAVE MUTUALLY AGREED FO R RECEIVING THE AMOUNT LOWER THAN THE MINIMUM GUARANTEE AMOUNT AND THEREFORE, QUESTION OF FILING ANY LEGAL CLAIM AGAINST THE DISTRI BUTOR FOR RECOVERY OF THE REMAINING AMOUNT RS.37,27,522/- DOES NOT ARISE. BO TH THE AUTHORITIES BELOW SIDELINED THE E-MAIL CONFIRMATION FR OM THE SECOND PARTY AND HELD THAT THE SAID CONFIRMATION HAS NO EVIDE NTIARY VALUE AS IT IS ONLY A SELF SERVING DOCUMENT. IN OUR VIEW, THE CON FIRMATION FROM THE SECOND PARTY WAS THE BEST SOURCE TO FIND OUT THE EXA CT FIGURE WHICH THE ASSESSEE HAS RECEIVED AND WHICH IN THE INSTANT CASE THE SECOND PARTY HAS REPLIED BY THE SENDING EMAIL AND THERE IS NOTHING ON RECORD THAT THE ASSESSING OFFICER HAS EVER TRIED TO SUMMON THE SECOND PARTY IN ORDER TO CONFIRM THE VERACITY OF TRANSACT ION AND/OR E- MAIL. NO DOUBT LEGAL AGREEMENT HAS ITS OWN VALUE AND THE LEGAL ACTIONS DEPENDS UPON THE AGREEMENT/MOU, HOWEVER, THERE IS NO BAR TO SIDE LINE AND/OR AMEND AND/OR NOVATION OF AGREEME NT BY WAY OF WRITTEN OR OTHERWISE ORALLY FOR REACHING TO THE JUST CO NCLUSION OF THE ULTIMATE OBJECT(S) OF THE AGREEMENT, WHICH IN THE INST ANT CASE APPEARS TO BE HELD ORALLY. EVEN THERE IS NOTHING ON R ECORD TO SUGGEST THAT THE ASSESSEE HAS RECEIVED ANY OTHER AMOUNT EXCEPT RS.70,72,478/- OUT OF RS.1,08,00,000/- AND THEREFORE, WE ARE UNABLE TO FIND ANY SUBSTANTIVE MATERIAL TO SUSTAIN THE ADDITIO N OF RS.37,27,522/-, CONSEQUENTLY THE ADDITION UNDER CHALLE NGE IS LIABLE TO BE DELETED, HENCE STANDS DELETED. ITA N0.327/ASR/ 2017 (A. Y: 2012 -13 ) M/S BEST FILM CORPORATION VS. DCIT 6 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/1 0/2019. SD/- SD/- (B.R.BASKARAN) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JU DICIAL MEMBER DATED:09/10/2019. /PK/ PS. COPY FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THEN CIT(APPEALS) 5. SR DR, I.T.A.T. AMRITSAR 6. GUARD FILE TRUE COPY BY ORDER