DCIT 10(1), MUMBAI V. RELIANCE BIG BROADCASTING P.LTD, MUMBAI

ITA 3530/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0636 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Business expenditure; Revenue expenditure; Capital expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , , , BEFORE SHRI B.R. BASKARAN , ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL ME MBER . / ITA NO . 3530 / MUM./ 2013 ( / ASSESSMENT YEAR : 2009 10 ) DY. COMMISSIONER OF INCOME TAX 10(1) ROOM NO.455, 4 TH FLOOR, AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. / APPELLANT V/S M/S. RELIANCE BIG BROADCASTING PVT. LTD. 3 RD FLOOR, RELIANCE ENERGY CENTRE SANTACRUZ (E), MUMBAI 400 055 PAN AAFCA8981N .... / RESPONDENT / REVENUE BY : SHRI LOVE KUMAR / ASSESSEE BY : S HRI JITENDRA SANGHVI / DATE OF HEARING 11.03.2015 / DATE OF ORDER 27.05.2015 / ORDER , / PER SANJAY GARG , J UDICIAL MEMBER TH E PRESENT APPEAL PREFERRED BY THE REVENUE IS DI RECTED AGAINST THE IMPUGNED ORDER DATED 6 TH FEBRUARY 2013, PASSED BY THE LEARNED COMMISSIONER (APPEALS) - 2 1 , MUMBAI, FOR THE ASSESSMENT YEAR 20 09 10 . M/S. RELIANCE BIG BROADCASTING PVT. LTD. 2 2. THE SOLE ISSUE RAISED IN THIS APPEAL BY THE REVENUE IS REGARDING THE ACTION OF THE LEARNED CIT(A) IN DELE TING THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADVANCES WRITTEN OFF OF ` 1,36,55,880, WHICH HAS BEEN TREATED BY THE ASSESSING OFFICER AS CAPITAL EXPENDITURE AS AGAINST THE CLAIM OF THE ASSESSEE THAT THE SAME BEING REVENUE EXPENDITURE. 3. THE ASSESSEE COMPANY HAS BEEN ENGAGED IN BROADCASTING T.V. CHANNELS IN ENGLISH AND HINDI AS WELL AS IN REGIONAL LANGUAGES ALONG WITH THE ACQUISITION AND SELLING OF MOVIE RIGHTS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD ACQUIRED TELECAST RIGHTS OF ENGLISH MOVIES AND PAID ADVANCE OF ` 1,36,55,880 ON SIGNING THE CONTRACT. HOWEVER, THE ASSESSEE DID NOT PREFER TO PAY THE BALANCE AMOUNT AS BUSINESS PROSPECTS OF TELECASTING THOSE MOVIES WERE UNCERTAIN. THE ASSESSEE, THEREFORE, GOT FORFEITED THE ADVANCED AMOUNT PAID AND CLAIMED THE SAME AS BUSINESS EXPENDITURE. THE ASSESSING OFFICER, HOWEVER, TREATED THE SAME AS CAPITAL EXPENDITURE. 4. THE LEARNED CIT(A), IN VIEW OF HIS FINDINGS GIVEN IN THE IMPUGNED ORDER, DIRECTED THE ASSESSING OFFICER TO TREAT THE SAID E XPENDITURE AS REVENUE IN NATURE. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE DEPARTMENT IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS. THE LEARNED A.R. OF THE ASSESSEE HAS STATED THAT THE MOVIES TELECASTING RIGHTS WERE TO BE M/S. RELIANCE BIG BROADCASTING PVT. LTD. 3 ACQUIRED FOR A PERIOD OF 1 2 YEARS. THE ASSESSEE WAS SUPPOSED TO EARN INCOME FROM ADVERTISEMENTS DURING THE TELECAST OF MOVIES. SINCE IT WAS OBSERVED THAT THAT THERE WAS NO PROFIT PROSPECTS IN THE TELECAST OF ABOVESTATED ENGLISH MOVIES, HENCE IT WAS DECIDED NOT TO PURCHASE THESE ENGLISH MOVIES AND THE ADVANCED AMOUNT WAS WRITTEN OFF. IT WAS A PRUDENT BUSINESS DECISION TAKEN DURING THE COURSE OF BUSINESS. ADMITTEDLY, THE TELECAST RIGHT OF THE MOVIES TO BE PURCHASED WERE FOR A SHORT PERIOD OF 1 2 YEARS. THE MOVIES WE RE NEVER PURCHASED AND THE ADVANCED MONEY WAS FORFEITED. THE ASSESSEE HAD TAKEN A PRUDENT DECISION DURING THE COURSE OF BUSINESS FOR NOT PURCHASING THE RIGHTS AND AVOIDING FURTHER LOSS. IT WAS A BUSINESS DECISION AND THE LOSS WAS INCURRED BY THE ASSESSEE D URING THE COURSE OF BUSINESS. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) WHILE DIRECTING THE ASSESSING OFFICER TO TREAT THE SAID EXPENDITURE AS REVENUE IN NATURE. THUS, THIS GROUND IS DISMISSED. 6. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 27 .5. 15 SD/ - . . B.R. BASKARAN ACCOUNTANT MEMBER SD/ - SANJAY GARG JUDIC IAL MEMBER MUMBAI, DATED : 27 05 15 M/S. RELIANCE BIG BROADCASTING PVT. LTD. 4 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE ; (2) THE REVENUE; (3) THE CIT(A ) ; (4) THE CIT, MUMBAI CITY CONCERNED ; (5) THE DR, ITAT, MUMBAI ; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVA TE SECRETARY ASS ISTANT REGISTRAR ITAT, MUMBAI