The DCIT, Circle-3, Ahmedabad V. Shri Dilipkumar Tulsidas Thakkar, Ahmedabad

ITA 3568/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6243 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 21-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: B T THAKKAR
• Keywords: Unexplained investment; Cost of acquisition
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 3568/AHD/2015 (ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER, WARD- 1 (3) (1), AHMEDABAD V/S SHRI DILIPKUMAR TULSIDAS THAKKAR 2245, MAHURAT POLE, MANEKCHOWK, AHMEDABAD-380001 (APPELLANT) (RESPONDENT) PAN: ACSPT3110E APPELLANT BY : SMT. SONIA KUMAR, SR. D.R. RESPONDENT BY : SHRI B. T. THAKKAR, A.R. ( )/ ORDER DATE OF HEARING : 17 -01-201 8 DATE OF PRONOUNCEMENT : 19 -01-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-10, AHMEDABAD DATED 06.10.2015 PERTAINING TO A.Y. 2008- 09. ITA NO. 3568 /AHD/2015 . A.Y. 2008-09 2 2. THE SUBSTANTIVE GRIEVANCE OF THE REVENUE READS AS U NDER: GROUND NO. 1: THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FAC TS IN DELETING THE ADDITION OF RS. 7,17,653ON PRESUMPTION BASIS, WITHO UT APPRECIATING THE FACT THAT AS PER AGREEMENT ASSESSEE IS ENTITLED FOR COMMISSIO N EVEN IF THE COLLECTION IS BELOW MINIMUM GUARANTEE AMOUNT. GROUND NO. 2: THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION MADE BY AO U/S 69 OF RS. 82,00,000/- OF IT. ACT, WITHOUT APPRECIATING THE FACTS THAT THE CONDITION LAID DOWN U/S 69 IS NOT SATISFIED. GROUND NO. 3: THAT THE ORDER OF LD. CIT(A) BEING ERRONEOUS ON LAW AND FACTS LIABLE TO BE REVERSED AND THAT THE ORDER OF AO IS T O BE RESTORED 3. REPRESENTATIVES OF BOTH SIDES WERE HEARD AT LENGTH. HAVING HEARD THE RIVAL CONTENTIONS, WE HAVE CAREFULLY PERUSED THE ORDERS O F THE AUTHORITIES BELOW. WE HAVE CAREFULLY CONSIDERED THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF A PAPER BOOK IN THE LIGHT OF RULE 18(6) OF THE ITAT RULES. 4. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS ENGAGED IN THE BUSINESS OF FILM DISTRIBUTION. DURING THE YEAR UNDE R CONSIDERATION, THE ASSESSEE ENTERED INTO A CONTRACT WITH M/S. RUPALEE ENTERTAI NMENT FOR THE EXHIBITION OF KYA LOVE STORY HAI FOR WHICH MINIMUM GUARANTEE FE E WAS PAID AT RS. 48.50 LACS. THE A.O. NOTICED THAT THE ASSESSEE HAS SHOWN GROSS COLLECTION OF RS. 35,88,266/-. THE A.O. WAS OF THE OPINION THAT AS PE R THE TERMS OF THE AGREEMENT, THE PRODUCER IS LIABLE TO PAY 20% OF GRO SS COLLECTION AS COMMISSION UP TO MINIMUM GUARANTEE PAYMENT. THE A.O . WAS OF THE FIRM BELIEF THAT THE ASSESSEE SHOULD HAVE GOT THE COMMIS SION OF RS. 717653/- ON GROSS COLLECTION OF RS. 35,38,266/-. THE A.O. FOUND THAT THE ASSESSEE HAS SHOWN LOSS OF RS. 12,62,483/- INSTEAD OF INCOME OF RS. 717653/-. THE A.O. ACCORDINGLY ADDED THE AMOUNT OF RS. 717653/-. ITA NO. 3568 /AHD/2015 . A.Y. 2008-09 3 5. WE FIND THAT THE A.O. HAS GROSSLY ERRED IN NOT UNDE RSTANDING THE LINE OF BUSINESS OF THE ASSESSEE QUA THE AGREEMENT WITH M/S . RUPALEE ENTERTAINMENT. THE AGREEMENT WAS THAT THE ASSESSEE SHALL PAY RS. 4 8.50 LACS TO GET THE RIGHTS OF EXHIBITING FILM KYA LOVE STORY HAI. IT WAS AGREED THAT IF THE FILM COLLECTS MORE THAN THE MINIMUM GUARANTEE OF 48.50 LACS, THE ASSESSEE SHALL RECEIVE 20% OF COMMISSION UP TO MINIMUM GUARANTEE AMOUNT AND IF THE MOVIE GROSSES MORE THAN THAT RUPALEE ENTERTAINMENT AND THE ASSESS EE SHALL SHARE THE PROFIT IN THE RATIO OF 65% : 35%. 6. WHAT THE A.O. MISSED IN UNDERSTANDING IS THAT THE F ILM COLLECTED ONLY RS. 3588266/- WHICH WAS LESS THAN THE MINIMUM GUARANTEE PAYMENT OF RS.48.50 LACS. WHICH MEANS THAT THE ASSESSEE HAS ACTUALLY IN CURRED A LOSS OF RS. 12.61 LACS ON THIS MOVIE. IN OUR UNDERSTANDING OF THE FACTS, T HE A.O. HAS WRONGLY INTERPRETED THE FACTS AND MADE THE ADDITION AND THE FIRST APPELLATE AUTHORITY GAVE THE RELIEF TO THE ASSESSEE AFTER PROPERLY APPR ECIATING THE FACTS IN THEIR TRUE PERSPECTIVE. THEREFORE, NO INTERFERENCE IS CALLED F OR. GROUND NO. 1 IS DISMISSED. 7. PROCEEDING FURTHER, THE A.O. NOTICED THAT THE ASSES SEE HAS ENTERED INTO AGREEMENT WITH VIP MOVIES ONE TWO THREE FOR A CON SIDERATION OF RS. 92 LACS. HOWEVER, THE A.O. NOTICED THAT THERE IS NO SU CH CLOSING STOCK SHOWN IN THE BALANCE SHEET OF THE ASSESSEE AND ON VERIFICATI ON OF THE PROFIT AND LOSS ACCOUNT, THE A.O. FOUND THAT AMOUNT OF RS. 92 LACS HAS ALSO NOT CHARGED TO EXPENDITURE ACCOUNT. THE A.O. WAS OF THE OPINION T HAT SINCE THE ASSESSEE HIMSELF HAS ADMITTED OF HAVING PAID RS. 82 LACS AND FINDING THAT THE SOURCE OF THE SAME IS NOT REFLECTED IN THE BOOKS OF ACCOUNTS. THE A.O. MADE THE ADDITION OF RS. 82 LACS AS UNEXPLAINED INVESTMENT IN FILM DI STRIBUTION OF ONE TWO THREE. ITA NO. 3568 /AHD/2015 . A.Y. 2008-09 4 8. WE FIND THAT ONCE AGAIN, THE A.O. HAS MISCONSTRUED THE FACTS. THE TRUE FACT IS THAT THE MOVIE DISTRIBUTION RIGHTS WERE PURCHASED I N F.Y. 2007-08 AND THE SAME CAN BE SEEN FROM THE FOLLOWING FILM-WISE PROFIT AND LOSS ACCOUNT:- D. T.ENTERPRISE. SOLE PROPRIETOR-THAKKAR DILIPKUMAR TULSIDAS. 2245, MAHURAT POLE, MANEKCHOWK AHMEDABAD P.A/C.NO:- ACSPT3100E A/C.YEAR : -1/4/2007 TO31/3/2008 WARD 3(2) ASSE.YEAR.2008-2009. FILM WISE PROFIT & LOSS ACCOUNT GUJARAT NO NATH A/C TO PURCHASE COST TO PROFIT TRANSFER P& L A/C. 50000.00 207500.00 BY COLLECTION 257500.00 TOTAL 257500.00 TOTAL 257500.00 ROCKY A/C. TO PURCHASE COST TO PROFIT TRANSF/ER P& L A/C. 2000.00 BY COLLECTION 2000.00 TOTAL 2000.00 TOTAL 2000.00 BIGBROTHER A/C TO PURCHASE COST TO PROFIT TRANSFER P& L A/C. 50000.00 200000.00 BY COLLECTION 250000.00 TOTAL 250000.00 TOTAL 250000.00 SARKAR A/C. TO PROFIT TRANSFER P& L A/C. 2500.00 BY COLLECTION 2500.00 TOTAL 2500.00 TOTAL 2500.00 ITA NO. 3568 /AHD/2015 . A.Y. 2008-09 5 KYA LOVE STORY A/C. TO PURCHASE COST TO PUBLICT EXP 4850000.00 750.00 BY COLLECTION BY LOSS TRF TO PROFIT & LOSS 3588266.19 1262483.81 TOTAL 4850750.00 TOTAL 4850750.00 TRAFFIC SIGNAL /AC. TO B/F REALISITION 112001.98 BY COLLECTION BY LOSS TRF TO PROFIT & LOSS 1250.00 110751.98 TOTAL 112001.98 TOTAL 112001.98 CHEETAH TO PURCHASE COST 200000.00 BY COLLECTION BY LOSS TRF TO PROFIT & LOSS 156500.00 43500.00 T OTAL 200000.00 TOTAL 200000.00 ONE TWO THREE A/C. TO PURCHASE COST . TO PRINT COST 9200000.00 0.00 [ BY CARRIED FOR.TO NEXT YEAR B/S 0.00 9200000.00 T OTAL 9200000.00 TOTAL 9200000.00 9. IF, WE SEE THE BALANCE SHEET AS ON 31.03.2008, THE CLOSING STOCK IS REFLECTED AT RS. 92 LACS IN RESPECT OF THE FILM ON ONE TWO THRE E. THE BALANCE SHEET IS AS UNDER:- D. T.ENTERPRISE. SOLE PROPRIETOR-THAKKAR DILIPKUMAR TULSIDAS. 2245, MAHURAT POLE, MANEKCHOWK AHMEDABAD ITA NO. 3568 /AHD/2015 . A.Y. 2008-09 6 P.A/C.NO:- ACSPT3100E A/C.YEAR : -1/4/2007 TO31/3/2008 WARD 3(2) ASSE.YEAR.2008-2009. BALANCE SHEET AS ON 31/03/2008. LIABILITY AMOUNT ASSETS AMOUNT CAPITAL A/C. DEBTORS.(CONSIDERED GOOD) THAKKAR DEL1PKUMAR TULIDAS 2250088.53 ADVANCES. NIL BOOKING ADVANCE FROM CUSTOMERS KA RUNANIDI K. GOSWAMI CLOSING STOCK AT COST 50000.00 AS PER SCHEDULE ' A ' 7057958.97 ONE TWO THREE- FILM CASH & BANK BALANCES . 9200000.00 CASH ON HAND STATE BANK OF PATIALA 15561.20 42486.30 TOTAL 9308047.50 TOTAL 9308047.50 SIGNIFICANT ACCOUNTING POLICIES & NOTES ON ACCOUNTS - SCHEDULE 'E AS PER OUR REPORT OF EVEN DATE FOR D.T.ENTERPRISE FOR, KEYUR B. THAKKAM & CO. CHARTED ACCOUNTANTS. PROPRIETOR. PROPRIET OR. PLACE : AHMEDABAD. DATE:-12.09.2008 DATE : - 12/09/2008. 10. A PERUSAL OF THE AFORE-STATED FACTS SHOWS THAT THE INVESTMENT WAS MADE IN F.Y. 2007-08 AND IT IS VERY MUCH REFLECTED IN THE FINANC IAL STATEMENTS OF THE ASSESSEE. THEREFORE, THERE IS NO QUESTION OF ANY UNEXPLAINED INVESTMENT AND THE ADDITIONS MADE BY THE A.O. ARE UNCALLED FOR AND UNW ARRANTED ON THE GIVEN FACTS OF THE CASE. WE THEREFORE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 2 IS ALSO DISMISSED. ITA NO. 3568 /AHD/2015 . A.Y. 2008-09 7 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 19 - 01- 20 18 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 19/01/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD