ACIT-11(1), MUMBAI V. SHRI RAVINDER B. WALIA, MUMBAI

ITA 4365/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87840 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Revenue expenditure

Judgement Text

, , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI , , ! ' BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO.4365/MUM/2013 #$ #$ #$ #$ %$ %$ %$ %$ / ASSESSMENT YEAR: 2008-09 ACIT-11(1), ROOM NO.439, AAYKAR BHAVAN, M.K. MARG, MUMBAI-400020 VS. SHRI RAVINDER B. WALIA, 401, A.N. CHAMBERS, TURNER ROAD, BANDRA (W), MUMBAI-400050 ( ! / REVENUE) ( &'() /RESPONDENT) P.A. NUMBER : AAJPW9207C ! * ** * + + + + /REVENUE BY : SHRI AKHILENDRA YADAV &'() * ** * + + + + /RESPONDENT BY NONE # * , / DATE OF HEARING : 29/12/2014 -.% * , / DATE OF PRONOUNCEMENT : 01/01/2015 O R D E R PER JOGINDER SINGH, JM: THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 28/03/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 2 SHRI RAVINDER B. WALIA, . I. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING THE COST OF RS.3,38,58,888/- TOWARDS ABANDON ED FILM BY RELYING ON THE RATIO OF THE BOMBAY HIGH COU RT IN THE CASE OF SH. RAJESH KHANNA, THEREBY IGNORING THE FACT THAT THE DEPARTMENT HAS FILED A REVIEW PETITION AGAINST T HE SAID DECISION. II. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. AT THE TIME OF HEARING, SHRI AKHILENDRA YADAV, LD. COUNSEL FOR THE REVENUE DEFENDED THE CONCLUSION ARRIVED AT IN T HE ASSESSMENT ORDER BY SUBMITTING THAT THE LD. COMMISSIONER OF IN COME TAX (APPEALS) GRANTED RELIEF TO THE ASSESSEE WITHOUT AS SIGNING ANY VALID REASON AND THE OBSERVATION MADE IN THE ASSESSMENT O RDER WAS IGNORED. 2.1. ON THE OTHER HAND, NOBODY APPEARED FOR THE ASS ESSEE IN SPITE OF ISSUANCE OF NOTICE, THEREFORE, WE HAVE NO OPTION BUT TO PROCEED EX-PARTY QUA THE ASSESSEE AND PROCEED TO DISPOSE OF THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 2.2. WE HAVE CONSIDERED THE SUBMISSIONS PUT FORTH B Y THE LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFOR E COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RE LEVANT PORTION FROM THE IMPUGNED ORDER:- 3 SHRI RAVINDER B. WALIA, . I HAVE CONSIDERED THE FACTS AND FIND THAT THE APPEL LANT IS FILM PRODUCER, THE FILM IS TO BE TREATED AS STOC K-IN- TRADE, AND HENCE COST OF ABANDONED FILM IS WRITTEN OFF AS REVENUE EXPENDITURE. THE ASSESSING OFFICER HAS PROPOSED DISALLOWANCE ON THE GROUND THAT EXPENDITUR E IS CAPITAL IN NATURE. HOWEVER, THE APPELLANT HAS T REATED THE FILM PRODUCTION AS STOCK IN TRADE. THE FILM HA S BEEN ABANDONED, THEREFORE, THE EXPENDITURE IS ALLOWABLE AS DEDUCTION IN THE LIGHT OF DECISION IN THE CASE OF M R. RAJESH KHANNA VS ACIT CIR 1(6) (ITA NO.4804/BOM/2000) (ASSESSMENT YEAR 1992-93) D- BENCH MUMBAI DATED 17/01/2003 AS WELL AS IN THE CASE OF ACIT 11(1) VS J RADICAL ENTERTAINMENT (I) P VT. LTD. (ITA NO.4550/M/2004 ASSESSMENT YEAR 1998-99) DATED 31/01/2007 AND ACIT VS DREAM MERCHANTS ENTERPRISE (ITA NO.3243 AND 3245/MUM/2009 (ASSESSMENT YEAR 2006-07 & 2004-05) DATED 09/02/2010 AND ACIT VS RAJIV TOLANI (ITA NO.2522/MUM/2010 ASSESSMENT YEAR 2007-08) DATED 27/04/2011 WHEREIN FOLLOWING THE RATIO OF DECISION IN THE CASE OF MR. RAJESH KHANNA AND ABOVE DECISION, DISALLOWANCE MADE ON ACCOUNT OF COST OF ABANDONED FILM WERE DELETED. FURTHER THE DECISION IN THE CAS E OF RAJESH KHANNA IS ALSO AFFIRMED BY BOMBAY HIGH COURT IN THE CASE OF CIT VS RAJESH KHANNA (ITA NO.3875 OF 2010) DECIDED ON 19/09/2011. THE SAID DECISION HAS 4 SHRI RAVINDER B. WALIA, . BEEN FOLLOWED IN THE CASE OF VENUS RECORDS AND TAPE S PVT. LTD. VS ACIT (ITA NO.666/MUM/2010) DATED 07/09/2012. IN THE LIGHT OF ABOVE FACTS, THE ISSUE SQUARELY COVERED IN FAVOUR OF THE APPELLANT BY THE AFORESAID DECISION OF HONBLE TRIBUNAL. THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS, THE DISALLOWANCE CANNOT BE MADE ON ACCOUNT OF COST OF ABANDONED FILM; HENCE NO ADDITION IS BEING MADE ON THIS ACCOUNT. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDE R, CONCLUSION DRAWN IN THE IMPUGNED ORDER, ASSERTIONS MADE BY LD . DR AND THE MATERIAL AVAILABLE ON RECORD, IF KEPT IN JUXTAP OSITION AND ANALYZED, WE NOTE THAT THE ASSESSEE IS IN THE BUSIN ESS OF FILM PRODUCTION, CLAIMED RS.3,38,58,888/- AS ALLOWABLE D EDUCTION ON THE PROJECT FAUZ MEIN MAUZ AS THERE WAS NO TAKER OF THE FILM, CONSEQUENTLY, THE ASSESSEE ABANDONED THE SAME AND D EBITED THE EXPENDITURE SO INCURRED ON THE PRODUCTION OF THE SA ME AS WORK IN PROGRESS AND ROUTED THE SAME IN ITS PROFIT & LOS S ACCOUNT. THE LD. ASSESSING OFFICER OPINED THAT THE EXPENDITURE C LAIMED TO BE NATURE IN STOCK IN TRADE IS NOT A CAPITAL EXPENDITU RE. THE ASSESSEE PLACE RELIANCE UPON THE DECISION FROM HON BLE BOMBAY HIGH COURT IN THE CASE OF RAJESH KHANNA (ITA NO.387 5/2010). THE STAND OF THE ASSESSEE RIGHT FROM ASSESSMENT STA GE IS THAT THE FILM WAS TREATED AS STOCK IN TRADE, HENCE THE COST OF ABANDONED FILM IS WRITTEN OFF AS REVENUE EXPENDITURE. WE NOT E THAT THE LD. 5 SHRI RAVINDER B. WALIA, . COMMISSIONER OF INCOME TAX (APPEALS), IDENTICALLY, PLACE RELIANCE UPON VARIOUS JUDICIAL PRONOUNCEMENTS FROM THE TRIBU NAL AND ALSO FROM HONBLE JURISDICTIONAL HIGH COURT. IN TH E CASE OF RAJESH KHANNA ALSO DISALLOWANCE WAS MADE ON ACCOUNT OF COST OF ABANDONED FILM. HOWEVER, THE HONBLE BOMBAY HIGH CO URT AFFIRMED THE DECISION OF THE TRIBUNAL AND THAT DECI SION WAS ALSO FOLLOWED IN THE CASE OF VENUS RECORDS & TAPES PVT. LTD. (ITA NO.666/MUM/2010) ORDER DATED 07/09/2012. NO CONTRA RY FACTS/DECISION WAS BROUGHT TO OUR NOTICE BY THE REV ENUE, THEREFORE, WE FIND NO INFIRMITY IN THE CONCLUSION D RAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). IT IS AFFIRM ED LEADING TO DISMISSAL OF APPEAL OF THE REVENUE. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 29/12/2014. SD/- SD/- (RAJENDRA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED - 01/01/2015 F{X~{T? P.S/. # . . / / / / * ** * &,0 &,0 &,0 &,0 10%, 10%, 10%, 10%, / COPY OF THE ORDER FORWARDED TO : 1. () / THE APPELLANT 2. &'() / THE RESPONDENT. 6 SHRI RAVINDER B. WALIA, . 3. 2 ( ) / THE CIT(A)- 4. 2 / CIT 5. 034 &,# , , / DR, ITAT, MUMBAI 6. 4$ 5 / GUARD FILE. /# /# /# /# / BY ORDER, '0, &, //TRUE COPY// 6 66 6 / 7 7 7 7 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI