ACIT 8(1), MUMBAI V. FUN MULTIPLEX P. LTD, MUMBAI

ITA 4379/MUM/2010

• Counselvise Citation: 437919914 RSA 2010
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 12-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBACHAN RAM
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Capital asset; Depreciation; Question of law; Non-deduction of tax; Scheme of amalgamation
• Section: 32

Judgement Text

ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 1 OF 18 IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 4460/MUM/2010 (ASSESSMENT YEAR: 2006-07) FUN MULTIPLEX PVT. LTD, 844/4 VS ACIT-8(1), ROOM NO. 439 SHAH INDL.ESTATE, OFF.NEW LINK AAYAKAR BHAVAN ROAD,OPP:LAXMI INDL.ESTATE M.K. MARG ANDHERI(W)MUMBAI 400053 MUMBAI 400020 PAN AAACF 9092 Q ( APPELLANT ) ( RESPONDENT ) ITA NO. 4379/MUM/2010 (ASSESSMENT YEAR: 2006-07) VS FUN MULTIPLEX PVT. LTD, 844/4 ACIT-8(1), ROOM NO. 439 AAYAKAR BHAVAN MK MARG MUMBAI 400020 SHAH INDL.ESTATE, OFF.NEW LINK, ROAD,OPP:LAXMI INDL.ESTATE, ANDHERI(W)MUMBAI 400053 PAN: AAACF 9092 Q (APPELLANT) (RESPONDENT) ASSESSEE BY: DR.K. SHIVARAM REVENUE BY: MR.SUBACHAN RAM, CIT DR DATE OF HEARING: 13/03/2012 DATE OF PRONOUNCEMENT: 30/03/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THESE ARE CROSS APPEALS BY ASSESSEE AND REVENUE AGA INST THE ORDERS OF THE CIT (A)-16, MUMBAI DATED 31/3/2010. T HE ASSESSEE RAISED THREE GROUNDS ON THE ISSUE OF DISALLOWANCE O F DEPRECIATION, OF ENTERTAINMENT TAX EXEMPTION AND ALSO QUESTIONING TH E JURISDICTION OF PASSING THE ORDER ON A NON-EXISTING COMPANY. THE REVENUE IN ITS APPEAL IS CONTESTING THE ISSUE OF PAYMENT OF COMPEN SATION DELETED BY THE CIT (A). ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 2 OF 18 2. WE HAVE HEARD THE LEARNED COUNSEL AND THE LEARNED DEPARTMENTAL REPRESENTATIVE IN DETAIL. THE ASSESSEE HAS FILED PAPER BOOK CONTAINING PAGES 1 TO 208 AND ALSO VARIOUS OTH ER DETAILS IN THE COURSE OF HEARING. 3. BRIEFLY STATED, THE ASSESSEE COMPANY WAS ORIGINALLY KNOWN AS E-CITY CINEMA RAJASTHAN PRIVATE LIMITED ENTERED I NTO A MEMORANDUM OF UNDERSTANDING FOR PURCHASE OF MULTIPL EX BUSINESS WITH M/S E-CITY ENTERTAINMENT (INDIA) PVT. LTD AND ACQUIRED THE SAID MULTIPLEX BUSINESS DURING THE YEAR. SUBSEQUENT LY, THE COMPANY NAME WAS CHANGED TO FUN MULTIPLEX (P) LTD A ND CONSEQUENT TO THE ORDERS OF HIGH COURT OF BOMBAY AN D DELHI, MERGED WITH E-CITY RETAIL INDIA (P) LTD W.E.F. 1.4. 2005, VIDE THE ORDERS DATED 28.05.2007 AND 5.1.2007. SUBSEQUENTLY, THE E-CITY RETAIL INDIA (P) LTD CHANGED ITS NAME TO FUN MULTIP LEX (P) LTD. THE APPEAL WAS FILED BY FUN MULTIPLEX (P) LTD (MERGED W ITH E-CITY RETAIL INDIA (P) LTD), WHEREAS IT WAS ADMITTED THAT PRESEN T COMPANYS NAME IS STILL FUN MULTIPLEX (P) LTD. 4. EVEN THOUGH THE ASSESSEE QUESTIONED PASSING OF THE ASSESSMENT ORDER ON NON EXISTING/DISSOLVED COMPANY IN GROUND NO.2, THIS GROUND WAS NOT PRESSED. THEREFORE, GROUN D NO.2 IS ACCORDINGLY DISMISSED AS WITHDRAWN. 5. ITA NO.4460/MUM/2010 : IN THIS ASSESSEE APPEAL GROUND NO.1 IS WITH REFERENCE TO DISALLOWANCE OF DEPRECIAT ION. THE GROUND IS AS UNDER: 1. DISALLOWANCE OF DEPRECIATION: I) THE LEARNED CIT (A) ERRED IN LAW AND FACTS IN UPHOLDING DISALLOWANCE OF 50% DEPRECIATION ON ASSETS ASSIGNED TO THE ASSESSEE W.E.F. 1.4.2005 VIDE ASSIGNMENT DEED DATED 14.11.2005 MADE IN PURSUANCE TO MOU DATED 1.4.2005 ON THE GROUND THAT ACTUAL OWNERSHIP OF ASSETS PASSED ON TO THE ASSESSEE ON 14.11.2005. THE REASONS GIVEN BY HIM FOR ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 3 OF 18 DOING SO ARE WRONG, CONTRARY TO THE FACTS OF THE CASE AND AGAINST THE PROVISIONS OF LAW. II) THE LEARNED CIT (A) FAILED TO APPRECIATE THE F ACT THAT THE ASSIGNMENT WAS EFFECTIVE W.E.F. 1.4.2005 AND ASSESSEE WAS OWNER OF THE ASSETS FROM THAT DATE AND PROFIT OF THE BUSINESS FROM 1.4.2005 IS OFFERED AND ASSESSED IN THE HANDS OF THE ASSESSEE AS ALSO THE ASSIGNOR WAS CONDUCTING THE MULTIPLEX BUSINESS ON BEHALF OF THE ASSESSEE AND ASSIGNOR HAS NOT CLAIMED DEPRECIATION FOR THE ASSESSMENT YEAR 2006-07 ON ASSETS ASSIGNED. III) WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CI T (A) OUGHT TO HAVE ALLOWED DEPRECIATION ON THE MULTIPLEX ASSETS FOR THE FULL YEAR AS THE ASSESSEE HAS BEEN CONSTRUCTIVE OWNER OF THE ASSETS W.E.F. 1.4.2005 AND THESE ASSETS ARE USED FOR THE BUSINESS OF THE ASSESSEE INCOME OF WHICH FOR THE FULL YEAR IS OFFERED TO TAX AND THE LEARNED ASSESSING OFFICER HAS ASSESSED ACCORDINGLY. 6. BRIEF FACTS PERTAINING TO THE ISSUE ARE THAT THE ER STWHILE E-CITY RAJASTHAN (P) LTD, ENTERED INTO A MOU FOR ACQUISITI ON OF MULTIPLEX BUSINESS FROM M/S E-CITY ENTERTAINMENT (P) LTD ON 1 .4.2005 ON SLUMP SALE BASIS. PENDING FORMALITIES OF TRANSFER A ND ASSIGNMENT BY WAY OF A DEED, THE BUSINESS WAS CARRIED ON BEHALF O F E-CITY RAJASTHAN (P) LTD BY M/S E-CITY ENTERTAINMENT (P) L TD. VIDE ASSIGNMENT DEED DATED 14.11.2005, THE ASSESSEE ACQU IRED THE ENTIRE BUSINESS W.E.F. 1.4.2005. THE ASSESSEE INCORPORATED THE ACCOUNTS OF MULTIPLEX BUSINESS FOR THE PERIOD 1.4.2005 TO 31.3. 2006 IN ITS FINANCIAL STATEMENTS AND OFFERED THE INCOME FROM MU LTIPLEX BUSINESS OF THE ENTIRE YEAR FOR TAXATION. HOWEVER, THE ASSESSING OFFICER WAS OF THE OPINION THAT SINCE THE ASSETS OF THE MULTIPLEX BUSINESS WERE ACQUIRED BY THE DEED DATED 14.11.2005 , THE ASSESSEE WAS NOT ENTITLED FOR DEPRECIATION OF THE WHOLE YEAR AND ACCORDINGLY HE ALLOWED ONLY 50% OF THE DEPRECIATION CLAIM THERE BY DISALLOWING AN AMOUNT OF ` .1,13,58,280/-. ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 4 OF 18 7. IT WAS THE ASSESSEES SUBMISSION THAT THE BUSINESS WAS CARRIED ON BY E-CITY ENTERTAINMENT (P) LTD FOR THE BENEFIT OF THE ASSESSEE COMPANY AND AFTER COMPLETION OF FORMALITIE S FOR ACQUIRING THE BUSINESS, THE ASSIGNMENT WAS COMPLETED ON 14.11 .2005 AND THE ACCOUNTS WERE ADOPTED FROM 1.4.2005 AS PER THE ORIG INAL MOU ENTERED W.E.F. 1.4.2005. SINCE E-CITY ENTERTAINMENT WAS CARRYING ON THE BUSINESS ON BEHALF OF THE ASSESSEE, THE ASSETS OWNED AND USED ARE TO BE CONSIDERED ASSETS OWNED AND USED BY THE A SSESSEE W.E.F. 1.4.2005. FURTHER, THE ENTIRE INCOME WAS OFFERED W. E.F. 1.4.2005 BY THE ASSESSEE AND IN SUPPORT ALSO FILED EVIDENCE THA T NO DEPRECIATION WAS CLAIMED BY E-CITY ENTERTAINMENT FOR THAT YEAR I N THEIR RETURN. THE ASSESSEE ALSO TOOK RELIANCE ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. ASSOCIATED CEMENT CO. LTD (1968) 68 ITR 478 (BOM.) AND PUNJAB & HARYANA HIGH COURT DECI SION IN THE CASE OF CIT VS. METALMAN AUTO PVT. LTD (2011) 336 I TR 434 (P&H). FURTHER RELIED ON THE PRINCIPLES LAID DOWN BY THE H ON'BLE SUPREME COURT IN THE CASE OF R.B. JODHA MAL KUTHIALA V. CIT (1971) 82 ITR 570 (SC), CIT VS. PODAR CEMENT PVT. LTD & OTHERS (1 997) 226 ITR 625 (SC) AND MYSORE MINERALS LTD., V. CIT (1999) 23 9 ITR 775 (SC). IT WAS SUBMITTED THAT THE ASSESSEE HAD BENEFICIAL O WNERSHIP FOR CLAIMING DEPRECIATION AND SINCE THE ASSETS WERE ULT IMATELY ACQUIRED BY WAY OF ASSIGNMENT DEED WHICH WAS NOT DISPUTED, D EPRECIATION FOR ENTIRE YEAR WAS ALLOWABLE. THE SAME SUBMISSIONS WER E REITERATED BEFORE THE CIT (A) WITHOUT MUCH SUCCESS. THE LEARNE D CIT (A) WAS OF THE OPINION THAT MACHINERY SHOULD BE ACTUALLY USED AND KEPT READY FOR USE IS NOT SUFFICIENT FOR CLAIMING DEPRECIATIO N AND FURTHER THE OWNERSHIP OF THE ASSETS IS MUST. FOLLOWING THE CASE S OF CIT VS. ABC INDIA LTD (1997) 94 TAXMAN 7 (GUH.), CIT VS. O.P.MO NGA (1986) 24 TAXMANN 56 (BOM.) AND CIT VS. BHARAT GOLD MINES LTD . (1991) 96 CTR (KAR) 188 (1991) 192 ITR 639 HE CAME TO A CONCL USION THAT THE ASSESSEE WAS NOT THE OWNER OF THE ASSETS BETWEEN 1. 4.2005 TO ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 5 OF 18 13.11.2005 AND ACCORDINGLY ASSESSING OFFICERS ACTI ON WAS CONFIRMED. 8. THE LEARNED COUNSEL REFERRING TO THE PAPER BOOK, PA RTICULARLY THE MOU ENTERED INTO BETWEEN E-CITY ENTERTAINMENT A ND THE ERSTWHILE E-CITY CINEMA RAJASTHAN SUBMITTED THAT TH E ENTIRE MULTIPLEX BUSINESS WAS INTENDED TO ACQUIRE AS A GOI NG CONCERN ON SLUMP SALE BASIS FOR CONSIDERATION OF ` .13.71 CRORES. IT WAS SUBMITTED THAT ASSESSING OFFICER DID NOT DISPUTE TH E MOU, NOR THE FACT THAT THE ASSESSEE HAD OFFERED THE ENTIRE INCOM E FROM 1.4.2005. REFERRING TO THE CLAUSE-6 OF THE MOU, IT WAS SUBMIT TED THAT BOTH THE PARTIES AGREED THAT THE INDENTING ASSIGNOR ( E-CITY ENTERTAINMENT) SHALL OPERATE AND MANAGE THE MULTIPLEX DIVISION, IN TRUST, FOR AND ON BEHALF OF THE INDENTING ASSIGNEE (ASSESSEE) FROM THE DATE HEAR OF ( IE.01-04-05) AND UNTIL THE FINAL COMPLETION OF TH E ASSIGNMENT AND TRANSFER. IN VIEW OF THE ABOVE, IT WAS SUBMITTED TH AT THE ASSESSEE HAD FINALIZED THE BALANCE SHEET OF ASSIGNOR AS ON 3 1.3.2004 WHICH TOOK SOME TIME AND ALSO OBTAINED ALL THE NECESSARY ASSIGNMENTS, AGREEMENTS, PERMISSION ETC AND ULTIMATELY THE ASSIG NMENT WAS COMPLETED ON 14.11.2005, THE FACT OF WHICH WAS ALSO NOT DISPUTED. SINCE THE ASSESSEES BUSINESS WAS RUN BY THE E-CITY ENTERTAINMENT, IN TRUST AND THE ASSIGNMENT WAS EFFECTIVE FROM 1.4. 2005, THE ASSESSEE IS DEEMED TO HAVE ACQUIRED THE ASSETS AND ACCORDINGLY DEPRECIATION WAS ALLOWABLE. HE RELIED ON THE PRINC IPLES LAID DOWN BY THE SUPREME COURT JUDGMENTS REFERRED TO SUPRA, MORE SO THE DECISION OF MYSORE MINERALS LTD. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE IN REPLY RE FERRED TO CLAUSE-6 TO SUBMIT THAT THE PROFITS AND LOSSES, IF ANY, ALONG WITH THE ASSETS AND LIABILITIES RELATING TO MULTIPLEX DIVISI ONS SHALL BE DEEMED TO BE THE PROFITS OF THE ASSESSEE AS PER THE CLAUSE AND REFERRED TO CLAUSE(B) TO SUBMIT THAT PROFITS BEING THE INCOME M INUS EXPENSES WITHOUT DEPRECIATION, THEREFORE, ASSESSEES CLAIM O F DEPRECIATION WAS ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 6 OF 18 NOT CORRECT. HE SUPPORTED THE ORDERS OF ASSESSING O FFICER AND FILED A DETAILED NOTE REGARDING SLUMP SALE AND PROVISIONS O F SECTION 2(42C) WHICH MEANS TRANSFER OF THE UNDERTAKING AS A RESULT OF SALE FOR A LUMP SUM CONSIDERATION TO WITHOUT VALUES BEING ASSI GNED TO INDIVIDUAL ASSETS AND LIABILITIES. IT WAS SUBMITTED THAT SINCE THE BUSINESS WAS ACQUIRED AS A GOING CONCERN AND BY ASS ESSEES OWN ADMISSION THE DEED OF THE ASSIGNMENT WAS DATED 14.1 1.2005, THERE IS NO REASON TO PRESUME THAT THE CONCERN WAS TRANSF ERRED ON 1.4.2005. HE FURTHER RELIED THAT THE MULTIPLEX DIVI SION WAS CARRIED ON, FOR AND ON BEHALF OF THE ASSIGNEES WHICH MEANS THE MULTIPLEX DIVISION HAS NOT BEEN TRANSFERRED TO ASSESSEE ON 1. 4.2005. SINCE THERE IS NO TRANSFER AS ON 1.4.2005, THE ASSESSEE C ANNOT BE HELD TO BE THE OWNER OF THE ASSETS. HE RELIED ON THE CASE L AW RELIED UPON BY THE CIT (A) IN HIS ORDER AND FURTHER IT WAS SUBMITT ED THAT FOR TRANSFER OF INTEREST/ SALE OF MOVABLE PROPERTIES, A REGISTERED DOCUMENT WAS NECESSARY TO GIVE EFFECT TO THE SALE A ND THE SALE WILL TOOK EFFECT ONLY W.E.F. THE DATE OF EXECUTION OF TH E DOCUMENTS AND SINCE THE DOCUMENT WAS EXECUTED ON 14.11.2005, THE ASSESSING OFFICER WAS CORRECT IN ALLOWING DEPRECIATION FROM T HAT DATE. HE ALSO RELIED ON THE CASE OF CIT VS. ABC INDIA LTD (1997) 94 TAXMAN 7(GAU.) AND FURTHER THE DECISION OF THE MADRAS HIGH COURT IN TAMILNADU CIVIL SUPPLIES CORPORATION V. CIT (1998) 96 TAXMAN 463 (MAD.). IT WAS FURTHER CONTENDED THAT THE ARGUMENTS OF THE ASSESSEE THAT THE INCOME WAS SHOWN FOR THE ENTIRE YEAR WAS N OT RELEVANT AS ASSESSEE WAS BENEFICIAL OWNER OF THE INCOME ONLY AN D NOT OWNER OF THE ASSETS AND THERE CANNOT BE ANY PRESUMPTION OF O WNERSHIP OF ASSETS. WITH THESE ARGUMENTS, HE SUPPORTED THE ORDE R OF THE ASSESSING OFFICER AND THE CIT (A). 10. WE HAVE CONSIDERED THE ISSUE. THE UNDISPUTED FACTS IN THE CASE ARE THAT THE ASSESSEE ENTERED INTO MOU ON 1.4. 2005 FOR ACQUIRING THE MULTIPLEX BUSINESS AND THE SAID MOU C LEARLY ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 7 OF 18 INDICATED THAT THE ASSIGNMENT HAS TO BE COMPLETED B EFORE 31.12.2005 AFTER COMPLETING THE FORMALITIES OF GETT ING CONSENT FROM CREDITORS, ASSIGNEES, LICENSE HOLDERS ETC. FOR TRAN SFER OF THE MULTIPLEX BUSINESS TO THE ASSESSEE. AFTER COMPLETION OF FORMA LITIES, THE ASSIGNMENT DEED WAS COMPLETED ON 14.11.2005 AND THE ASSESSEE ACQUIRED THE MULTIPLEX BUSINESS AS A GOING CONCERN. THERE IS ALSO NO DISPUTE THAT THE ASSETS WERE ACQUIRED BY THE ASSESS EE AND ALSO THERE IS NO DISPUTE THAT THE RECEIPTS FROM 1.4.2005 WERE INCORPORATED IN THE ASSESSEES BOOKS OF ACCOUNT AFT ER THE ASSIGNMENT DEED WAS REGISTERED. THERE IS ALSO NO DI SPUTE THAT THE ASSESSEE HAD OFFERED THE ENTIRE RECEIPTS AND EXPEND ITURE FOR WHOLE YEAR FROM 1.4.2005 TO 31.3.2006. THE ONLY DISPUTE I S WITH REFERENCE TO THE OWNERSHIP OF THE ASSETS DURING THE PERIOD WH EN THE ASSESSEES BUSINESS WAS RUN BY THE E-CITY ENTERTAIN MENT LTD, PENDING COMPLETION OF FORMALITIES FOR ASSIGNMENT DE ED. IT IS ALSO NOT IN DISPUTE WITH REFERENCE TO THE PAYMENTS BEING MAD E FOR ACQUIRING AS GOING CONCERN. IN OUR VIEW, BOTH THE ASSESSING O FFICER AND THE CIT (A) ERRED IN HOLDING THAT THE ASSESSEE IS NOT O WNER OF ASSETS ACQUIRED AND HENCE ASSESSEE CANNOT BE ALLOWED DEPRE CIATION. FROM THE TIME THE ASSESSEE ENTERED INTO THE MOU FOR ACQU IRING THE BUSINESS AND ADVANCE AMOUNT WAS PAID AND ALSO FROM THE FACT THAT ENTIRE BUSINESS WAS RUN FOR AND ON BEHALF OF THE AS SESSEE BY THE OTHER COMPANY, IT CAN BE CONCLUDED THAT THE ASSESSE E HAD ACQUIRED THE RIGHTS IN THE ENTIRE MULTIPLEX BUSINESS. THE FO RMALITIES OF COMPLETING ASSIGNMENT DEED WAS DELAYED IN VIEW OF T RANSFER OF VARIOUS LICENSES FROM ONE COMPANY TO THE OTHER AND TO OBTAIN NECESSARY CONFIRMATIONS/APPROVALS FROM VARIOUS CRED ITORS, LICENSEES AND OTHER STAKE HOLDERS. THEREFORE, IT CANNOT BE SA ID THAT THE ASSESSEE WAS NOT THE OWNER OF THE PROPERTY W.E.F. 1 .4.2005. IN FACT TRANSFER ITSELF HAS TAKEN PLACE DURING THE YEAR ON 14-11-05 AFTER COMPLETION OF THE FORMALITIES MUCH BEFORE THE SCHED ULED TIME PRESCRIBED IN THE MOU. IT IS ALSO UNDISPUTED BY THE PARTIES THAT THE ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 8 OF 18 ACCOUNTS WERE INCORPORATED W.E.F. 1.4.2005 IN THE B OOKS OF ACCOUNT OF THE ASSESSEE. THE VARIOUS CASE LAW RELIED UPON B Y AO, CIT(A) AND CIT (DR) ARE GIVEN EARLIER BUT THESE ISSUES WERE U LTIMATELY SETTLED BY THE HON'BLE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD 239 ITR 775 (SC). THEREFORE, THERE IS NO NEED TO DI SCUSS VARIOUS CASE LAW RELIED UPON BY ASSESSING OFFICER AND CIT ( A) WHILE DENYING THE CLAIM. THE HON'BLE SUPREME COURT IN THE CASE OF MYSORE MINERALS LTD., V. CIT (1999) 239 ITR 775 (SC) WHILE INTERPRETING THE PROVISIONS OF SECTION 32 AND THE MEANING OF OWNER HAS CONSIDERED AND DECIDED AS UNDER: SECTION 32 OF THE INCOME TAX ACT, 1961 CONFERS A B ENEFIT ON THE ASSESSEE. THE PROVISION SHOULD BE SO INTERPR ETED AND THE WORDS USED THEREIN SHOULD BE ASSIGNED SUCH MEANING AS WOULD ENABLE THE ASSESSEE TO SECURE THE BENEFIT INTENDED TO BE GIVEN BY THE LEGISLATURE TO THE ASSESSEE. IT IS ALSO WELL-SETTLED THAT WHERE THERE ARE TWO POSSIBLE INTERPRETATIONS OF A TAXING PROVISION THE ONE WHICH IS FAVOURABLE TO THE ASSESSEE SHOULD BE PREFE RRED. SECTION 32 OF THE ACT ALLOWS CERTAIN DEDUCTIONS, ON E OF THEM BEING DEPRECIATION OF BUILDINGS, ETC., OWNED B Y THE ASSESSEE AND USED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. THE TERMS OWN, OWNERSHIP AND OWNED ARE GENERIC AND RELATIVE TERMS. THEY HAVE A WIDE AN D ALSO A NARROW CONNOTATION. THE MEANING WOULD DEPEN D ON THE CONTEXT IN WHICH THE TERMS ARE USED. CIT V. PODDAR CEMENT PVT. LTD (1997) 226 ITR 625 (SC), IN A CASE UNDER THE INCOME TAX ACT AND HAS TO BE TAKEN A S A TREND-SETTER IN THE CONCEPT OF OWNERSHIP. ASSISTANC E FROM THE LAW LAID DOWN THEREIN CAN BE TAKEN FOR FINDING OUT THE MEANING OF THE TERM OWNED AS OCCURRING IN SEC TION 32(1) OF THE ACT. THE TERM OWNED AS OCCURRING IN SE CTION 32(1) OF THE INCOME TAX ACT MUST BE ASSIGNED A WIDE R MEANING. ANYONE IN POSSESSION OF PROPERTY IN HIS OW N TITLE EXERCISING SUCH DOMINION OVER THE PROPERTY AS WOULD ENABLE OTHERS BEING EXCLUDED THERE FROM AND HAVING THE RIGHT TO USE AND OCCUPY THE PROPERTY AND/OR TO ENJO Y ITS USUFRUCT IN HIS OWN RIGHT WOULD BE THE OWNER OF THE BUILDING, THOUGH A FORMAL DEED OF TITLE MAY NOT HAV E BEEN EXECUTED AND REGISTERED AS CONTEMPLATED BY THE TRANSFER OF PROPERTY ACT, THE REGISTRATION ACT ETC. , BUILDING OWNED BY THE ASSESSEE, THE EXPRESSION AS ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 9 OF 18 OCCURRING IN SECTION 32(1) OF THE INCOME-TAX ACT, M EANS THE PERSON WHO HAVING ACQUIRED POSSESSION OVER THE BUILDING IN HIS OWN RIGHT USES THE SAME FOR THE PUR POSES OF THE BUSINESS OR PROFESSION THOUGH A LEGAL TITLE HAS NOT BEEN CONVEYED TO HIM CONSISTENTLY WITH THE REQUIREM ENTS OF LAWS SUCH AS THE TRANSFER OF PROPERTY ACT AND TH E REGISTRATION ACT, ETC. GENERALLY SPEAKING DEPRECIAT ION IS AN ALLOWANCE FOR THE DIMINUTION IN THE VALUE DUE TO WEAR AND TEAR OF A CAPITAL ASSET EMPLOYED BY AN ASSESSEE IN HIS BUSINESS. THE VERY CONCEPT OF DEPRECIATION SUGG ESTS THAT THE TAX BENEFIT ON ACCOUNT OF DEPRECIATION LEGITIMATELY BELONGS TO ONE WHO HAS INVESTED IN THE CAPITAL ASSET AND IS UTILIZING THE CAPITAL ASSET AN D THEREBY LOSING GRADUALLY THE INVESTMENT CAUSED BY W EAR AND TEAR, AND WOULD NEED TO REPLACE THE SAME BY HAV ING LOST ITS VALUE FULLY OVER A PERIOD OF TIME. IT IS W ELL SETTLED THAT THERE CANNOT BE TWO OWNERS OF THE PROPERTY SIMULTANEOUSLY AND IN THE SAME SENSE OF THE TERM. T HE INTENTION OF THE LEGISLATURE IN ENACTING SECTION 32 OF THE ACT WOULD BE BEST FULFILLED BY ALLOWING DEDUCTION I N RESPECT OF DEPRECIATION TO THE PERSON IN WHOM FOR T HE TIME BEING VESTS THE DOMINION OVER THE BUILDING AND WHO IS ENTITLED TO USE IT IN HIS OWN RIGHT AND IS USING THE SAME FOR THE PURPOSES OF HIS BUSINESS OR PROFESSION . ASSIGNING ANY DIFFERENT MEANING WOULD NOT SUB SERVE THE LEGISLATIVE INTENT. 11. THEREFORE, RELYING ON THE PRINCIPLES LAID DOWN, WE NOTICE THAT ASSESSEE HAS ACQUIRED THE BENEFICIAL INTEREST IN TH E ENTIRE BUSINESS OF MULTIPLEX AS A GOING CONCERN WITH EFFECT FROM 01 -04-2005. WE HAVE NO HESITATION IN HOLDING THAT THE ASSESSEE ACQ UIRED THE PROPERTIES/ ASSETS W.E.F. 1.4.2005 EVEN THOUGH THE ASSIGNMENT DEED WAS REGISTERED SUBSEQUENTLY ON 14.11.2005. HAVING O FFERED THE ENTIRE INCOME FOR THE YEAR FROM 1.4.2005 AND HAVING ACCEPTED BY THE REVENUE, WE WERE SURPRISED THAT THE ASSESSEE WA S NOT CONSIDERED OWNER OF THE ASSET. IF THE ASSESSEE IS N OT THE OWNER OF THE BUSINESS, HOW THE BUSINESS COULD BE RUN WAS NOT EXP LAINED. SINCE THE ASSESSEES BUSINESS IS RUNNING MULTIPLEX AND AS SETS ARE REQUIRED IN THE SAID BUSINESS, THERE IS NO DISPUTE WITH REFERENCE TO THE FACT THAT THE ASSETS WERE USED DURING THE YEAR. ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 10 OF 18 12. FURTHER IN THE SCHEME OF AMALGAMATION OF ERSTWHILE COMPANY WITH E-CITY RETAIL (INDIA) LTD APPROVED BY HONBLE BOMBAY AND DELHI HIGH COURTS LATER, THE SCHEME VIDE PARA 10 (A) HAS THIS CLAUSE: THE TRANSFEROR COMPANY SHALL CARRY ON AND BE DEEMED TO HAVE CARRIED ON ITS BUSINESS AND ACTIVITIES AND SHALL ST AND POSSESSED OF ALL ITS UNDERTAKINGS, IN TRUST FOR THE TRANSFER COM PANY AND SHALL ACCOUNT FOR THE SAME TO THE TRANSFER COMPANY. THE ASSESSING OFFICER HAD PERMITTED THE MERGER OF A CCOUNTS AND ACCEPTED REVISION OF ACCOUNTS WITH EFFECT FROM 01-0 4-05 AND HAS NOT TAKEN ANY OBJECTION EVEN THOUGH SIMILAR CLAUSE WAS STATED IN MERGER SCHEME. THIS SHOWS THAT ASSESSING OFFICER OB JECTION IS NOT BASED ON CORRECT LEGAL INTERPRETATION. 13. IN VIEW OF THIS, WE HAVE NO HESITATION IN HOLDING THAT THE ASSESSEE IS THE OWNER OF THE ASSETS W.E.F. 1.4.2005 AND ACCORDINGLY THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEPRECIA TION AS CLAIMED. THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A) ON THIS ISSUE ARE SET ASIDE AND GROUND. NO 1 IS ALLOWED. 14. GROUND NO.3 IS AS UNDER: 3. ENTERTAINMENT TAX EXEMPTION CAPITAL SUBSIDY: THE INCENTIVE AVAILED BY THE ASSESSEE IN THE FORM O F ENTERTAINMENT TAX EXEMPTION FOR PROMOTING ESTABLISHMENT OF MULTIPLEX THEATRE IS CAPITAL IN NA TURE AND HENCE DOES NOT FORM PART OF THE TOTAL INCOME. T HE TOTAL INCOME OF THE ASSESSEE OUGHT TO HAVE BEEN ASSESSED AFTER REDUCING ENTERTAINMENT TAX (SUBSIDY) EMBEDDED IN THE REVENUE BEING CAPITAL-RECEIPT. THIS GROUND WAS NOT RAISED BEFORE THE AUTHORITIES A ND FOR THE FIRST TIME RAISED AS A REGULAR GROUND IN THE APPEAL. WHEN THIS WAS POINTED OUT, ASSESSEE MODIFIED THE CONTENTION AND P LACED A REQUEST FOR ADMITTING THE SAME AS AN ADDITIONAL GROUND. IT WAS THE SUBMISSION THAT THE GROUND IS LEGAL IN NATURE AND T HEREFORE, FOLLOWING THE PRINCIPLES ON THE ISSUE, THE GROUND I S TO BE ADMITTED. ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 11 OF 18 THE ASSESSEE RELIED ON AHMEDABAD ELECTRICITY CO. LT D V. CIT (1993) 199 ITR 351 (BOM.) (FB) AND IN THE CASE NATIONAL TH ERMAL POWER CO. LTD V. CIT (1999), 229 ITR 383 (SC), FOR THE PR OPOSITION THAT THE ADDITIONAL GROUND BEING A LEGAL GROUND CAN BE ADMIT TED. IN THE PETITION IT WAS CLAIMED THAT THE ASSESSEE AS PER TH E POLICY OF VARIOUS STATE GOVT. RECEIVED ENTERTAINMENT TAX SUBSIDY AND HAS INCLUDED THE SAME IN THE OPERATING INCOME. IT WAS SUBMITTED THAT THE SAID SUBSIDY WAS CAPITAL IN NATURE AS PER THE DECISION O F THE BOMBAY HIGH COURT IN THE CASE OF CIT V. M/S CHAPHALKAR BRO THERS, PUNE DATED 8/6/2011. THE ASSESSEE ON BECOMING AWARE OF T HE LEGAL PROVISIONS AS CONFIRMED BY THE BOMBAY HIGH COURT RA ISED THE ADDITIONAL GROUND FOR THE FIRST TIME BEFORE THE TRI BUNAL ONLY. IT WAS FURTHER SUBMITTED THAT IN SUBSEQUENT YEAR OF AY 200 8-09, THE CIT DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWI NG THE DECISION OF THE BOMBAY HIGH COURT. IT WAS PRAYED THAT THE ADDIT IONAL GROUND MAY BE PERMITTED TO BE RAISED AND THE ASSESSING OFF ICER MAY BE DIRECTED TO VERIFY THE FACTS. THE LEARNED DEPARTMEN TAL REPRESENTATIVE HOWEVER, OBJECTED RAISING THE ADDITI ONAL GROUND AS THE FACTS ARE NOT AVAILABLE ON THE RECORD AND UNLES S THE FACTS ARE AVAILABLE ON RECORD, THE LEGAL QUESTION CANNOT BE R AISED. 15. WE HAVE EXAMINED THE CONTENTIONS. AS FAR AS THE ISS UE IS CONCERNED, IT MAY BE A LEGAL ISSUE AND HON'BLE BOMB AY HIGH COURT IN THE CASE OF M/S CHAPHALKAR BROTHERS HELD THAT EN TERTAINMENT TAX SUBSIDY RECEIVED WAS NOT A REVENUE RECEIPT. UNDOUBT EDLY, THE TRIBUNAL HAS THE DISCRETION TO ALLOW OR NOT TO ALLO W A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW ARISING FROM FACTS WHICH ARE ON REC ORD IN THE ASSESSMENT PROCEEDINGS, THERE IS NO REASON WHY SUCH QUESTION SHOULD NOT BE ALLOWED TO BE RAISED, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD VS CIT 229 ITR 383. HOWEVER, THERE IS NOTHING ON RECORD TO INDICAT E THAT THE ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 12 OF 18 ASSESSEE HAD INCLUDED ANY ENTERTAINMENT TAX SUBSIDY IN ITS RECEIPTS AS SEEN FROM VARIOUS SCHEDULES/DETAILS ON RECORD. I T IS ALSO NOTICED THAT THE ASSESSEE IS RUNNING MULTIPLEXES IN AHMEDAB AD, DELHI, BOMBAY, CHANDIGARH ETC., WHERE DIFFERENT TAX SCHEME S ARE AVAILABLE WHICH MAY REQUIRE DETAILED EXAMINATION OF FACTS. NO T ONLY THAT NOWHERE IN THE SCHEDULES OR ACCOUNTS, THE FACT THAT THE ASSESSEE HAS RECEIVED ENTERTAINMENT TAX SUBSIDY WAS STATED, SO AS TO EVEN EXAMINE THE AMOUNT INVOLVED IN THE LEGAL ISSUE RAIS ED. THE ASSESSEE ALSO DID NOT STATE THE AMOUNT INVOLVED IN THIS CLAI M, SO MADE FOR THE FIRST TIME BEFORE THE ITAT. IT IS TRUE THAT ANY LEG AL CLAIM CAN BE AGITATED FOR THE FIRST TIME BEFORE THE AUTHORITIES BUT DEVOID OF FACTS, A LEGAL CLAIM CANNOT BE ENTERTAINED. IT IS ALSO VERY CLEAR FROM THE PRAYER AND ALSO THE WRITTEN SUBMISSIONS THE ASSESSE E PRAYS THAT THE ADDITIONAL GROUND BE PERMITTED AND THE ASSESSI NG OFFICER MAY BE DIRECTED TO VERIFY THE FACTS. SINCE THE ISSUE I NVOLVES EXAMINATION OF THE FACTS AFRESH WHICH CANNOT BE CULLED OUT FROM THE RECORD ALREADY AVAILABLE, THE LEGAL GROUND SO RAISED CANNO T BE PERMITTED FOLLOWING THE PRINCIPLES LAID DOWN IN THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD V. CIT (1999), 229 ITR 383 (SC). ACCORDINGLY, ADDITIONAL G ROUND RAISED IS DISMISSED. 16. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. 17. ITA NO.4379/MUM/2010 : IN THIS APPEAL REVENUE RAISED THE FOLLOWING GROUND: GROUND NO.1: ON THE FACTS AND CIRCUMSTANCES IN THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN HOLDI NG THAT THERE WAS NO COMPENSATION OF ` .2 CRORES IN THE LEASE RENTAL PAID TO M/S E-CITY ENTERTAINMENT INDIA PVT. LTD WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COM PANY HAD ALSO PAID A SUM OF ` .2,06,22,029/- TO M/S E-CITY ENTERTAINMENT PVT LTD ON ACCOUNT OF COMMON AREA MAINTENANCE CHARGES, THE TAX DEDUCTED AT SOURCE ON WHICH WAS ALSO NOT PROVED BY THE ASSESSEE COMPANY ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 13 OF 18 EITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE COURSE OF APPELLATE PROCEEDINGS. 18. BRIEFLY STATED, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAID LEASE RENTAL OF ` .7,60,60,003/- TO E-CITY ENTERTAINMENT (INDIA) PVT. LTD. IT WAS CONSIDERED BY HIM THAT THI S AMOUNT INCLUDES AN AMOUNT OF ` .2 CRORES PAID TOWARDS COMPENSATION. ACCORDINGLY, A SHOW CAUSE NOTICE WAS ISSUED TO EXPLAIN THE ALLOWAB ILITY OF THIS EXPENSE. IN RESPONSE TO THIS, THE ASSESSEE SUBMITTE D ITS REPLY. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE ASSESSIN G OFFICER HAS HELD THAT THERE WAS NO CLAUSE IN THE DEED WHERE IT WAS S TATED THAT ASSESSEE WAS REQUIRED TO PAY COMPENSATION OF ` .2 CRORE, APART FROM THE COST OF ` .13.71 CRORE FOR ACQUIRING THE MULTIPLEX BUSINESS. THUS, THE ASSESSING OFFICER DISALLOWED THE COMPENSATION OF ` .2 CRORES OUT OF AMOUNTS PAID TO E-CITY ENTERTAINMENT (INDIA) PVT . LTD. SECONDLY, THE ASSESSING OFFICER HAS HELD THAT TDS WAS NOT DED UCTED ON THIS COMPENSATION OF ` .2 CRORE, THEREFORE, THE ADDITION OF ` .2 CRORE WAS ALSO CALLED FOR UNDER THE PROVISIONS OF THE IT ACT FOR NON-DEDUCTION OF TAX. 19. IT WAS SUBMITTED BEFORE THE CIT (A) THAT THE ASSESS EE SUBMITTED COMPLETE DETAILS OF LEASE RENTALS OF ` .7.61 CRORES DURING ASSESSMENT PROCEEDINGS ALONG WITH COPY OF REGISTERE D RENT AGREEMENTS, WHICH WERE ON RECORD. IT WAS THE CONTEN TION THAT ASSESSING OFFICER ARRIVED AT AN ARBITRARY AMOUNT OF ` .2 CRORES AND DISALLOWED THE SAME ON THE GROUND THAT THERE IS NO CLAUSE IN ASSIGNMENT DEED WHERE AS THE ASSESSEE WAS NOT REQUI RED TO PAY ANY AMOUNT AS COMPENSATION. IT WAS FURTHER CONTENDED TH AT ASSESSING OFFICER FAILED TO APPRECIATE THE FACT THAT THE LEAS E RENTALS WERE PAID AS PER RENT AGREEMENTS ENTERED BY THE ASSESSEE AND NOT ON THE BASIS OF ASSIGNMENT DEED. AS THE ASSESSEE SUBSTANTI ATED THE CLAIM OF LEASE RENTAL PAYMENTS WITH RELEVANT DOCUMENTS AN D AS ASSESSING OFFICER ACCEPTED THOSE DOCUMENTS WITHOUT RAISING AN Y QUESTIONS NOR ISSUING ANY SHOW CAUSE NOTICE OF HIS INTENTION TO D ISALLOW THE LEASE ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 14 OF 18 RENTAL. IT WAS SUBMITTED THAT THE LEASE RENTAL WERE PAID FOR USE OF PREMISES FOR ITS MULTIPLEX BUSINESS SUPPORTED BY RE NT AGREEMENTS, HENCE LEASE RENTAL WAS ALLOWABLE UNDER SECTION 30 O F THE ACT. 20. THE CIT (A) ACCEPTED THE ASSESSEES CONTENTIONS AND DELETED THE ADDITION BY STATING AS UNDER: 3.4 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT, THE ORDER OF THE ASSESSING OFFICER AND FACTS OF THE CASE THAT THE APPELLANT HAS PAID LEASE RENTALS OF ` .7,60,60,003/- AS GIVEN IN SCHEDULE 20 FORMING PART OF THE PROFIT & LOSS A/C . THE APPELLANT HAS ARGUED TH AT EXCEPT FOR THE PAYMENT OF LEASE RENT, NO COMPENSATI ON WAS PAID DURING THE YEAR UNDER CONSIDERATION. IT WA S FURTHER ARGUED THAT IT WAS NOT KNOWN FROM WHERE THE FIGURES OF ` .2 CRORE COMPENSATION WAS ADOPTED BY THE ASSESSING OFFICER. ACCORDINGLY, THE SUBMISSION OF T HE APPELLANT WAS SENT BACK TO THE ASSESSING OFFICER FO R VERIFICATION AND REMAND REPORT. THE ASSESSING OFFIC ER SUBMITTED ITS REPORT VIDE DATED 22/03/2010 AND SUBMITTED AS UNDER: DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS ALSO PLEADED THAT THE ASSESSEE HAS NOT PAID ANY COMPENSATION OF ` .2 CRORE TO E CITY ENTERTAINMENT PVT LTD. HOWEVER, YOUR KIND ATTENTION IS INVITED TO PARA 5 OF THE ASSESSMENT ORDER WHEREIN T HE ASSESSEE WAS SPECIFICALLY ASKED TO EXPLAIN WHY THE COMPENSATION OF ` .2 CRORE SHOULD NOT BE DISALLOWED. HOWEVER, IN REPLY, WHICH IS REPRODUCED IN PARA 5.1 OF THE ASSESSMENT ORDER, THE ASSESSEE NOWHERE DENIED THAT IT DID NOT PAID ANY COMPENSATION TO E CITY ENTERTAINME NT (INDIA) PVT. LTD. FURTHER THE DETAILS OF RENTAL SHO W THAT THESE EXPENSES INCLUDE COMPENSATION PAID ALSO. IN T HE CIRCUMSTANCES, THE CLAIM OF THE ASSESSEE THAT IT HA S NOT PAID ANY LEASE RENTAL TO E CITY ENTERTAINMENT PVT. LTD IS NOT ACCEPTABLE AND LIABLE TO BE REJECTED. FROM THE PERUSAL OF THE REMAND REPORT, IT IS SEEN T HAT THE ASSESSING OFFICER HAS REFERRED THE ASSESSMENT ORDER OF PARA 5 AND 5.1 TO CLARIFY THE AMOUNT OF COMPENSATIO N OF ` .2 CRORE TO E-CITY ENTERTAINMENT (INDIA) PVT. LTD. THE ASSESSING OFFICER HAS NO DOCUMENTARY EVIDENCE TO PR OVE THAT WHERE FROM THIS FIGURE OF COMPENSATION HAS BEE N ADOPTED. THE APPELLANT HAS PAID ONLY LEASE RENT OF ` .7,60,16,003/- AND TDS WAS DULY DEDUCTED ON THIS AMOUNT. COPY OF FORM NO.16A WAS SUBMITTED WHICH WAS ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 15 OF 18 SENT BACK TO THE ASSESSING OFFICER FOR VERIFICATION . HOWEVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY COMMENTS ON THE TDS DEDUCTED ON THE LEASE RENT OF ` .7,60,60,003/-. THE CLAIM OF THE ASSESSING OFFICER THAT TDS WAS NOT DEDUCTED IS ALSO WITHOUT ANY BASIS BECAUSE THE TDS WAS DULY DEDUCTED AS APPARENT FROM THE FORM NO.16A FILED BEFORE ME WHICH WAS GIVEN TO THE ASSESSING OFFICER FOR HIS COMMENTS. FROM THESE FACT S AND CIRCUMSTANCES, IT IS CONCLUDED THAT THE LEASE A ND RENT PAID AMOUNTING TO ` .7,60,60,003/-, THERE IS NO AMOUNT OF COMPENSATION OF ` .2 CRORES, NOR THIS AMOUNT HAS BEEN GIVEN IN SCHEDULE 20 OF THE PROFIT & LOSS A/C . THUS, IT IS HELD THAT THE ASSESSING OFFICER HAS ADO PTED THIS AMOUNT OF ` .2 CRORE BY OVERSIGHT IN THE CONFUSION OF SOME FIGURE AND TDS HAS BEEN DEDUCTED. THEREFORE, T HE ADDITION MADE BY THE ASSESSING OFFICER OF ` .2 CRORE ON ACCOUNT OF COMPENSATION PAID IS WITHOUT ANY BASIS A ND WITHOUT ANY EVIDENCE WHICH IS NOT SUSTAINABLE, HENC E DELETED. THE GROUND OF APPEAL IS ALLOWED . 21. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT THERE IS AN ADMISSION BY THE ASSESSEE THAT THEY HAV E PAID COMPENSATION FOR USE OF BUILDING AND ACCORDINGLY TH E ASSESSEE WAS RIGHT IN TREATING THE AMOUNT OF ` .2 CRORES COMPENSATION, WHEREAS THE LEARNED COUNSEL SUBMITTED THAT NOWHERE THE AMOU NT OF COMPENSATION OF ` .2 CRORES WAS AVAILABLE AND ONLY THE ASSESSING OFFICER ASSIGNED THE VALUE ON HIS OWN WITHOUT APPRE CIATING THE FACTS. IT WAS SUBMITTED THAT THE ASSESSEE ACQUIRED THE MULTIPLEX BUSINESS FROM M/S E-CITY ENTERTAINMENT AND E-CITY E NTERTAINMENT LTD HAS CONTINUED WITH THE REALITY DIVISION IN WHIC H ALL THE THEATRE BUILDINGS AND PREMISES WERE WITH THE SAID COMPANY F OR WHICH THE ASSESSEE HAS PAID A LEASE RENT OF ` .7,60,60,003/- AFTER DEDUCTING THE TAX AS PER THE PROVISIONS. THIS AMOUNT WAS PAID AS A LEASE RENT FOR USE OF THE PREMISES IN THE MULTIPLEX BUSINESS. 22. THE LEARNED COUNSEL ALSO REFERRED TO THE MOU AND ASSIGNMENT DEED AND ALSO THE DEPRECIATION SCHEDULE EXTRACTED IN PAGE 3 OF THE ASSESSMENT ORDER TO SUBMIT THAT THE A SSESSEE ACQUIRED ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 16 OF 18 ONLY COMPUTERS AND COMPUTER SOFTWARE & PLANT AND MA CHINERY, FURNITURE AND FIXTURES WHICH ARE MORE SO MOVABLE IN NATURE AND NOT THE BUILDINGS AND THEATRES WHICH ARE STILL WITH THE E-CITY ENTERTAINMENT LTD IN THEIR REALTY DIVISION. IT WA S SUBMITTED THAT THE ASSESSEE PAID LEASE RENT FOR USE OF THE ABOVE A SSETS AND IN ADDITION, THE ASSESSEE ALSO PAID MAINTENANCE CHARGE S OF COMMON AREAS, THE DETAILS OF WHICH WERE PLACED BEFORE THE AUTHORITIES AND A COPY OF WHICH WAS ALSO PLACED BEFORE US WITH THE SU BMISSION THAT NO COMPENSATION OF ` .2 CRORES WAS PAID, SO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT CORRECT ON FACTS. 23. WE HAVE EXAMINED THE ISSUE AND RIVAL CONTENTIONS. A S SEEN FROM THE LEASE RENTALS PAID, THE ASSESSEE PAID ` .2.68 CRORES FOR AHMEDABAD PROPERTY, ` .2.82 CRORES FOR ANDHERI PROPERTY ` .1.66 CRORES FOR CHANDIGARH AND `0 .44 CRORES FOR DELHI PROPERTY AS LEASE RENTALS WHICH WAS ALLOWED BY THE ASSESSING OFFICER. THE OTHER AMOUNT WHICH WAS PAID AS COMMON AREA MAINTENANCE CH ARGES ARE ` .78.92 LAKHS FOR AHMEDABAD, ` .72.38 LAKHS FOR ANDHERI, ` .54.90 LAKHS FOR CHANDIGARH AND ` .11.10 LAKHS FOR DELHI PROPERTY TOTALING TO ` .2.17 CRORES FOR THE YEAR ENDED 31.3.2006. THERE IS ALSO NO DISPUTE WITH REFERENCE TO THESE PAYMENTS AND THE AS SESSING OFFICER HAS NOT DISALLOWED ANY AMOUNT OUT OF THESE. THE BAL ANCE OF EXPENDITURE OUT OF THE SCHEDULE 20 WAS FOR OPERATIN G EXPENSES WHERE, OTHER EXPENDITURE LIKE ADVERTISEMENT, SALES PROMOTION, ELECTRICITY AND WATER CHARGES AND OTHER DAY TO DAY EXPENSES WERE CLAIMED. NOWHERE THERE IS A CLAIM FOR COMPENSATION PAID. JUST BECAUSE THE ASSESSEE USED THE WORD COMPENSATION F OR THE USE OF PROPERTY, WHICH THEY INTENDED TO REFER THE LEASE RE NTALS PAID, IN OUR OPINION, THE ASSESSING OFFICER MISTOOK TO BE THE CO MPENSATION WHICH CANNOT BE ALLOWED AS EXPENDITURE. ON THIS MIS CONCEPTION, HE ALSO QUANTIFIED AN AMOUNT AT RS. 2 CRORES EVEN THOU GH THE RECORD DOES NOT INDICATE ANYTHING AT ALL. SINCE THERE IS N O AMOUNT PAID BY ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 17 OF 18 ASSESSEE TO CONSIDER AS COMPENSATION PAID, THE DE LETION MADE BY THE CIT (A) IS IN ORDER. WE UPHOLD THE SAME AND DIS MISS THE REVENUE GROUND. REVENUE APPEAL IS DISMISSED. 24. IN THE RESULT, APPEAL FILED BY ASSESSEE IS PARTLY A LLOWED AND THE APPEAL FILED BY REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH, 2012. SD/- SD/- ( R.S.PADVEKAR ) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 30 TH MARCH, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, F BENCH, ITAT, MUMBAI /BY ORDER/ ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI ITA NOS.4460 & 4379 OF 2010 FUN MULTIPLEX PVT LTD MUMBAI PAGE 18 OF 18 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 20.3.12 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 22.3.12 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 27.3.12. JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 27.3.12 AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 28.3.12 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 30.3.12 SR. PS/PS 7 FILE SENT TO BENCH CLERK 30.3.12 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER