Sree Raam Films Private Limited, CHENNAI V. ACIT, CHENNAI

ITA 507/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8084 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 21-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 11-03-2015
• Court: TRIBUNAL
• Department Lawyers: A B KOLI JCIT
• Keywords: Revised return

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , ! ' #! ' $ . %& ' () BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.507 /MDS./2015 ( / ASSESSMENT YEAR :2008-09) M/S.SREE RAAM FILMS PVT. LTD ., 78,CHAMIERS ROAD, RAJA ANNAMALAI PURAM, CHENNAI 600 028. VS. ASSISTANT COMMISSIONER OF INCOME TAX,MEDIA CIRCLE-II, CHENNAI-34. PAN AAJCS 9649 D ( *+ / APPELLANT ) ( ,-*+ / RESPONDENT ) / APPELLANT BY : MR.SAROJ KUMAR PARIDA, ADVOCATE / RESPONDENT BY : MR.A.B.KOLI,JCIT, D.R / DATE OF HEARING : 21.01.2016 ! /DATE OF PRONOUNCEMENT : 29.01.2016 . / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ITA NO.507/MDS/2015 2 ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)- VI, CHENNAI DATED 11.08.2014 PERTAINING TO THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED THE GROUND THAT DISALLO WANCE OF ` 38,63,478/- U/S.40(A)(IA) OF THE ACT IS INCORRECT A S THE DISALLOWANCE IS POSSIBLE ONLY IN RESPECT OF EXPENDITURE FOR WHICH T HE PAYMENT WAS OUTSTANDING AT THE END OF THE YEAR. 3. ON PERUSING THE APPEAL, WE FIND THAT THE ASSESS EE HAD FILED THE APPEAL WITH DELAY OF 123 DAYS. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED A PETITION DATED 11.03.2015 SEEKING C ONDONATION OF DELAY. AFTER CONSIDERING THE SAME, WE ARE SATISFIED ABOUT THE REASONS ADVANCED BY THE ASSESSEE FOR DELAY IN FILING THE AP PEAL. ACCORDINGLY, THE DELAY IS CONDONED. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A COMPANY, ENGAGED IN THE BUSINESS OF PRODUCTION AND DISTRIBUT ION OF MOTION PICTURES, FILED ITS RETURN OF INCOME ON 09.02.2009 FOR ASSESSMENT YEAR 2008-09. SUBSEQUENTLY, THE ASSESSEE FILED A REVISED STATEMENT OF ITA NO.507/MDS/2015 3 INCOME ON 30.09.2012 ALONG WITH FOLLOWING ITEMS OF EXPENDITURES WHICH WERE VOLUNTARILY DISALLOWED U/S.40(A)(IA) IN THE ORIGINAL RETURN FILED AND WERE REVERSED IN THE REVISED RETURN AND C LAIMED THE REFUND. DTS & EFFECTS 84,270 EDITING 37,636 FILM PROCESSING CHARGES 20,21,744 GRAPHICS AND PHOTOGRAPHY 1,68,540 ARTIST REMUNERATION 12,74,785 REMUNERATION AND OTHERS 51,503 TECHNICAL REMUNERATION 2,25,000 TOTAL 38,63,478 THE AO DISALLOWED THE ABOVE SUMS U/S.40(A)(IA) OF T HE ACT AS THE SAME WERE MADE WITHOUT DEDUCTION OF TDS. ON APPEA L, THE LD. CIT(A) CONFIRMED THE ORDER OF THE LD. ASSESSING OFF ICER. AGAINST THE ACTION OF THE REVENUE, THE REVENUE IS IN APPEAL BEF ORE US. 5. BEFORE US, THE LD.A.R REITERATED THE SUBMISSION S MADE BEFORE THE REVENUE AND PLACED RELIANCE IN THE DECISION OF HONBLE SUPREME ITA NO.507/MDS/2015 4 COURT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVIC ES (P) LTD. FURTHER LD.A.R SUBMITTED THAT ONLY EXPENDITURE COVE RED U/S.30 TO 38 HAS TO BE DISALLOWED U/S.40(A)(IA) OF THE ACT, IF I T IS MADE WITHOUT DEDUCTION OF TAX, AND THE EXPENDITURE INCURRED TOWA RDS PRODUCTION OF FEATURE FILMS ARE A CHARGE AGAINST GROSS RECEIPTS A ND HENCE COVERED U/S.28(I) OF THE ACT AS HELD BY THE HONBLE APEX CO URT REPORTED IN (1958) 34 ITR 10(SC) & (1959) 37 ITR 01. LD. DEPART MENTAL REPRESENTATIVE ON THE OTHER HAND ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS ON RECORD. IN OUR OPINION, THE ISSUE IS SQUARELY COVE RED BY THE ORDER OF THE SPECIAL BENCH OF ITAT (VIZAG BENCH), IN THE CAS E OF MERILYN SHIPPING AND TRANSPORTERS VS. ADDL.CIT (136 ITD 23) (VIZAG SB), WHEREIN IT WAS HELD THAT THE PROVISIONS OF THE SECT ION 40(A)(IA) ARE APPLICABLE ONLY TO THE EXPENSES THAT ARE PAYABLE AND OUTSTANDING AT THE END OF THE CLOSE OF THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR AND NOT TO THE AMOUNT ALREADY PAID. THE SAME VIEW WAS TAKEN BY THE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT V S. M/S.VECTOR ITA NO.507/MDS/2015 5 SHIPPING SERVICES (P) LTD IN ITA NO.122 OF 2013 DAT ED 09.07.2013 BY HOLDING THAT SEC.40(A)(IA) IS NOT APPLICABLE WHEN T HERE IS NO OUTSTANDING BALANCE AT THE END OF THE CLOSE OF THE YEAR RELEVANT TO THE ASSESSMENT YEAR AND SLP FILED BY THE REVENUE IN SU PREME COURT OF INDIA IN CC NO.8068/2014 DATED 02.07.2014 IS ALSO D ISMISSED. BEING SO, IN OUR OPINION AN AMOUNT OUTSTANDING AT THE END OF THE CLOSE OF THE ASSESSMENT YEAR IS NOT TO BE ALLOWED AS BUSINES S EXPENDITURE IN VIEW OF PROVISIONS 40(A)(IA) OF THE ACT. FURTHER, WE MAKE IT CLEAR THAT THE AO SHOULD CONSIDER ONLY PAYMENT WHICH IS NOT SU BJECT TO TDS FOR DISALLOWANCE AND NOT SHORT DEDUCTION OF TDS. SINCE WE HAVE FOLLOWED THE ORDER OF THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORTERS VS. ADDL.CIT CITED SUPRA AND ALSO THE JUDGEMENT OF ALLAHABAD HIGH COURT IN THE CASE OF CI T VS. M/S.VECTOR SHIPPING SERVICES (P) LTD CITED SUPRA, WE HAVE NOT CONSIDERED THE JUDGEMENT OF KERALA HIGH COURT IN THE CASE OF SHRI THOMAS GEORGE MUHOOT IN ITA NO.278 OF 2014 DATED 3 RD DAY OF JULY 2015 AND THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI D.UMAP ATHY IN ITA NO.2435/MDS./2014 DATED 14.08.2015. ITA NO.507/MDS/2015 6 ACCORDINGLY, THE ISSUE IN DISPUTE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 29 TH OF JANUARY,2016 AT CHENNAI. SD/- SD/- ' # $ . % &' ( ( DUVVURU RL REDDY ) ) ( ( ) * + , ) ) ' CHANDRA POOJARI (- JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 29 TH JANUARY,2016. K S SUNDARAM. ./-- 01-21 /COPY TO: - 1. /APPELLANT 2. /RESPONDENT 3. - 3-'( /CIT(A) 4. - 3 /CIT 5. 145- 6 /DR 6. 5'-7 /GF