ACIT 16(1), MUMBAI V. MAYA ENTERTAINMENT LTD, MUMBAI

ITA 527/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6772 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI DR. A.L. SAINI , ACCOUNTANT MEMBER ITA NO. 527 / MUM . /2017 ( ASSESSMENT YEAR : 20 13 14 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 16(1), MUMBAI . APPELLANT V/S M/S. MAYA ENTERTAINMENT LTD. A 65, APTECH HOUSE MIDC, MAROL, ANDHERI (E) MUMBAI 400 093 PAN AABCM7192B . RESPONDENT REVENUE BY : SHRI SAURABH KUMAR RAI ASSESSEEBY : SHRI S.C. TIWARI A/W MS. RUTUJA N. PAWAR DATE OF HEARING 1 9 .0 6 .2018 DATE OF ORDER 27.06.2018 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEAL BY THE REVENUE IS AGAINST ORDER DATED 18 TH OCTOBER 20 16 , PASSED BY THE L EARNED COMMISSIONER (APPEALS) 4 , MUMBAI, FOR THE ASSESSMENT YEAR 20 1 3 14 . 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO DELETION OF ADDITION OF AN AMOUNT OF ` 1,53,52,679, RELATING TO SURPLUS OF STUDENT FEES. 2 M/S. MAYA ENTERTAINMENT LTD. 3 . B RIEF FACTS ARE, THE ASSESSEE A COMPANY IS IN THE BUSINESS OF PROVIDING ANIMATION AND MULTI MEDIA EDUCATION. FOR THE ASSESSMENT YEAR UNDER DISPUTE THE ASSESSEE FILED ITS RETURN OF INCOME ON 27 TH SEPTEMBER 2013, DECLARING TOTAL INCOME OF ` 2,28,47,210. DURING THE ASSESSMENT PROCEEDINGS, ON VERIFYING THE DETAILS AVAILABLE ON RECORD, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS RECEIVED INCOME OF ` 42,85,62,308, UNDER THREE DIFFERENT HEADS VIZ. (I) STUDENT FEES; (II) SHARE OF INCOME FROM FRANCHISE FEE; AND (III) OTHER INCOME FROM OPERATION. ON VERIFYING THE DETAILS OF INCOME OFFERED, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT OFFERED FULL AMOUNT OF THE FEES BILLED DURING THE ASSESSMENT YEAR 2013 14 IN RESPECT OF STUDENT FEES. O N FURTHER ENQUIRY, HE FOUND THAT TILL FINANCIAL YEAR 2005 06 THE ASSESSEE WAS RECOGNISING THE INCOME FROM TRAINING COURSES ON THE BASIS OF BILLED AMOUNT. HOWEVER, FROM THE FINANCIAL YEAR 2006 07, THE ASSESSEE CHANGED THE REVENUE RECOGNITION METHOD BY RECOG NISING INCOME RELATING TO STUDENTS ENROLLMENT FEE TO THE EXTENT OF ACTUAL TRAINING RENDERED DURING THE RELEVANT PREVIOUS YEAR. THUS, THE ASSESSEE HAS BIFURCATED THE TOTAL BILLED AMOUNT FOR THE FINANCIAL YEAR 2012 13 IN TWO YEARS I.E., ASSESSMENT YEAR 2013 14 AND 2014 15. THE ASSESSING OFFICER DID NOT ACCEPT THE CHANGED REVENUE RECOGNITION METHOD ADOPTED BY THE ASSESSEE AND PROCEEDED TO MAKE ADDITION ON THE BASIS OF BILLED AMOUNT AND THEREBY ADDED AN AMOUNT OF ` 3 M/S. MAYA ENTERTAINMENT LTD. 1,53,52,679, TO THE INCOME OF THE ASSESSEE. T HE ASSESSEE CHALLENGED THE ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. 4 . THE LEARNED COMMISSIONER (APPEALS) NOTED THAT THE REVENUE RECOGNI Z ED BY THE ASSESSEE IS AS PER THE CHANGED SYSTEM OF RECOGN IZING THE INCOME FROM BILLING TO RECOGNI Z ING THE INCOME ON LY TO THE EXTENT IT HAD IMPARTED TRAINING TO STUDENT . HE FOUND THAT ASSESSE HAS ADOPTED THIS METHOD OF REVENUE RECOGNITION FROM ASSESSMENT YEAR 2007 08 AND IN ASSESSMENT YEAR 2012 13 HE HAS ACCEPTED THE ACCOUNTING METHOD FOLLOWED BY THE ASSESSEE AND DELETE D SIMILAR ADDITION MADE BY THE ASSESSING OFFICER .F OLLOW ING THE SA ID DECISION HE DELETED THE ADDITION MADE IN THE IMPUGNED ASSESSMENT YEAR AS WELL. 5 . AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL ADDITION MADE BY THE ASSESSIN G OFFICER IN THE PRECEDING ASSESSMENT YEARS WERE DELETED EITHER BY THE LEARNED COMMISSIONER (APPEALS) OR BY THE TRIBUNAL. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE ORDER DATED 28 TH FEBRUARY 2017, PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007 08 AND 2009 10 IN ITA NO.507/MUM./2013 & ORS. A COPY OF THE ORDER WAS ALSO PLACED BEFORE THE BENCH. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED , AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) DELETING SIMILAR ADDITION MADE BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2012 13, THE DEPARTMENT HAS NOT PREFERRED ANY APPEAL BEFORE 4 M/S. MAYA ENTERTAINMENT LTD. THE TRIBUNAL , THEREBY , ACCEPT ED THE DECISION OF THE LEARNED COMMISSION ER (APPEALS). THUS, HE SUBMITTED , THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) DESERVES TO BE UPHELD. 6 . LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH , FAIRLY SUBMITTED THAT THE DISPUTED ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE APPELLATE AUTH ORIT IES IN THE PRECEDING ASSESSMENT YEAR S , HOWEVER, HE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER. 7 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD , THE ASSESSEE WAS RECOGNI Z ING REV ENUE ON THE BASIS OF BILLED AMOUNT TILL ASSESSMENT YEAR 2006 07 AND THEREAFTER HE CHANGED THE METHOD OF RECOGNI Z ING REVENUE FROM THE BILLED AMOUNT TO THE ACTUAL TRAINING IMPARTED DURING THE YEAR. IT IS EVIDENT, THE CHANGED METHOD OF REVENUE RECOGNITION ADO PTED BY THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER FROM ASSESSMENT YEAR 2007 08 . H OWEVER, THE TRIBUNAL WHILE DECIDING THE ISSUE IN THE PRECEDING ASSESSMENT YEARS , IN THE ORDER REFERRED TO ABOVE, HAS ACCEPTE D THE CHANGED REVENUE RECOGNI TION METH OD ADOPTED BY THE ASSESSEE AND ACCORDINGLY DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. IN THIS CONTEXT, IT IS NECESSARY TO REPRODUCE HEREUNDER THE FINDING OF THE CO ORDINATE BENCH ON THE ISSUE. 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW ON THE POINT. WE FIND THAT DURING THE YEAR UNDER 5 M/S. MAYA ENTERTAINMENT LTD. CONSIDERATION THE ASSESSEE HAS CHANGED SYSTEM OF REVENUE RECOGNITION QUA THE COURSE FEE RECEIVED FROM THE STUDENTS IN CINEMATIC TRAINING DIVISION FROM BILLING BASIS TO ONLY TO THE SYSTEM WHICH RECOGNIZED THE REVENUE BASIS ON THE TRAINING IMPARTED / SERVICES RENDERED. IN OUR OPINION, THE ASSESSEE HAS EVERY RIGHT TO CHANGE T HE METHOD OF ACCOUNTING PROVIDED THE SAME IS CONSISTENTLY FOLLOWING THE SUBSEQUENT YEARS. MOREOVER, THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO WHICH CONFIRMED THAT THE ASSESSEE WAS FOLLOWING THE SAID SYSTEM OF ACCOUNTING IN THE SUBSEQUENT YEAR S. WE ARE THEREFORE IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE LD. CIT(A) THAT THE AO WAS NOT RIGHT IN REJECTING THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE AND THEREFORE WE UPHOLD THE SAME. ACCORDINGLY, THE GROUND TAKEN BY THE REVENUE IS REJECTED BY UPHOLDING THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 8 . T HE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO MADE A STATEMENT AT THE BAR THAT AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) DELETING SIMILAR ADDITION MADE BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2012 13, THE DEPARTMENT HAS NOT PREFERRED ANY APPEAL BEFORE THE TRIBUNAL. THERE BEING NO DIFFERENCE IN FACT RELATING TO THE DISPUTED ISSUE IN THE IMPUGNED ASSESSMENT YEAR, RESPECTFULLY FOLLOWING THE DECISION OF THE CO ORDINATE BENCH IN ASSESSEES OWN CASE AS REFERRED TO ABOVE, WE UPHOLD THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE. GROUNDS RAISED ARE DISMISSED. 9 . IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.06.2018 SD/ - DR. A.L. SAI NI ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 27.06.2018 6 M/S. MAYA ENTERTAINMENT LTD. 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. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI