DCIT CEN CIR -30, MUMBAI V. TIPS INDUSTRIES LTD, MUMBAI

ITA 5535/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3677 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 02-12-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 09-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

1 ITA 5535/MUM/09, M/S TIPS INDUSTRIES LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RAO , JM ITA NO. 5535/MUM/09 ASSESSMENT YEAR 2006-07 A.C.I.T. CENTRAL CIR. 30, 4 TH FLOOR, AAYAKAR BHAWAN, M.K. MARG, MUMBAI 400 020. VS. M/S TIPS INDUSTRIES LIMITED, 601, DURGA CHAMBERS, 6 TH FLOOR, LINKING ROAD, KHAR (W), MUMBAI . 52 PAN AAACT5284 APPELLANT RESPONDENT APPELLANT BY SHRI D. SONGATE RESPONDENT BY SHRI DEEPAK TRALSHAWAL A ORDER PER P.M. JAGTAP, A.M. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) CENTRAL - V, MUMBAI DATED 15.07.2009 AND THE GRIEVANCE OF THE REVENUE IS PROJECTED IN THE FOLLOWING GROUNDS RAISED THEREIN:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT EXPENSES OF ` . 5,63,70,231/- INCURRED BY THE ASSESSEE FOR ACQUIRING AUDIO RIGHTS AS REVENUE EXPENDITURE AND A RE NOT CAPITAL EXPENDITURE AND THEREBY ALLOWING THE CLAIM OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF T HE DISALLOWANCE OF 1/3 RD OF THE EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD AD VERTISEMENT EXPENSES. 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS REGARDS GROUND NO. 1, THE L EARNED REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE INVOLVED THEREIN RELATIN G TO THE NATURE OF EXPENSES INCURRED BY THE ASSESSEE FOR ACQUIRING AUDIO RIGHTS WHETHER REV ENUE OR CAPITAL IS SQUARELY COVERED IN 2 ITA 5535/MUM/09, M/S TIPS INDUSTRIES LTD. FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004- 05 PASSED IN ITA NO. 2407/MUM/2008 WHEREIN IT WAS H ELD AS UNDER: GROUND NO. 1 IS ON THE ISSUE OF ALLOWABILITY OF EXP ENDITURE INCURRED ON PURCHASE OF AUDIO RIGHTS TREATED BY THE ASSESSING O FFICER AS CAPITAL EXPENDITURE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF AUDIO RIGHTS AND CDS AND FOR THIS PURPOSE IT PURCHASES AUDIO RIGHTS OF F ILM SONGS FROM PRODUCERS. EXPENDITURE INCURRED ON PURCHASE OF AUDIO RIGHTS, M USIC FOR WHICH IS RELEASED (ACCEPTED AS AUDIO RIGHTS) IS TREATED BY THE ASSESS EE AS REVENUE EXPENDITURE. THE INCOME TAX DEPARTMENT HAS BEEN SINCE ASSESSMENT YEA R 1990-91, DISALLOWING THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE EXPEND ITURE IS CAPITAL IN NATURE. THE TRIBUNAL FOR ALL THE EARLIER ASSESSMENT YEARS HAS B EEN DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. THE ASSESSING OFFICER MADE THE ADDIT ION OBSERVING AT PARAGRAPH 3.3 PAGE 7 THAT THE REVENUE HAS NOT ACCEPTED THE DECISI ON OF THE TRIBUNAL AND HAS FILED AN APPEAL BEFORE HONBLE BOMBAY HIGH COURT AND THAT TH E ADDITION IS MADE BY FOLLOWING THE STAND OF THE REVENUE IN THE EARLIER Y EARS TO KEEP THE ISSUE ALIVE. THE FIRST APPELLATE AUTHORITY APPLIED THE DECISION OF T HE TRIBUNAL AND DELETED THE ADDITION. WE SEE NO INFIRMITY IN THE SAME. IN FACT, GROUND 1 B OF THE REVENUE APPEALS STATES THAT THE GROUND IS TAKEN BECAUSE THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE TRIBUNAL. IN VIEW OF THE ABOVE DISCUSSION, WE RESP ECTFULLY APPLY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR EARLIER YEARS AND DISMISS THE GROUND TAKEN BY THE REVENUE. 3. EVEN IN A.Y. 2005-06, A SIMILAR ISSUE HAS BEEN DECI DED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE VIDE ITS ORDER DATED 29.01.2010 PAS SED IN ITA NO. 599/MUM/2009 FOLLOWING ITS EARLIER DECISION RENDERED IN ASSESSEE S OWN CASE FOR A.Y. 2004-05. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION AS W ELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF A.Y. 2004-05 AND 200 5-06, WE RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL FOR THE SAID YEAR AND UPHOLD THE IM PUGNED ORDER OF THE LD. CIT(A)ON THIS ISSUE. GROUND NO. 1 OF REVENUES APPEAL IS ACCORDI NGLY DISMISSED. 4. AS REGARDS GROUND NO. 2, IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELATING TO THE DISALLOWANCE OUT OF ADVERTISEMENT EXPENSES TO T HE EXTENT OF 1/3 RD IS ALSO SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-05 (SUPRA) WHEREIN A SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN PARA 3.2 OF ITS ORDER AS UNDER:- COMING TO GROUND 2 IT RELATES TO DISALLOWANCE OF 1/ RD OF ADVERTISEMENT EXPENDITURE ON THE GROUND THAT THE BENEFIT OF EXPEN DITURE ALSO ACCRUES TO THE PRODUCER OF THE FILMS WHOSE AUDIO RIGHTS WERE PURCH ASED BY THE ASSESSEE, HERE ALSO 3 ITA 5535/MUM/09, M/S TIPS INDUSTRIES LTD. LIKE IN GROUND NO. 1, BOTH THE ASSESSING OFFICER AS WELL AS THE FIRST APPELLATE AUTHORITY AGREED THAT IN THE EARLIER YEARS SIMILAR ISSUES HAVE COME UP BEFORE THE TRIBUNAL AND THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. IN THE LIGHT OF THE ABOVE WE RESPECTFULLY FOLLOW THE DECISION OF THE TRIBUNAL AND DISMISS THIS GROUND OF THE REVENUE. 5. FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL FO R A.Y. 2004-05, THE TRIBUNAL ALSO DECIDED SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE FOR A.Y. 2005-06 VIDE ITS ORDER DATED 29.1.2010 (SUPRA). AS THE ISSUE INVOLVED IN THE YE AR UNDER CONSIDERATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO A.Y. 2004-05 AND 2005-06, WE RESPECTFULLY FOLLOW THE ORDERS OF THE TRIBUNAL FOR THE SAID YEAR S AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE. GROUND N O. 2 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED ON 10 TH DECEMBER, 2010. SD/- SD/- (V. DURGA RAO) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI, DATED 10 TH DECEMBER , 2010. RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XIX - MUMBAI 4. THE CIT- 19 MUMBAI 5. THE DR BENCH, E 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 4 ITA 5535/MUM/09, M/S TIPS INDUSTRIES LTD. ` DATE INITIALS 1. DRAFT DICTATED 2.12.10 SR.P.S./P.S. 2. DRAFT PLACED BEFORE AUTHOR 3.12.10 SR.P.S./P.S. 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER. - J.M./A.M. 4.DRAFT DISCUSSED/ APPROVED BY SECOND MEMBER. J.M./A.M. 5. APPROVED DRAFT COMES TO THE SR.P.S./P.S. SR.P.S./P.S. 6. KEPT FOR PRONOUNCEMENT ON SR.P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S. 8. DATE OF WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER.