DCIT C.C. 30, MUMBAI V. TIPS INDUSTRIES LTD, MUMBAI

ITA 599/MUM/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 5597 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-01-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 29-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANT J LAL
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI T.R.SOOD, AM & SMT. P.MADHAVI DEVI, JM I.T.A.NO.599/MUM/2009 - A.Y 2005-06 DY. COMMISSIONER OF I.T., C.C. 30, MUMBAI VS. M/S TIPS INDUSTRIES LTD., 601, DURGA CHAMBERS, LINKING ROAD, 6 TH FLOOR, KHAR (W), MUMBAI 400 052 PAN NO. AAACT 5284 A (APPELLANT) (RESPONDENT) REVENUE BY : SHRI HEMANT J. LAL. ASSESSEE BY : SHRI DEEPAK TRALSHAWALA. O R D E R PER P.MADHAVI DEVI, JM: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST CIT (A)S ORDER DATED 12/11/2008 FOR THE A.Y 2005-06. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT[A] ERRED IN HOLDING THAT EXPENSES OF RS.3,76,92,710/- INCURRED BY THE ASSESSEE FOR ACQUIRING AUDIO RIGHTS AS REVENUE EXPENDITURE AND ARE NOT CAPITAL EXPENDITURE AND THE REBY ALLOWING THE CLAIM OF THE ASSESSEE . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT[A] ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF THE DISALLOWANCE OF 1/3 RD OF THE EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD ADVERTISEMENT EXPENSES. 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUES RAISED BY THE ASSESSEE AR E COVERED BY THE DECISION OF E BENCH OF THE TRIBUNAL IN I.T.A.NO.2 407/MUM/2008 IN THE ASSESSEES OWN CASE FOR A.Y 2004-05. HE HAS FILED A COPY OF THE SAID ORDER BEFORE US. THE LD. DR, THOUGH FAIRLY ADMITTED THAT THE ISSUES ARE 2 COVERED BY THE DECISION OF THE TRIBUNAL CITED SUPRA , HOWEVER, PLACED RELIANCE UPON THE ORDER OF THE AO. 4. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THEIR RIVAL CONTENTIONS, WE FIND THAT THE ISSUES RAISED IN THIS APPEAL ARE COVERED BY THE DECISION OF THE TRIBUNAL CITED SUPRA. 5. AS REGARDS GROUND NO.1, THE TRIBUNAL HAS DEALT W ITH THIS ISSUE AT PARA 3.1 OF ITS ORDER IN I.T.A.NO.2407/M/08 WHICH I S REPRODUCED HEREUNDER FOR EASY REFERENCE- 3.1 GROUND NO.1 IS ON THE ISSUE OF ALLOWABILITY OF EXPENDITURE INCURRED ON PURCHASE OF AUDIO RIGHTS TREATED BY THE ASSESSING OFFICER AS CAPITAL EXPENDITURE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF AUDIO RIGHTS AND CDS AND FO R THIS PURPOSE IT PURCHASES AUDIO RIGHTS OF FILM SONGS FROM PRODUCERS . EXPENDITURE INCURRED ON PURCHASE OF AUDIO RIGHTS, MUSIC FOR WHI CH IS RELEASED [ACCEPTED AS AUDIO RIGHTS] IS TREATED BY THE ASSESSEE AS REVENUE EXPENDITURE. THE INCOME-TAX DEPARTMENT HAS BEEN SIN CE ASSESSMENT YEAR 1990-91, DISALLOWING THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE EXPENDITURE IS CAPITAL IN NATURE. THE TRIBUNAL FOR ALL THE EARLIER ASSESSMENT YEARS HAS BEEN DECIDING THE ISSUE IN FAV OUR OF THE ASSESSEE . THE ASSESSING OFFICER MADE THE ADDITION OBSERVING AT PARAGRAPH 3.3 ON PAGE 7 THAT THE REVENUE HAS NOT AC CEPTED THE DECISION OF THE TRIBUNAL AND HAS FILED AN APPEAL BE FORE HON'BLE BOMBAY HIGH COURT AND THAT THE ADDITION IS MADE BY FOLLOWING THE STAND OF THE REVENUE IN THE EARLIER YEARS TO KEEP T HE 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 F ACT, GROUND 1B OF THE REVENUE APPEALS STATES THAT THE GROUND IS TAKEN BEC AUSE THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE TRI BUNAL. IN VIEW OF THE ABOVE DISCUSSION, WE RESPECTFULLY APPLY THE DEC ISION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR EARLIER YEARS AND DISMISS THE GROUND TAKEN BY THE REVENUE. IN VIEW OF THE SAME, GROUND OF APPEAL NO.1 IS REJEC TED. 6. AS REGARDS GROUND NO.2, WE FIND THAT THE TRIBUN AL HAS DEALT WITH THIS ISSUE AT PARA 3.2 OF ITS ORDER CITED SUPR A, WHICH IS REPRODUCED AS UNDER- 3.2 COMING TO GROUND 2 IT RELATES TO DISALLOWANCE OF 1/3 RD OF ADVERTISEMENT EXPENDITURE ON THE GROUND THAT THE BE NEFIT OF 3 EXPENDITURE ALSO ACCRUES TO THE PRODUCER OF THE FIL MS WHOSE AUDIO RIGHTS WERE PURCHASED BY THE ASSESSEE . HERE ALSO LIKE IN GROUND NO.1, BOTH THE ASSESSING OFFICER AS WELL AS THE FIRST APP ELLATE AUTHORITY AGREED THAT IN THE EARLIER YEARS SIMILAR ISSUES HAV E 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. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH THIS GROUND IS ALSO REJECTED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 29 TH DAY OF JANUARY, 2010. SD/- SD/- (T.R.SOOD) (P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 29 TH JANUARY, 2010. P/-* COPY TO- 1) APPELLANT 2) RESPONDENT 3) CITA MUMBAI. 4) CIT CITY MUMBAI 5) DR BENCH MUMBAI TRUE COPY BY ORDER DY /ASST.REGISTRAR,ITAT MUMBAI. 4 SR.NO. PARTICULARS DATE INITIALS 1 DRAFT DICTATED ON 29-1-10 P 2 DRAFT PLACED BEFORE AUTHOR 29-1-10 P 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO SR.PS/PS 6 ORDER KEPT FOR PRONOUNCEMENT 7 FILE SENT TO BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER