The ITO, Ward-9(2), Surat V. Gangani Film Production, Surat

ITA 614/AHD/2010

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9633 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Business income; Corroborative evidences
• Section: 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. ./ I.T.A. NO.202/AHD/2010 AY 2006-07 2. ./ I.T.A. NO.614/AHD/2010 AY 2006-07 1.GANGANI FILM PRODUCTION 225, SUNRISE CHAMBERS MINI BAZAR VARACHHA ROAD SURAT 2. THE INCOME TAX OFFICER WARD-9(2), SURAT / VS. 1.THE INCOME TAX- OFFICER, WARD-9(2) SURAT 2. GANGANI FILM PRODUCTION, SURAT ./ ./ PAN/GIR NO. : AAGFG 0311A ( # / APPELLANTS ) .. ( $% # / RESPONDENTS ) ASSESSEE B Y : SHRI M.K. PATEL, AR REVENUE BY : SHRI M.K. SINGH, SR.DR &'() / DATE OF HEARING 24/03/2015 *+,-() / DATE OF PRONOUNCEMENT 17/04/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE CROSS-APPEALS BY THE ASSESSEE AND THE REVEN UE ARE DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-V, SURAT (CIT(A) IN SHORT) DATED 12/11/2009 PERTAINING TO ASSESSMENT YEAR (AY) 2006-07. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 2 - 2. FIRST WE TAKE UP THE ASSESSEES APPEAL IN ITA NO .202/AHD/2010 FOR AY 2006-07. THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS. 65,300 ON ACCOUNT OF CRANE TROLLEY EXPENSES AS ALLEGED UNEXPLAINED EXPENDITURE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING ADDITION OF RS. 1,93,180 ON ACCOUNT O F CAMERAMAN EXPENSES DISALLOWED U/S 40(A)(IA) OF THE I.T. ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING DISALLOWANCE OF RS. 10,41,492 ON ACCO UNT OF LABORATORY EXPENSES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING 25% DISALLOWANCE OF RS. 51,308 ON ACC OUNT OF TRAVELLING EXPENSES AS ALLEGED UNEXPLAINED EXPENDITURE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING 25% DISALLOWANCE OF RS.12,832 ON ACCO UNT OF VEHICLE EXPENSES AS ALLEGED UNEXPLAINED EXPENDITURE. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING 50% DISALLOWANCE OF RS. 33,467 ON ACC OUNT OF ELECTRIC POWER (STUDIO) EXPENSES AS ALLEGED UNEXPLAINED EXPENDITUR E. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 3 - 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING 50% DISALLOWANCE OF RS.1,85,000 ON AC COUNT OF MUSIC EXPENSES AS ALLEGED UNEXPLAINED EXPENDITURE. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING 50% DISALLOWANCE OF RS.95,288 ON ACCO UNT OF STUDIO EXPENSES AS ALLEGED UNEXPLAINED EXPENDITURE. 9. IT IS THEREFORE PRAYED THAT THE ABOVE ADDITION MAY PLEASE BE DELETED AS LEARNED MEMBERS OF THE TRIBUNAL MAY DEEM IT PROP ER. 10. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF THE HEARING OF THE APPEA L. 2.1. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 17/12/2008, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE VARIOUS DISALLOWANCES OF EXPENSES; VIZ. DISALLOWANC E OF CRANE-TROLLEY RENT EXPENSES OF RS.65,300/-, DISALLOWANCE OF CAMERA-MAN SALARY EXPENSES OF RS.1,93,180/-, DISALLOWANCE OF LABORATORY EXPENSES OF RS.16,69,492/-, DISALLOWANCE OF PUBLICITY EXPENSES OF RS.4,96,065/- , DISALLOWANCE OF TRAVELLING EXPENSES OF RS.1,02,615/-,DISALLOWANCE O F VEHICLE EXPENSES OF RS.25,663/-, DISALLOWANCE OF ARTIST EXPENSES OF RS. 1,21,294/-, DISALLOWANCE OF ELECTRIC POWER EXPENSES OF RS.66,93 3/-, DISALLOWANCE OF MUSIC EXPENSES OF RS.3,70,000/-, DISALLOWANCE OF ST UDIO EXPENSES OF ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 4 - RS.1,90,575/- AND MADE ADDITION OF RS.1,80,000/- ON ACCOUNT OF UNDER STATEMENT OF INCOME. AGAINST THIS, THE ASSESSEE FI LED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, PARTLY ALLOWED THE APPEAL. WHILE PARTLY ALLOWING THE APP EAL, THE LD.CIT(A) CONFIRMED THE DISALLOWANCES MADE ON ACCOUNT OF CRAN E-TROLLEY RENT EXPENSES, CAMERAMAN EXPENSES, SUSTAINED 25% OF DISA LLOWANCE MADE ON ACCOUNT OF TRAVELLING EXPENSES, SUSTAINED 25% OF D ISALLOWANCE MADE ON ACCOUNT OF VEHICLE EXPENSES, SUSTAINED 50% OF DISAL LOWANCE MADE ON ACCOUNT OF ELECTRIC-POWER (STUDIO) EXPENSES, SUSTAI NED 50% OF DISALLOWANCE MADE ON ACCOUNT OF MUSIC EXPENSES AND SUSTAINED 50% OF DISALLOWANCE MADE ON ACCOUNT OF STUDIO EXPENSES. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), BOTH THE ASSESSEE AND THE R EVENUE ARE NOW IN CROSS-APPEALS BEFORE US. 3. IN ASSESSEES APPEAL GROUND NO.1 IS AGAINST CONF IRMATION OF DISALLOWANCE OF RS.65,300/- MADE ON ACCOUNT OF CRAN E-TROLLEY EXPENSES. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE DISALLOWANCE AND CONFIR MING THE EXPENDITURE. HE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN FILM PRODUCTION AND ASSESSEE HAD PRODUCED AND RELEASED A GUJARAT FILM NAMED ME TO PALVADE BANDHI PREET. THE LD.COUNSEL FOR THE ASSE SSEE SUBMITTED THAT AS PER RULE 9A OF THE INCOME-TAX RULES, IN CASE, THE F ILM IS NOT RELEASED FOR EXHIBITION ON A COMMERCIAL BASIS AT LEAST 90 DAYS B EFORE THE END OF SUCH ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 5 - PREVIOUS YEAR, THE COST OF PRODUCTION OF THE FILM I N SO FAR AS IT DOES NOT EXCEED THE AMOUNT REALIZED BY THE FILM PRODUCER BY EXHIBITING THE FILM ON A COMMERCIAL BASIS OR THE AMOUNT FOR WHICH THE R IGHTS OF EXHIBITION ARE SOLD OR, AS THE CASE MAY BE, THE AGGREGATE OF T HE AMOUNTS REALIZED BY THE FILM PRODUCER BY EXHIBITING THE FILM AND BY THE SALE OF THE RIGHTS OF EXHIBITION, SHALL BE ALLOWED AS A DEDUCTION IN COMP UTING THE PROFIT AND GAINS OF SUCH PREVIOUS YEAR; AND THE BALANCE, IF AN Y, SHALL BE CARRIED FORWARD TO THE NEXT FOLLOWING PREVIOUS YEAR AND ALL OWED AS A DEDUCTION IN THAT YEAR. THE LD.COUNSEL FOR THE ASSESSEE SUBM ITTED THAT IN VIEW OF THE PROVISION, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE DISALLOWANCES AND SUSTAINED THE SAME. 3.1. THE LD.SR.DR SUBMITTED THAT THE ASSESSEE WAS R EQUIRED TO SUBSTANTIATE ITS CLAIM OF EXPENDITURE OF CRANE-TROL LEY RENT EXPENDITURE. HE SUBMITTED THAT THE ASSESSEE FAILED TO FURNISH TH E COMPLETE DETAILS WITH REGARD TO ADDRESS OF PAYEE WHICH WAS NOT GIVEN BY T HE ASSESSEE, THEREFORE THE AO WAS JUSTIFIED IN MAKING THE DISALLOWANCE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO HAD MADE DISALLOWANCE BY OBSERV ING AS UNDER:- THE FILM HAS BEEN RELEASED ON 11.02.2005. THEREFO RE, QUESTION OF CRAIN TROLLEY RENT EXPENSE DOES NOT ARISE DURING TH E PREVIOUS YEAR ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 6 - RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION . IF AT ALL, THE EXPENSES WERE INCURRED IN THE EARLIER YEAR, THE ASS ESSEE WAS REQUIRED TO PROVE THE EXPENSES BY SUPPORTING EVIDEN CES. NOT A SINGLE PIECE OF PAPER IN THE FORM OF EVIDENCE TO SU PPORT CRAIN TROLLEY RENT EXPENSES HAS BEEN FURNISHED. THE ASSE SSEE FURNISHED A CHART SHOWING EXPENSES INCURRED DURING F.Y. 2002-03 TO F.Y. 2005-06. IT MAY BE REITERATED THAT EXPENSES SHOWN IN THE CHART REMAINED UNSUPPORTED BARRING LABORATORY EXPENSES IN CURRED DURING F.Y. 2002-03. ON PERUSAL OF THE SAID CHART IT IS SEEN THAT NO SUCH EXPENSES WERE CLAIMED INCURRED IN EARLIER Y EARS. THIS PROVES THAT CRAIN TROLLEY EXPENSES ARE NOT REAL BUT MERE AN ATTEMPT TO INFLATE EXPENSES TO REDUCE TAX LIABILITY. THE E XPENSES ARE CLAIMED INCURRED IN CASH WHICH GIVES ENORMOUS SCOPE TO INFLATE THE EXPENSES. THE EXPENSES ARE NOT VERIFIABLE. COMPLE TE ADDRESS OF PAYEE WAS NOT GIVEN. IN VIEW OF THIS CRAIN TROLLEY RENT EXPENSE IS HELD TO BE INADMISSIBLE. ACCORDINGLY, THE CRAIN TR OLLEY RENT EXPENSES OF RS.65,300/- IS DISALLOWED AND ADDED BAC K TO THE TOTAL INCOME OF THE ASSESSEE. 4.1. THE LD.CIT(A) CONFIRMED THE FINDING OF THE AO BY OBSERVING AS UNDER:- 5. I HAVE PERUSED BOTH THE POSITIONS. AS REGARDS CRANE TROLLEY RENT EXPENSES IT IS ADMITTED BY THE APPELLANT THAT HE WAS UNABLE TO PRODUCE THE VOUCHERS. THE ASSESSING OFFICER HAS GI VEN A DEFINITE FINDING OF FACT THAT THE EXPENDITURE IS NOT SUPPORT ED BY RELEVANT EVIDENCES. FURTHER, NO JUSTIFIABLE REASON HAS BEEN GIVEN AS TO HOW SAID EXPENSE IS NECESSARILY REQUIRED TO BE INCURRED . THEREFORE, I DO NOT CONSIDER IT PROPER TO INTERFERE WITH THE FIN DINGS OF ASSESSING OFFICER. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 7 - 4.2 THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE/MATE RIAL IN SUPPORT OF ITS CLAIM BEFORE THE AO OR LD.CIT(A). THEREFORE, W E DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE AUTHORITI ES BELOW, THE SAME IS HEREBY CONFIRMED. THUS, THIS GROUND OF ASSESSEES APPEAL IS REJECTED. 5. GROUND NO.2 IS AGAINST SUSTAINING THE DISALLOWAN CE OF EXPENDITURE MADE ON ACCOUNT OF SALARY EXPENSES OF CAMERA-MAN. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW W ERE NOT JUSTIFIED IN CONFIRMING THE ADDITION. HOWEVER, HE ADMITTED THE FACT THAT IN SUPPORT OF THE EXPENDITURE, NO EVIDENCE WAS PLACED. 5.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON FACT IN PARA5.1 OF HIS ORDER BY OBSERVING AS UNDER:- 5.1. COMING TO THE ISSUE OF DISALLOWANCE OF CAMERA MAN SALARY, THE EXPENSES HAVE BEEN INCURRED IN CASH AND ARE NOT VER IFIABLE BECAUSE THE PERSON TO WHOM THE PAYMENTS HAVE BEEN MADE HAS EVAD ED THE NOTICE. THEREFORE THE GENUINENESS OF THE CLAIM MADE BY THE ASSESSEE IS NOT ESTABLISHED. EVEN OTHERWISE, THE ASSESSEE WAS REQU IRED TO DEDUCT TDS ON SUCH PAYMENTS MADE IN RESPECT OF WORK CONTRACT G IVEN TO THE CAMERAMAN BY THE ASSESSEE. THE APPELLANT HAS TAKEN A POSITION THAT PROVISION OF SECTION 40(A)(IA) IS NOT APPLICABLE AS IT COMES INTO EFFECT FROM ASSESSMENT YEAR 2005-06 PRIOR TO WHICH THE PAY MENTS HAVE BEEN MADE. THERE IS NO EVIDENCE TO SUPPORT THE ASSESSEE S CONTENTION THAT ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 8 - THE PAYMENTS WERE MADE PRIOR TO THE A.Y. 2005-06. FURTHER, THE ASSESSEE HAS CONTENDED THAT ON EACH OCCASION THE PA YMENTS HAVE BEEN MADE BELOW RS.20,000/-, THUS IMPLYING THAT THE PROV ISION OF 194C IS NOT APPLICABLE. AS PER PROVISION OF SECTION 194C(3)(I) WHERE THE AGGREGATE OF AMOUNT OF SUCH SUM CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID DURING THE F.Y. EXCEEDS RS.50,000/-, THE PERSON RES PONSIBLE FOR SUCH SUMS SHALL BE LIABLE TO DEDUCT INCOME-TAX U/S.194C. THEREFORE, EVEN IF IN EACH OCCASION THE PAYMENT HAS BEEN MADE BELOW RS .20,000/-, AGGREGATE AMOUNT PAID IS ABOVE RS.50,000/-, THEREFO RE, REQUIRING THE ASSESSEE TO DEDUCT TAX AT SOURCE U/S.194C R.W.S.40( A)(IA). IN VIEW OF THIS, I DO NOT FIND ANY MERIT IN THE SUBMISSION OF THE APPELLANT AND DISALLOWANCE IS CONFIRMED. 6.1. WE DO NOT SEE ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, THIS GROU ND OF ASSESSEES APPEAL IS REJECTED. 7. GROUND NO.3 IS AGAINST SUSTAINING THE DISALLOWANCE OF RS.10,41,492/- MADE ON ACCOUNT OF LABORATORY EXPENS ES. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WAS N OT JUSTIFIED IN SUSTAINING THE ADDITION. HE SUBMITTED THAT THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ENTIRE EXPENDITURE PER TAINS TO THE FILM RELEASE IN FEBRUARY-2005 WHICH IS ALLOWABLE AS DEDUCTION IN VIEW OF RULE 9A OF THE I.T.RULES. 7.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDER OF THE AO. HE SUBMITTED THAT THE LD.CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 9 - HOWEVER, HE SUBMITTED THAT THE LD.CIT(A) OUGHT TO H AVE CONFIRMED THE ENTIRE DISALLOWANCE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING IN P ARAS-8 & 8.1. WHICH READ AS UNDER:- 8. I HAVE CONSIDERED BOTH THE POSITIONS. THE DIS ALLOWANCE HAS TWO COMPONENTS, ONE IS RS.10,41,492/- AND ANOTHER RS.6, 28,000/-. IT IS CLEAR FROM THE FACTS THAT THE EXPENDITURE OF RS.10, 41,492/- WAS INCURRED IN 2002-03. THUS THIS EXPENDITURE IS NOT PERTAININ G TO THE FILM RELEASED DURING THE YEAR UNDER REFERENCE. THEREFORE, ASSESS ING OFFICERS FINDINGS ON THIS POINT IS CONCURRED WITH. THE APPELLANT HAS ALSO ADMITTED THAT THE EXPENDITURE WAS ALLOWABLE AGAINST THE INCOME EA RNED ON THE RELEASE OF FILM MANDOVADA ROPAVO MANARAJ WHICH WAS RELEAS ED IN EARLIER YEARS. THE A.R.S CONTENTION THAT THERE WOULD BE L OSS TO THE EXTENT OF RS.10,41,490/- AGAINST THE AFORESAID FILM AND LOSS WOULD BE ALLOWABLE FOR SET OFF AGAINST THE BUSINESS INCOME FOR THE YEA R UNDER CONSIDERATION. THE A.R. HAS ADMITTED THAT THE ABOVE AMOUNT WAS INA DVERTENTLY CARRIED FORWARD TO THE EXTENT YEAR INSTEAD OF CLAIMING DEDU CTION. WHILE THERE COULD BE MERIT IN THE SUBMISSION OF THE APPELLANT, THE FACT REMAINS THAT THE ASSESSEE HAS NOT CLAIMED THIS AMOUNT IN THE RES PECTIVE YEAR AND AS SUCH NO LOSS HAS BEEN DETERMINED IN ASSESSMENT IN A NY EARLIER ASSESSMENT YEAR. THEREFORE, THE QUESTION OF CARRYI NG FORWARD THIS UNDETERMINED/UNASSESSED LOSS TO BE SET OFF AGAINST THE INCOME OF THE CURRENT ASSESSMENT YEAR DOES NOT ARISE. THE LOSS I S REQUIRED TO BE ASSESSED FIRST TO BE ELIGIBLE FOR CARRY FORWARD TO THE SUBSEQUENT YEARS IN ACCORDANCE WITH THE PROVISION OF THE ACT. THEREFOR E THE SUBMISSION OF THE APPELLANT IS HYPOTHETICAL IN NATURE AND IS NOT PERMISSIBLE UNDER THE LAW. IN VIEW OF THIS, THE DISALLOWANCE OF RS.10,41 ,492/- IS CONFIRMED. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 10 - 8.1. AS REGARDS DISALLOWANCE OF RS.6,28,000/-, IT F ORMS A PART OF RS.12,56,000/- SAID TO HAVE BEEN INCURRED IN F.Y. 2 004-05. THIS EXPENDITURE PERTAINS TO THE FILM ME TO PLAVADE BAN DHI PREET RELEASED DURING THE YEAR UNDER REFERENCE. 50% OF T HE EXPENDITURE HAS BEEN CLAIMED IN A.Y. 2005-06 AND REMAINING UNCLAIME D EXPENDITURE SHOWN AS CLOSING WIP HAS BEEN CLAIMED DURING THE YE AR UNDER REFERENCE. THEREFORE, THERE IS NO DOUBLE DEDUCTION AS OBSERVED BY THE ASSESSING OFFICER. THE CLAIM MADE IN CONSONANCE WI TH THE RULE 9A OF I.T.RULES IS ELIGIBLE FOR DEDUCTION. THE DISALLOWA NCE TO THIS EXTENT IS THEREFORE DELETED. 8.1. THE LD.COUNSEL FOR THE ASSESSEE COULD NOT CONT ROVERT THE FINDING OF THE LD.CIT(A) BY PLACING ANY MATERIAL ON RECORD. T HEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A),SAME IS HEREBY UPHELD. THUS, THIS GROUND OF ASSESSEES APP EAL IS REJECTED. 9. GROUND NO.4 IS AGAINST SUSTAINING 25% DISALLOWAN CE OF RS.51,308/- ON ACCOUNT OF TRAVELLING EXPENSES. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTI FIED IN SUSTAINING 25% DISALLOWANCE MADE BY THE AO. HE SUBMITTED THAT T HE LD.CIT(A) OUGHT TO HAVE DELETED THE ENTIRE DISALLOWANCE. 9.1. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT THE A DMITTED FACT IS THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPP ORT OF ITS CLAIM, THEREFORE THE AO WAS JUSTIFIED IN MAKING THE DISALL OWANCE OF THE EXPENDITURE. HE SUBMITTED THAT ANY CLAIM OF THE EX PENDITURE THE ONUS IS ON THE ASSESSEE TO PROVE THAT SUCH EXPENDITURE WAS INCURRED. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 11 - 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO HAD MADE AHOC DISALLOWANCE @ 50 % PURELY ON ESTIMATION BASIS. LD.CIT(A) REDUCED THE SAME TREA TING ADHOC DISALLOWANCE TO 25%. ADMITTEDLY, THERE IS NO SUPPO RTING EVIDENCE WAS PRODUCED BY THE ASSESSEE. EVEN BEFORE THIS TRIBUNA L AS WELL, THE ASSESSEE HAS NOT PLACED ANY EVIDENCE, PROVING THE EXPENDITUR E. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE FINDING OF LD.CIT(A), SAME IS HEREBY CONFIRMED. THIS GROUND OF ASSESSEES APPEAL IS DISMISSED. 11. GROUND NO.5 IS AGAINST SUSTAINING 25% DISALLOWA NCE OF RS.12,832/- ON ACCOUNT OF VEHICLE EXPENSES. THE LD .COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTI FIED IN SUSTAINING 25% DISALLOWANCE MADE BY THE AO. HE SUBMITTED THAT T HE LD.CIT(A) OUGHT TO HAVE DELETED THE ENTIRE DISALLOWANCE. 11.1. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT THE ADMITTED FACT IS THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPP ORT OF ITS CLAIM, THEREFORE THE AO WAS JUSTIFIED IN MAKING THE DISALL OWANCE OF THE EXPENDITURE. HE SUBMITTED THAT FOR ANY CLAIM OF TH E EXPENDITURE THE ONUS IS ON THE ASSESSEE TO PROVE THAT SUCH EXPENDITURE W AS INCURRED. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 12 - 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO HAD MADE AHOC DISALLOWANCE @ 50 % PURELY ON ESTIMATION BASIS. LD.CIT(A) REDUCED THE SAME TREA TING ADHOC DISALLOWANCE TO 25%. ADMITTEDLY, NO SUPPORTING EV IDENCE WAS PRODUCED BY THE ASSESSEE. EVEN BEFORE THIS TRIBUNAL AS WELL , THE ASSESSEE HAS NOT PLACED ANY EVIDENCE, PROVING THE EXPENDITURE. THER EFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE FINDING OF LD.CIT( A), SAME IS HEREBY CONFIRMED. THIS GROUND OF ASSESSEES APPEAL IS DIS MISSED. 13. GROUND NO.6 IS AGAINST SUSTAINING 50% DISALLOW ANCE OF RS.33,467/- ON ACCOUNT OF ELECTRIC POWER EXPENSES. THE LD.COUN SEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN S USTAINING 50% DISALLOWANCE MADE BY THE AO. HE SUBMITTED THAT T HE LD.CIT(A) OUGHT TO HAVE DELETED THE ENTIRE DISALLOWANCE. 13.1. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT THE ADMITTED FACT IS THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPP ORT OF ITS CLAIM, THEREFORE THE AO WAS JUSTIFIED IN MAKING THE DISALL OWANCE OF THE EXPENDITURE. HE SUBMITTED THAT ANY CLAIM OF THE EX PENDITURE THE ONUS IS ON THE ASSESSEE TO PROVE THAT SUCH EXPENDITURE WAS INCURRED. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 13 - 14. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO HAD MADE THE DISALLOWANCE ON TH E GROUND THAT ASSESSEE HAS NOT PRODUCED ANY SUPPORTING EVIDENCE. LD.CIT(A) REDUCED THE SAME TREATING ADHOC DISALLOWANCE TO 50%. EVEN BEFORE THIS TRIBUNAL AS WELL, THE ASSESSEE HAS NOT PLACED ANY EVIDENCE, PROVING THE EXPENDITURE. THEREFORE, WE DO NOT SEE ANY REASON T O INTERFERE WITH THE FINDING OF LD.CIT(A), SAME IS HEREBY CONFIRMED. TH IS GROUND OF ASSESSEES APPEAL IS DISMISSED. 15. GROUND NO.7 IS AGAINST SUSTAINING 50% DISALLOWA NCE OF RS.1,85,000/- ON ACCOUNT OF MUSIC EXPENSES. THE LD .COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTI FIED IN SUSTAINING 50% DISALLOWANCE MADE BY THE AO. HE SUBMITTED THAT T HE LD.CIT(A) OUGHT TO HAVE DELETED THE ENTIRE DISALLOWANCE. 15.1. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT THE ADMITTED FACT IS THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPP ORT OF ITS CLAIM, THEREFORE THE AO WAS JUSTIFIED IN MAKING THE DISALL OWANCE OF THE EXPENDITURE. HE SUBMITTED THAT ANY CLAIM OF THE EX PENDITURE THE ONUS IS ON THE ASSESSEE TO PROVE THAT SUCH EXPENDITURE WAS INCURRED. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 14 - WE FIND THAT THE AO HAD MADE THE DISALLOWANCE ON TH E GROUND THAT ASSESSEE HAS NOT PRODUCED ANY SUPPORTING EVIDENCE. LD.CIT(A) REDUCED THE SAME TREATING ADHOC DISALLOWANCE TO 50%. EVEN BEFORE THIS TRIBUNAL AS WELL, THE ASSESSEE HAS NOT PLACED ANY EVIDENCE, PROVING THE EXPENDITURE. THEREFORE, WE DO NOT SEE ANY REASON T O INTERFERE WITH THE FINDING OF LD.CIT(A), SAME IS HEREBY CONFIRMED. TH IS GROUND OF ASSESSEES APPEAL IS DISMISSED. 17. GROUND NO.7 IS AGAINST SUSTAINING 50% DISALLOW ANCE OF RS.95,288/- ON ACCOUNT OF STUDIO EXPENSES. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN SUSTAINING 50% DISALLOWANCE MADE BY THE AO. HE SUBMITTED THAT THE LD.CIT(A) OUGHT TO HAVE DELETED THE ENTIRE DISALLOWANCE. 17.1. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT THE ADMITTED FACT IS THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPP ORT OF ITS CLAIM, THEREFORE THE AO WAS JUSTIFIED IN MAKING THE DISALL OWANCE OF THE EXPENDITURE. HE SUBMITTED THAT ANY CLAIM OF THE EX PENDITURE THE ONUS IS ON THE ASSESSEE TO PROVE THAT SUCH EXPENDITURE WAS INCURRED. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO HAD MADE THE DISALLOWANCE ON TH E GROUND THAT ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 15 - ASSESSEE HAS NOT PRODUCED ANY SUPPORTING EVIDENCE. LD.CIT(A) REDUCED THE SAME TREATING ADHOC DISALLOWANCE TO 50%. EVEN BEFORE THIS TRIBUNAL AS WELL, THE ASSESSEE HAS NOT PLACED ANY EVIDENCE, PROVING THE EXPENDITURE. THEREFORE, WE DO NOT SEE ANY REASON T O INTERFERE WITH THE FINDING OF LD.CIT(A), SAME IS HEREBY CONFIRMED. TH IS GROUND OF ASSESSEES APPEAL IS DISMISSED. 20. GROUND NOS.9 & 10 ARE GENERAL IN NATURE REQUIRE NO INDEPENDENT ADJUDICATION. 21. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. 22. NOW, WE TAKE UP THE REVENUES APPEAL IN ITA NO. 614/AHD/2010 FOR AY 2006-07. THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 6,28,000/- MADE BY THE A.O. ON ACCOUNT OF LABORATORIES EXPENSES WITHOU T APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO SUBSTANTIATE SUCH EXPENSES. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 4,96,065/- MADE BY THE A.O. ON ACCOUNT OF PUBLICITY EXPENSES WITHOUT A PPRECIATING THE FACT THAT THE ASSESSEE FAILED TO SUBSTANTIATE SUCH EXPEN SES. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,80,000/- MADE ON ACCOUNT OF UNDER ASSESSMENT OF INCOME WITHOUT APPRE CIATING THE FACT THAT THE ASSESSEE FAILED TO RECONCILE THE FIGURES I N THE BANK ACCOUNT AND AS SHOWN IN THE P&L ACCOUNT. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 16 - [4] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,85,000/- MADE BY THE A.O. ON ACCOUNT OF MUSIC EXPENSES WITHOUT APPRE CIATING THE FACT THAT THE ASSESSEE FAILED TO SUBSTANTIATE SUCH EXPENSES. [5] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,21,294/- MADE BY THE A.O. ON ACCOUNT OF ARTIST EXPENSES WITHOUT APPR ECIATING THE FACT THAT THE ASSESSEE FAILED TO SUBSTANTIATE SUCH EXPENSES. 22.1. FIRST GROUND OF REVENUES APPEAL IS AGAINST D ELETION OF ADDITION OF RS.6,28,000/-. THE LD.SR.DR SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. HE SUBMITTED T HAT THE ASSESSEE FAILED TO FURNISH THE REQUISITE EVIDENCE IN SUPPORT OF ITS CL AIM. THEREFORE, THE AO WAS JUSTIFIED IN MAKING THE ADDITION. HE HEAVILY R ELIED ON THE ASSESSMENT ORDER. HE REITERATED THE SUBMISSIONS MADE IN THE S TATEMENT OF FACTS. 22.2. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. HE SUBMITTED THAT UND ER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE AO WAS NOT J USTIFIED IN MAKING THE ADDITION. 23. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE AO MADE ADDITION OF RS.6,28,000/- ON THE BASIS THAT THE ASSESSEE HAS CLAIMED THIS AMOUNT TWICE; I.E. IN AY 2005-06 AND IN 2006-07. ANOTHER ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 17 - OBJECTION OF THE AO WAS THAT THE ASSESSEE DID NOT F URNISH ANY BILL OR VOUCHER IN SUPPORT OF HIS CLAIM OF EXPENSES. HOWEV ER, WE FIND THAT THE LD.CIT(A) HAS GIVEN FINDING ON FACT IN PARAS-8 & 8. 1 OF HIS ORDER (WHICH ARE REPRODUCED IN PARA-8 OF THIS ORDER-SUPRA). 23.1. THE AFORESAID FINDING OF THE LD.CIT(A) IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF T HE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, THIS GROUND OF REVENUES APPE AL IS DISMISSED. 24. SECOND GROUND OF REVENUES APPEAL IS AGAINST DE LETION OF ADDITION OF RS.4,96,065/- MADE ON ACCOUNT OF PUBLICITY EXPEN SES. LD.SR.DR RELIED ON THE ORDER OF THE AO AND REITERATED THE SUBMISSIO NS MADE IN THE STATEMENT OF FACTS. 24.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A). 25. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE AO MADE DISALLOWANCE FOR WANT OF SUPPORTING EVI DENCE. HOWEVER, LD.CIT(A) IN PARA-10 OF HIS ORDER HAS GIVEN FINDING ON FACT AS UNDER:- 10. I HAVE CONSIDERED THE REASONS GIVEN BY ASSESS ING OFFICER AND ALSO THE SUBMISSIONS OF APPELLANT. IT IS NOT DISPUTED T HAT THIS EXPENDITURE ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 18 - PERTAINS TO THE FILM RELEASED DURING THE CURRENT YE AR. IT IS ALSO RELEVANT TO CONSIDER HERE THAT PART OF THE TOTAL PUBLICITY E XPENSES OF RS.9,45,470/- HAS BEEN CLAIMED AND ALLOWED IN THE PRECEDING YEAR. THEREFORE, THE BALANCE BECOMES ELIGIBLE FOR DEDUCTION DURING THE Y EAR UNDER REFERENCE. THE ASSESSEE HAS PRODUCED RELEVANT BILLS/VOUCHERS I N SUPPORT OF THE EXPENDITURE INCURRED BY IT & IT IS SEEN THAT MAJORI TY OF THE PAYMENT HAS BEEN MADE TO ETV M/S.USHODAYA ENTERTAINMENT LTD. THE PUBLICITY IS AN ESSENTIAL ASPECT OF PROMOTION OF FILM, THEREFORE INCURRING SUCH EXPENDITURE, PART OF WHICH HAS ALREADY BEEN ALLOWED IN THE EARLIER YEAR CANNOT BE DENIED. THEREFORE, THE BALANCE UNCLAIMED EXPENSES OF RS.4,96,065/- IS ALLOWED UNDER RULE 9 OF I.T.RULES. 25.1. THE AFORESAID FINDING ON FACT AS RECORDED BY THE LD.CIT(A) IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRAR Y MATERIAL ON RECORD. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE O RDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, THIS GROUND OF REVENU ES APPEAL IS DISMISSED. 26. THIRD GROUND OF REVENUES APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.1,80,000/-. THE LD.SR.DR RELIED ON THE ASSESSMENT ORDER AND REITERATED THE SUBMISSIONS MADE IN THE STATEMEN T OF FACTS. 26.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE AO UNDER THE F ACTS OF THE PRESENT CASE WAS NOT JUSTIFIED IN MAKING THE ADDITION. 27. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 19 - WE FIND THAT THE AO MADE ON THE BASIS OF DIFFERENCE BETWEEN THE P&L ACCOUNT AND BANK ACCOUNT IN RESPECT OF RECEIPTS OF RS.1,80,000/-. HOWEVER, LD.CIT(A) HAS GIVEN FINDING IN PARA-23 OF HIS ORDER WHICH READS AS UNDER:- 23. I HAVE GONE THROUGH THE REASONS GIVEN BY ASSE SSING OFFICER AND ALSO THE SUBMISSIONS OF APPELLANT. AFTER CAREFULLY CONSIDERING THE ISSUE, THE CONTENTION OF A.R. THAT RIGHT SALE INCOME OF RS .2,25,000/- WHICH IS CREDITED IN P/L ACCOUNT HAS NOT BEEN TAKEN INTO CON SIDERATION BY THE ASSESSING OFFICER APPEARS TO BE CORRECT. THE CONTE NTION OF APPELLANT THAT TOTAL INCOME SHOWN IN P/L ACCOUNT INCLUDING RI GHT SALE INCOME COMES TO RS.42,13,328/- WHICH EXCEEDS THE TOTAL AMO UNT DEPOSITED IN ICIC BANK ACCOUNT IS FOUND TO BE CORRECT. AS SUCH WHEN INCOME SHOWN IN THE P/L ACCOUNT IS ALREADY MORE THAN THE TOTAL D EPOSITS IN THE BANK ACCOUNT, THERE IS NO QUESTION OF MAKING ADDITION ON THE GROUND THAT INCOME SHOWN IN THE PROFIT AND LOSS ACCOUNT IS LOWE R THAN THE AMOUNT CREDITED IN THE BANK ACCOUNT. HENCE, THE ADDITION OF RS.1,80,000/- IS HEREBY DELETED. 27.1. THE AFORESAID FINDING OF THE LD.CIT(A) IS NOT REBUTTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE FINDING OF LD.CIT(A ), SAME IS HEREBY UPHELD. THUS, THIS GROUND OF REVENUES APPEAL IS D ISMISSED. 28. FOURTH GROUND OF REVENUES APPEAL IS AGAINST TH E DELETION OF ADDITION OF RS.1,895,000/- MADE ON ACCOUNT OF DISAL LOWANCE OF MUSIC EXPENSES. THE LD.SR.DR RELIED ON THE ASSESSMENT OR DER AND REITERATED THE SUBMISSIONS AS WERE MADE IN THE STATEMENT OF FACTS. ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 20 - 28.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. 29. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO MADE DISALLOWANCE OF MUSIC EXPE NSES OF RS.3,70,000/-. HOWEVER, OUT OF DISALLOWANCE OF RS. 3,70,000/-, THE LD.CIT(A) DELETED A SUM OF RS.1,85,000/- BY OBSERVI NG AS UNDER:- 19. DURING THE COURSE OF APPELLATE PROCEEDINGS, AS REGARDS ELECTRIC POWER BILL AND MUSIC EXPENDITURE, IT HAS BEEN SUBMI TTED BY THE A.R. THAT ASSESSEE WAS UNABLE TO PRODUCE THE BILLS AS EXPENDI TURE WERE INCURRED IN EARLIER YEARS AT THE TIME WHEN PRODUCTION OF FIL M 'ME TO PALVADE BANDHI PREET' WAS IN PROGRESS AND VOUCHERS RELATING TO THE SAME WERE UNTRACEABLE AT THE TIME OF ASSESSMENT PROCEEDINGS. IT HAS BEEN VEHEMENTLY CONTENDED THAT FILM CANNOT BE PRODUCED W ITHOUT INCURRING EXPENDITURE TOWARDS MUSIC AND ELECTRIC POWER. THE E XPENDITURE IS INCURRED IN THE NORMAL COURSE OF BUSINESS OF PRODUC TION OF FILM AND THE SAME IS REQUIRED TO BE ALLOWED FROM COMMERCIAL POIN T OF VIEW. AS REGARDS STUDIO EXPENSES, IT HAS BEEN ARGUED BY THE A.R THAT PAYMENTS HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES ON VAR IOUS OCCASIONS & THAT IT WAS NOT POSSIBLE TO PRODUCE FILM WITHOUT INCURRING ABOVE EXPENSES. IT HAS BEEN FURTHER ARGUED THAT IF VARIOU S DISALLOWANCES/ADDITIONS ARE TAKEN INTO CONSIDERATIO N, IN THAT CASE, NET PROFIT RATIO JUMPS UP TO 83.68% WHICH IS UNIMAGINAB LE CONSIDERING THAT ASSESSEE PRODUCED GUJARATI FILM WHICH WAS NOT VERY SUCCESSFUL AND WAS RELEASED ONLY IN FEW CITES & THEATRES OF GUJARA T STATE. 20. I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WE LL AS SUBMISSION OF THE A.R. AFTER CAREFULLY CONSIDERING THE ISSUES INV OLVED, IT IS APPARENT THAT EXPENSES HAVE BEEN DISALLOWED AS ASSESSEE WAS NOT IN A POSITION TO PRODUCE EVIDENCES. AS ASSESSEE COULD NOT PRODUCE RE LEVANT EVIDENCES, THE ACTION OF ASSESSING OFFICER IN MAKING THE DISAL LOWANCE CANNOT BE REGARDED AS TOTALLY INVALID. HOWEVER, AT THE SAME T IME, I ALSO FIND MERIT ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 21 - IN THE CONTENTION OF APPELLANT THAT WITHOUT INCURRI NG ABOVE EXPENSE, THE PRODUCTION OF FILM IS NOT POSSIBLE. IT IS ALSO SEEN THAT IF VARIOUS DISALLOWANCES / ADDITIONS MADE IN ASSESSMENT ORDER ARE TAKEN INTO CONSIDERATION, THE NET PROFIT MARGIN GOES UTPO 83.6 8% WHICH APPEARS TO BE ON HIGHER SIDE. IN THIS VIEW OF THE MATTER, IN M Y CONSIDERED OPINION, IT WILL BE QUITE REASONABLE IF DISALLOWANCES ARE RE STRICTED TO THE EXTENT OF 50% OF VARIOUS EXPENSES CLAIMED AS ABOVE. ACCORDING LY, DISALLOWANCE OUT OF VARIOUS EXPENSES MENTIONED ABOVE IS CONFIRME D TO THE EXTENT OF 50% & THE BALANCE AMOUNT IS DELETED. 29.1. WE DO NOT SEE ANY INFIRMITY INTO THE ORDER OF THE LD.CIT(A). IF THE REASONING ADOPTED BY THE AO IS ACCEPTED, IT WOULD L EAD TO A DISTORTED FIGURE OF PROFIT MARGIN. HENCE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A), SAME IS HEREBY CONFIRM ED. THUS, THIS GROUND OF REVENUES APPEAL IS DISMISSED. 30. FIFTH GROUND OF REVENUES APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.1,21,294/- MADE ON ACCOUNT OF DISALL OWANCE OF ARTIST EXPENDITURE. THE LD.SR.DR SUPPORTED THE ORDER OF T HE AO AND REITERATED THE SUBMISSIONS MADE IN THE STATEMENT OF FACTS. 30.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF LD.CIT(A). 31. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE AO MADE THE DISALLOWANCE ON THE BASIS THAT THE ASSESSEE DID NOT PRODUCE ANY SUPPORTING EVIDENCE. HOWEVER, LD.CIT(A ) HAS DELETED THE DISALLOWANCE BY OBSERVING AS UNDER:- ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 22 - 17. I HAVE CONSIDERED THE REASONS GIVEN BY ASSESS ING OFFICER AND ALSO THE SUBMISSIONS OF APPELLANT. IT IS TRUE THAT THE PRODUCTION OF FILM IS NOT POSSIBLE WITHOUT THE HELP OF ARTISTS AN D EXPENDITURE CLAIMED IS A PART OF THE NON-CLAIMED EXPENSES PERTA INING TO EARLIER YEAR. MOREOVER, IT IS NOT THE CASE OF ASSESSING OF FICER THAT EXCESSIVE EXPENDITURE HAS BEEN CLAIMED BY APPELLANT . CONSIDERING THE NATURE OF EXPENSES, THE CLAIM OF ASSESSEE IS AL LOWED AND ACCORDINGLY, THE DISALLOWANCE OF RS.1,21,294/- MADE BY A.O. IS HEREBY DELETED. 31.1. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDIN G THAT THE IMPUGNED EXPENSES ARE PART OF EXPENSES OF EARLIER YEARS. TH IS FINDING IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREFORE, WE DO NOT DEEM FIT TO INTERFERE WITH THE ORDER OF LD.CIT(A), SAME IS HEREBY AFFIRMED. THUS, THIS GROUND OF REVE NUES APPEAL IS DISMISSED. 32. IN THE RESULT, CROSS-APPEALS OF THE ASSESSEE AN D REVENUE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 17 TH DAY OF APRIL, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 17/ 04 /2015 1)..,&.../ T.C. NAIR, SR. PS ITA NO.202/AHD/2010 (BY ASSESSEE) AND ITA NO.614/AHD/2010 (BY REVENUE) GANGANI FILM PRODUCTION VS. ITO ASST.YEAR 2006-07 - 23 - !'#$%$&' / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT. 3. 234 5 / CONCERNED CIT 4. 5 ( ) / THE CIT(A)-V, SURAT 5. 6&7$34 , )34- , 2 / DR, ITAT, AHMEDABAD 6. 79:;' / GUARD FILE. / BY ORDER, %6$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 6.4.15 (DICTATION-PAD 12- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..12.4.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.17.4.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17.4.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER