ITO 18(2)(3), MUMBAI V. GEETA EXHIBITORS, MUMBAI

ITA 6193/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55852 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 13-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: K S CHOKSHI
• Keywords: Business expenditure
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RAO , J.M. ITA NO. 6193/MUM/2010 ASSESSMENT YEAR: 2005-06 INCOME TAX OFFICER-18(2)(3), APPELLANT 105, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. VS. GEETA EXHIBITORS, RESPONDENT C/O SUNIL ENTERPRISES, 217, ABDUL REHMAN STREET, MUMBAI 400 018. (PAN AAEFG0922F) APPELLANT BY : MR. A.K. NAYAK RESPONDENT BY : MR. K.S. CHOKSHI DATE OF HEARING : 28/11/2011 DATE OF PRONOUNCEMENT: /11/2011 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-29, MUMBAI, PASSED ON 04/05/2010 FOR THE AS SESSMENT YEAR 2005-06 WHEREIN THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING AN ADDITION OF RS. 9,6 0,000/- BEING THE THEATRE HIRE CHARGES AND RENT PAID TO M/S ODEN THEATRE PVT. LTD. WITHOUT APPRECIATING THE FACT THAT ON ONE HAND THE ASSESSEE STATES THAT THEY ARE THE OWNER OF THE THEATRE WHERE AS ON THE OTHER HAND THEY WERE PAYING RENT TO M/S ODEON THEAT RE. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE BE RESTORED. 2. THE FACTS ARE IN BRIEF THAT RETURN OF INCOME HAD BEEN FILED BY THE ASSESSEE ON 21/10/2005 DECLARING TOTAL INCOME AT NI L AND THE RETURN ITA NO. 6193/M/2010 M/S GEETA EXHIBITORS 2 WAS ACCOMPANIED BY STATEMENT OF INCOME; PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTI CES WERE ISSUED U/S 143(2) AND 142(1) OF THE ACT. DURING THE COURSE OF HEARING, A COPY OF AGREEMENT DATED 10/03/1999 ENTERED INTO BY THE A SSESSEE WITH MR. RAJKUMAR BAJAJ, PROPRIETOR OF PUSHPAM ENTERPRISES H AD BEEN FILED. ACCORDING TO THE SAID AGREEMENT, THE ASESSSEE OWNS A BUILDING AT DR. E MOSES ROAD, WORLI NAKA, MUMBAI-19 AND THE BUILDIN G COMPRISES OF A CINEMA THREAT KNOWN AS GEETA CINEMA. THEY HAD A GREED TO EXHIBIT AND SCREEN THE MOTION PICTURES WHICH MAY BE SUPPLIE D BY THE DISTRIBUTOR. THE AO NOTICED THAT A SUM OF RS. 9,00, 000/- HAD BEEN DEBITED TOWARDS THEATRE HIRE CHARGES, IN SUPPORT OF WHICH, A PHOTO COPY OF LETTER DATED31.02.2001 FROM ODEON THEATRES PVT. HAD BEEN FURNISHED, WHICH REVEALED THAT THEY WERE GETTING RS . 75,000/- PER MONTH FROM THE ASSESSEE TOWARDS RENT, KEEP UP THE P ROPERTY AND CONTRIBUTION TOWARDS PROPERTY TAX AND MAINTENANCE O F THE SURROUNDING OF THE CINEMA AND GIVING ALL OTHER FACI LITIES. THE AO FURTHER NOTICED THAT A SUM OF RS. 60,000/- HAD ALSO BEEN DEBITED TOWARDS RENT, WHICH WAS REPORTEDLY GIVEN TO THE SAI D ODEON THREATRES PVT. LTD. WHO WERE STATED TO BE THE OWNER OF THE WH OLE PROPERTY. SINCE THE MATTER IS NOT CLEAR TO THE AO, HE ASKED THE ASS ESSEE SUBMIT A COPY OF THE AGREEMENT WITH THE SAID ODEON THEATRES PVT. LTD, FOR WHICH NO COMPLIANCE FROM THE ASSESSEE. THE AO, THEREFORE, WA S OF THE VIEW THAT ON THE ONE HAND, THE ASSESSEE STATES THAT THEY ARE THE OWNERS OF THE THREATRE, WHEREAS THEY WERE PAYING RENT TO ODEON TH EATRES AND NO AGREEMENT HAD, HOWEVER, BEEN PROVIDED DESPITE CALLI NG FOR THE SAME. IN THESE CIRCUMSTANCES, THE CLAIM OF THE ASSESSEE F OR RENTALS OF RS. 9,00,000/- AND RS. 60,000/- TO ODEON THEATRES WAS D ISALLOWED BY THE AO. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 3. BEFORE THE CIT(A), THE ASSESSEE ARGUED THAT THEY WERE NEVER THE OWNERS OF THE THEATRE AND THE PAYMENTS HAD BEEN RIG HTLY MADE TO THE ITA NO. 6193/M/2010 M/S GEETA EXHIBITORS 3 ODEON THEATRES PVT. LTD., WHO WERE THE OWNERS OF TH E PROPERTY. AFTER CONSIDERING THE SUBMISSION OF THE ASESSSEE, THE CIT (A) DELETED THE ADDITION MADE BY THE AO AFTER OBTAINING REMAND REPO RT FROM THE AO BY OBSERVING THAT THE FACTS ARE VERY CLEAR AND SO C ALLED AGREEMENT DOES NOT MAKE THE APPELLANT THE OWNER OF THE PROPER TY. THE PAYMENT IS LEGITIMATE BUSINESS EXPENDITURE AND HAS TO BE AL LOWED. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL B EFORE US. 4. THE LEARNED DR SUBMITTED THAT THE CIT(A) WITHOUT APPRECIATING THE FACTS ON RECORD THAT ON ONE HAND THE ASESSSEE S TATES THAT THEY ARE THE OWNERS OF THE THEATRE WHEREAS ON THE OTHER HAND THEY WEE PAYING RENT TO M/S ODEON THEATRES, DELETED THE ADDITION MA DE BY THE AO, WHICH IS NOT PROPER. THEREFORE, HE SUBMITTED THAT T HE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED . 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SESSEE STRONGLY RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED T HAT AFTER APPRECIATING THE FACTS ON RECORD, THE CIT(A) HAS RI GHTLY DELETED THE ADDITION MADE BY THE AO, THEREFORE, THE SAME MAY BE UPHELD. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE AO POINTED OUT THAT ACCORDING TO THE AGREEMENT DATED 10/03/199 9 BETWEEN THE ASESSEE AND MR. RAJKUMAR BAJAJ, PROP. PUSHPAN ENTER PRISES, THE ASSESSEE OWNS A BUILDING COMPRISING OF CINEMA THEAT RE CALLED GEETA CINEMA. THE GRIEVANCE OF THE AO IS THAT WHEN THE AS SESSEE HAS A CINEMA THEATRE, THERE CANNOT BE ANY PAYMENT OF HIRE CHARGES AND RENT. ON THE OTHER HAND, THE LEARNED CIT(A) AFTER O BTAINING REMAND REPORT FROM THE AO GAVE A CATEGORICAL FINDING THAT THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY AND THEY HAVE ACTUALLY PA ID THE HIRE CHARGES AND RENT. HE GAVE A FURTHER FINDING THAT THE FACTS ARE VERY CLEAR AND SO CALLED AGREEMENT DOES NOT MAKE THE ASSESSEE THE OWN ER OF THE PROPERTY. FINALLY, HE HELD THAT THE PAYMENT IS LEGI TIMATE BUSINESS ITA NO. 6193/M/2010 M/S GEETA EXHIBITORS 4 EXPENDITURE AND HAS TO BE ALLOWED. THE ACTUAL RECEI PT HAS OFFERED THIS INCOME TO TAX AND IT HAS BEE TAXED. THEREFORE, THER E IS NO EVIDENCE TO SHOW THAT HIRE CHARGES WERE NOT PAID OR NOT ADMISSI BLE. SINCE THE CIT(A) GAVE A SPECIFIC FINDING AFTER OBTAINING THE REMAND REPORT FROM THE AO THAT THE ASSESSEE IS NOT THE OWNER OF THE PR OPERTY AND THEY HAVE ACTUALLY PAID THE HIRE CHARGES AND RENT, WE FI ND NO INFIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE ADDITION OF RS. 9,60,000/- MADE BY THE AO BEING THE THEATRE HIRE CHARGES AND RENT P AID TO M/S ODEAN THEATRE PVT. LTD. ACCORDINGLY, THE ORDER OF THE CIT (A) IS HEREBY UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOVEMBER, 2011. SD/- SD/- (P.M. JAGTAP) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 30 TH NOVEMBER, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, G BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.