ACIT 11(1), MUMBAI V. HEMA MALINI, MUMBAI

ITA 6388/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59880 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 12-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 30-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: H N SHAH

Judgement Text

IN THE INCOME TAX APPELLATE APPELLATE APPELLATE APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A.NO.6388/MUM/2010 A.Y 2005-06 ASST. COMMISSIONER OF I.T. 11(1), MUMBAI. VS. SMT. HEMA MALINI, AA/39, YASHODHAM ENCLAVE, YASHODHAM HILL TOP SOCIETY, GEN. A.K.VAIDYA MARG, GOREGAON (E), MUMBAI 400 063. PAN: AAIPD 1356 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.V.SHASTRI. RESPONDENT BY : SHRI H.N.SHAH. DATE OF HEARING: 12-03-2012. DATE OF PRONOUNCEMENT: 16-03-2012. O R D E R PER T.R.SOOD, AM: IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GRO UNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) MUMBAI HAS ERRED IN DELETING THE ADDITI ON OF RS. 8, 40,580/- MADE ON ACCOUNT OF DISALLOWANCE OF EXPENDI TURE INCURRED BY H.M. VIDEO PRODUCTION, BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT (A) MUMBAI HAS FAILED TO APPRECIATE THE FACT TH AT WHEN NO INCOME HAS BEEN OFFERED BY THE ASSESSEE, EXPENSES SHOULD N OT HAVE BEEN ALLOWED AS A DEDUCTION. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DUR ING THE ASSESSMENT PROCEEDINGS AO NOTICED THAT ASSESSEE HAS SHOWN EXPENSES AMOUNTING TO RS.8,40,580/- IN ONE OF THE DIVISIONS KNOWN AS H.M. PRODUCTIONS. HOWEVER, NO INCOME WAS OFFERED IN RESP ECT OF THIS ITA NO.6388 OF 2010 SMT.HEMA MALINI 2 PROPRIETARY CONCERN. SINCE NO SATISFACTORY EXPLANAT ION WAS GIVEN, THIS AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE. 3. BEFORE THE CIT(A) IT WAS MAINLY SUBMITTED THAT E XPENDITURE IN RESPECT OF H.M.VIDEO PRODUCTIONS WAS IN RESPECT OF SALARY, ELECTRICITY CHARGES, CONSULTANCY FEES AND PROFESSIONAL CHARGES CONNECTED WITH THE PROFESSIONAL ACTIVITY OF THE ASSESSEE. SIMILAR EXPE NSES WERE INCURRED IN THE EARLIER YEAR ALSO AND WERE ALLOWED. THOUGH NO I NCOME WAS EARNED THE ACTIVITIES HAD NOT STOPPED AND ASSESSEE WAS UND ER OBLIGATION TO PAY SALARY ETC. IT WAS FURTHER STATED THAT EMPLOYEES OF THIS DIVISION CONDUCTED PROPOSAL OF PRODUCTION OF VIDEO FILMS, DE VELOPMENT OF NEW CONCEPT ETC., THEREFORE, ACTIVITIES WERE CONTINUING . THE LD. CIT(A) AGREED WITH THE SUBMISSIONS AND DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE VIDE PARA 2.2.1 WHICH IS AS UNDER: 2.2.1 FACTS AND MATERIAL ON RECORD ARE CONSIDERED. IT IS SEEN THAT AT LEAST TWO EXPENSES VIZ, SALARY AND CONSULTANCY ARE SUCH WHICH ARE NOT SUBSTANTIALLY INCURRED IN THE OTHER PROPRIETY DIVIS ION OF APPELLANT. APPELLANT HAS ALSO SUBMITTED THAT THIS DIVISION PAI D RS.50,000!- TO SUNSHINE CREATIONS TO MAKE A 5 MINUTES PILOT ANIMAT ED EPISODE FOR A SERIAL FOR JIGYASA CHANNEL DURING THE PERIOD. THIS WAS DONE IN CONSULTATION WITH VENKATESHWARA CONSULTANCY FOR WHI CH CONSULTANCY CHARGES WERE ALSO PAID. IN VIEW OF APPELLANTS SUBM ISSION REGARDING EXPENDITURE INCURRED, THE ACTIVITIES OF THIS DIVISI ON NOT HAVING BEEN STOPPED AND IN ABSENCE OF AOS REASONS HOLDING APPE LLANTS REPLY AS NOT COGENT, IT IS HELD THAT THE EXPENDITURE CLAIMED BY THE APPELLANT IN THIS DIVISION IS ALLOWABLE. THE DISALLOWANCE MADE I S DELETED. 4. BEFORE US, LD. DR RELIED ON THE ORDER OF THE AO. 5. ON THE OTHER HAND. LD. COUNSEL OF THE ASSESSEE S UBMITTED THAT FIRST OF ALL IT HAS TO BE SEEN THAT ASSESSEE WAS RU NNING THREE PROPRIETARY DIVISIONS AND IN OTHER DIVISION I.E. H.M. CREATIONS THERE WAS INCOME OF RS.17,44,795/- BUT THERE WAS VERY LITTLE EXPENDITUR E. THIS CLEARLY SHOWS ITA NO.6388 OF 2010 SMT.HEMA MALINI 3 THAT STAFF OF H.M.VIDEO PRODUCTIONS WAS WORKING IN OTHER DIVISIONS ALSO. IN ANY CASE, SINCE THE ACTIVITY OF H.M.VIDEO PRODUCT IONS WAS CONTINUED, THEREFORE, ONCE EXPENDITURE WAS GENUINE, SAME SHOUL D HAVE BEEN ALLOWED. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT AO HAS NOT DOUBTED GENUINENESS OF THE EXPENDITURE. IF IN A PAR TICULAR YEAR THERE IS NO INCOME IN A PARTICULAR DIVISION, IT DOES NOT MEA N THAT EXPENDITURE IS NOT REQUIRED TO BE INCURRED. IN ANY CASE, IT IS POSS IBLE THAT THE INFRASTRUCTURE OF THIS DIVISION MIGHT HAVE BEEN USE D FOR OTHER DIVISION WHICH HAS GENERATED LOT OF INCOME WITHOUT ANY SUBST ANTIAL EXPENDITURE. FROM PERUSAL OF PAGE-12 OF THE PAPER BOOK, IT IS SE EN THAT IN THE CASE OF OTHER DIVISION KNOWN AS H.M. CREATIONS THERE IS AN INCOME OF RS.17,44,795/- WHEREAS EXPENDITURE IS ONLY RS.46,42 2/-. THEREFORE, IT IS POSSIBLE THAT SOME OF THE EXPENDITURE OF H.M.VID EO PRODUCTIONS MAY RELATE TO THIS DIVISION. CONSIDERING ALL THESE FACT S, WE ARE OF THE OPINION, THAT THE LD. CIT(A) HAS CORRECTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY WE CONFIRM HIS ORDER. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 6/3/2012. SD/- SD/- (VIJAY PAL RAO) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 16/3/2012. P/-*