NIKMO ENTERTAINMENT P.LTD( EARLIER KNOWN AS M./S NIKMO FINANCE P.LTD), MUMBAI V. DCIT 9(2), MUMBAI

ITA 6430/MUM/2011

• Counselvise Citation: 643019914 RSA 2011
• Duration Of Justice: 2 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 20-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B , MUMBAI BEFORE SHRI P.M. JAGTAP , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 6430/M/2011 ASSESSMENT YEAR: 2008 - 09 M/S. NIKMO ENTERTAINMENT PVT. LTD. ( EARLIER KNOWN AS M/S. NIKMO FINANCE PVT. LTD.) ATTRIUM 215, 10 TH FLOOR, NEAR MARRIOT COURT YARD, ANDHERI KURLA ROAD, ANDHERI (E), MUMBAI 400 059. PAN: AABCN9974G VS. DCIT 9(2) AAYAKAR BHAVAN, 2 ND FLOOR, NEW MARINE LINES, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANUJ KISNADWALA, A.R. REVENUE BY : SHRI RAVI PRAKASH, D.R. DATE OF HEARING : 13.03 .201 4 DATE OF PRONOUNCEMENT : 16.05.2014 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESE NT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] DATED 29.07.11 . THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX , APPEAL 20 ERRED IN LAW & ON FACTS IN NOT TREATING THE ENTERTAINMENT DUTY COLLECTED OF RS.2,07,92,130/ - AS REVENUE RECEIPT. 2. APPELLANT PRAYS THAT THE ENTERTAINMENT DUTY OF RS.2,07,92,130/ - COLLECTED DURING THE YEAR UNDER CONSIDERATION SHOULD BE TRE ATED AS CAPITAL SUBSIDY NOT LIABLE TO BE TAXED AS REVENUE RECEIPT. 2. THE ONLY QUESTION FOR ADJUDICATION IN THIS APPEAL IS AS TO WHETHER THE ENTERTAINMENT DUTY SUBSIDY GIVEN TO THE ASSESSEE BY THE STATE GOVERNMENT FOR CONSTRUCTION OF MULTI PLEXES IS IN T HE NATURE OF REVENUE RECEIPT OR CAPITAL RECEIPT. ITA NO. 6430/M/2011 M/S. NIKMO ENT ERTAINMENT PVT. LTD. (EARLIER KNOWN AS M/S. NIKMO FINANCE PVT. LTD.) 2 3. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS STATED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHAPHALKAR BROTHER S (2013) 351 ITR 309 (BOM . ). THE HONBLE BOMBAY HIGH COURT WHILE ADJUDICATING ON THE ISSUE HAS OBSERVED AS UNDER: THUS, THE PURPOSES FOR WHICH THE SUBSIDY WAS GIVEN IS THE RELEVANT FACTOR AND IF THE OBJECT OF SUBSIDY WAS TO ENABLE THE ASSESSEE TO SET UP A NEW UNIT THEN THE RECEIPT OF SUBSIDY WOULD BE ON CAPITAL ACCOUNT. IN THE PRESENT CASE, AS NOTED BY THE INCOME - TAX APPELLATE TRIBUNAL, THE OBJECT OF GRANTING ENTERTAINMENT DUTY SUBSIDY BY THE STATE GOVERNMENT WAS AS FOLLOWS : '1. AS A RESULT OF TH E ONSLAUGHT OF CABLE TELEVISION AND ADVERTISEMENT IN THE FIELD OF INFORMATION TECHNOLOGY, THE AVERAGE OCCUPANCY IN CINEMA THEATRE HAS FALLEN CONSIDERABLY AND HARDLY ANY NEW THEATRES HAVE BEEN STARTED IN THE RECENT PAST. PUBLIC AT LARGE THESE DAYS PREFER TO SEE MOVIES AT HOME. KEEPING IN VIEW THIS SCENARIO, A CONCEPT OF COMPLETE FAMILY ENTERTAINMENT CENTRE, MORE POPULARLY KNOWN AS 'MULTIPLEX THEATRE COMPLEX' HAS EMERGED. THESE MULTIPLEX THEATRE COMPLEXES OFFER VARIOUS ENTERTAINMENT FACILITIES FOR THE ENTIRE FAMILY UNDER SINGLE ROOF. HOWEVER, THESE COMPLEXES ARE HIGHLY CAPITAL INTENSIVE, THEIR GESTATION PERIOD IS ALSO QUIT E LONGER, AND, THEREFORE, NEED GOVERNMENT SUPPORT AND INCENTIVE IN ENTERTAINMENT DUTY. 2. THE GOVERNMENT HAS, THEREFORE, WITH A VIEW TO COM MEMORATE BIRTH CENTENARY OF CHITRAPATI LATE SHRI V. SHANTARAM, DECIDED TO GRANT CONCESSION IN ENTERTAINMENT DUTY TO MULTIPLEX THEATRE COMPLEXES TO PROMOTE CONSTRUCTION OF NEW CINEMA HOUSES IN THE STATE.' SINCE THE OBJECT OF SUBSIDY WAS TO PROMOTE CONST RUCTION OF MULTIPLEX THEATRE COMPLEXES, IN OUR OPINION, RECEIPT OF SUBSIDY WOULD BE ON CAPITAL ACCOUNT. THE FACT THAT THE SUBSIDY WAS NOT MEANT FOR REPAYING THE LOAN TAKEN FOR CONSTRUCTION OF MULTIPLEXES CANNOT BE A GROUND TO HOLD THAT SUBSIDY RECEIPT WAS ON REVENUE ACCOUNT, BECAUSE, IF THE OBJECT OF THE SCHEME WAS TO PROMOTE CINEMA HOUSES BY CONSTRUCTING MULTIPLEX THEATRES, THEN IRRESPECTIVE OF THE FACT THAT THE MULTIPLEXES HAVE BEEN ITA NO. 6430/M/2011 M/S. NIKMO ENT ERTAINMENT PVT. LTD. (EARLIER KNOWN AS M/S. NIKMO FINANCE PVT. LTD.) 3 CONSTRUCTED OUT OF OWN FUNDS OR BORROWED FUNDS, THE RECEIPT OF SUB SIDY WOULD BE ON CAPITAL ACCOUNT. IN THE LIGHT OF THE AFORESAID OBJECTS OF THE SCHEME FRAMED BY THE STATE GOVERNMENT, THE DECISION OF THE INCOME - TAX APPELLATE TRIBUNAL THAT THE AMOUNT OF SUBSIDY RECEIVED BY THE ASSESSEE IS ON CAPITAL ACCOUNT CANNOT BE FAU LTED. ACCORDINGLY, BOTH THE APPEALS ARE DISMISSED WITH NO ORDE R AS TO COSTS. 4. SINCE THE QUESTION FOR ADJUDICATION BEFORE US HAS ALREADY BEEN SETTLED BY THE HONBLE BOMBAY HIGH COURT IN THE ABOVE CASE HOLDING THAT THE ENTERTAINMENT DUTY SUBSIDY IS C APITAL IN NATURE AND THE LD. D.R. HAS NOT BROUGHT ANY CONTRARY DECISION IN THIS REGARD WHICH MAY JUSTIFY DEPARTURE THERE FROM. THE ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.05. 201 4 . SD/ - SD/ - ( P.M. JAGTAP ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16.05. 201 4 . * KISHORE COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.