ITO 16(1)(1), MUMBAI V. BR TV, MUMBAI

ITA 6790/MUM/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3796 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARI S RAHEJA
• Keywords: Set aside
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6790/M/2016 ASSESSMENT YEAR: 2007-08 ITA NO.6791/M/2016 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER- 16(1)(1), ROOM NO.436A, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. MARG, NEW MARINE LINES, MUMBAI - 400020 VS. M/S. B.R. TV, ANAND VILLA, PLOT NO.G-38, 15 TH ROAD, SANTACRUZ WEST, MUMBAI 400 054 PAN: AAAFB0941M (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI AJEY MALIK, A.R. REVENUE BY : SHRI HARI S. RAHEJA, D.R. DATE OF HEARING : 12.09.2019 DATE OF PRONOUNCEMENT : 22.10.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE DEPAR TMENT AGAINST THE ORDER DATED 16.08.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2007-08. ITA NO.6790/M/2016 2. THE REVENUE HAS RAISED VARIOUS GROUNDS OF APPEAL WHICH ARE AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. C1T(A) HAS ERRED IN QUASHING THE REASSESSMENT PROCE EDINGS WITHOUT APPRECIATING THAT THE ISSUE UNDER CONTENTION WAS FIRST DISCOVERE D IN THE ASSESSMENT PROCEEDINGS FOR AY 2011-12 AND DURING THE ORIGINAL ASSESSMENT P ROCEEDINGS, NO DELIBERATIONS WERE MADE AND THE INCOME WAS MASKED BY THE ASSESSEE UNDER THE GUISE OF ADVANCES. ITA NO.6790 & 6791/M/2016 M/S. B.R. TV 2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD, CIT(A) HAS ERRED IN HOLDING THAT THE WHOLE OF THE INCOME O F RS.3.70 CRORES DID NOT ACCRUE TO THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR A ND WAS NOT TAXABLE DURING THIS ASSESSMENT YEAR PARTICULARLY WHEN THE ASSESSEE IS F OLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. GT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 3.11 CROR E MADE BY THE ASSESSING OFFICER ON ACCOUNT OF REVENUE RECOGNITION IN SPITE OF THE FACT THAT THE ENTIRE RIGHTS WERE ASSIGNED IRREVOCABLY DURING THE YEAR OF SALE ITSELF AND THE INCOME WAS NOT CONTINGENT UPON ANY FUTURE EVENTS. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RELYING ON THE ORDER OF B. R. FILMS VS . ACIT - 11(1), MUMBAI (IT A NO, 3632/MUM/2012 DATED 14-01-2015) ESPECIALLY IN VIEW OF THE FACT THAT IN THAT CASE THE ASSIGNMENT RIGHTS OF VARIOUS FILMS COMMENCED AT DIFFERENT TIMES, WHEREAS IN THIS CASE THE COMMENCEMENT OF THE RIGHTS OF SERIALS HAPPENED IN THE SAME YEAR. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE ONLY ISSUE RAISED IN THE VARIOUS GROUNDS OF APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.3.11 CRORES BY LD. CIT(A) AS MADE BY THE AO ON THE REVENUE RECOGNITION IN VIEW O F THE FACT THAT ENTIRE RIGHTS WERE ASSIGNED IRRECOVERABLY DURI NG THE YEAR OF SALE ITSELF. THE LD. CIT(A) ERRED IN HOLDING THAT WHOLE INCOME OF RS.3.70 CRORES DID NOT ACCRUE TO THE ASSESSEE DURIN G THE RELEVANT PREVIOUS YEAR AND AS SUCH WAS NOT TAXABLE DURING TH IS ASSESSMENT YEAR IN VIEW OF THE MERCANTILE SYSTEM OF ACCOUNTING OF THE ASSESSEE. THE FACTS IN BRIEF ARE THAT DURIN G THE YEAR UNDER CONSIDERATION, ASSESSEE HAS ENTERED INTO AN AGREEME NT WITH M/S. TOUCH TELE CONTENT (INDIA) PVT. LTD. ON 27.01. 2007 AND RECEIVED A CONSIDERATION OF RS.3 CRORE FOR TOTAL 13 9 EPISODES OF SERIAL MAHABHARAT AND MAHABHARAT KATHA. THE ASSESS EE ALSO ENTERED INTO AN AGREEMENT FOR 52 EPISODES OF THE SE RIAL MAA SHAKTI FOR WHICH IT RECEIVED RS.70 LAKHS FOR SALE O F SATELLITE RIGHTS CABLE TAXABLE TERRESTRIAL DUBBING AND SUBTIT LING RIGHT, FOR ITA NO.6790 & 6791/M/2016 M/S. B.R. TV 3 A PERIOD OF 5 YEARS COMMENCING 01.08.2006. THUS TH E ASSESSEE ENTERED INTO AGREEMENTS WITH THE ABOVE PARTIES TO M ARKET AND EXPLOIT 3 SERIALS MENTIONED ABOVE FOR A CONSIDERATI ON OF RS.3,70,00,000/-. SINCE THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THE ASSESSEE RECOGNISED RS.58 ,39,400/- AS INCOME DURING THE YEAR AND CARRY FORWARD RS.3,11 ,60,600/- AS ADVANCE IN THE BALANCE SHEET TO BE RECOGNIZED IN SUBSEQUENT YEARS . HOWEVER, ACCORDING TO THE AO THE ENTIRE CO NSIDERATION IS ASSESSABLE DURING THE YEAR AS THE ASSESSEE HAS RECE IVED THE INCOME IRREVOCABLY DURING THE CURRENT YEAR. FINALL Y, THE AO TREATED THE ADVANCE CARRY FORWARD OF RS.3,11,60,600 /- AS INCOME DURING THE YEAR IN THE ASSESSMENT ORDER DATED 07.1 0.2014 PASSED UNDER SECTION 147 READ WITH SECTION 143(3)(I I) OF THE ACT. 4. IN THE APPELLATE PROCEEDINGS, LD. CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF B.R . FILMS IN A.Y. 2010-11 AND ALSO THE DECISION OF THE PREDECESS OR CIT(A) IN ASSESSEES OWN CASE IN A.Y. 2011-12 VIDE ORDER NO. CIT(A)- 4/TR.315/APPEAL(3)/ITO-11(1)(1)/14-15 DATED 02.09.2 015. 5. THE LD. A.R., AT THE OUTSET, SUBMITTED THAT THE IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE IN ITA NO.6092/M/2017 A.Y. 2 012-13 VIDE ORDER DATED 04.07.2019. THE LD. A.R. THEREFOR E PRAYED THAT THE APPEAL OF THE REVENUE DESERVES TO BE DISMISSED IN VIEW OF THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL I N ASSESSEES OWN CASE. 6. THE LD. D.R., ON THE OTHER HAND, RELIED HEAVILY ON THE ORDER OF AO AND GROUNDS OF APPEAL BY SUBMITTING THAT THE ASSESSEE ITA NO.6790 & 6791/M/2016 M/S. B.R. TV 4 HAS SOLD THE LEASEHOLD RIGHTS OF 31 FILMS IN THE AY 2012-13 AND THUS THERE WERE MULTIPLE AGREEMENTS FOR SELLING THE RIGHTS WHEREAS IN THE PRESENT CASE , THE ASSESSEE HAS SOLD ONLY 3 SERIALS. THE LD. D.R. SUBMITTED THAT THE DECISION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CA SE WAS DECIDED BY FOLLOWING THE SAID DECISION IN THE CASE OF B.R. FILMS VS. ACIT IN ITA NO.3632/M/2012 WHEREAS IN THE CASE OF THE ASSESSEE, THE RIGHTS IN THE SERIALS WERE SOLD IRRE COVERABLY FOR A PERIOD OF THREE YEARS AND ENTIRE CONSIDERATION WAS RECEIVED DURING THE YEAR. THE LD. D.R. THEREFORE PRAYED THA T THE INCOME SHOULD BE ASSESSED IN THE YEAR OF RECEIPT AND SHOUL D NOT BE ALLOWED TO BE SPREAD OVER THE PERIOD OF AGREEMENTS. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, ESPECIALLY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.6092/M/20 17 A.Y. 2012-13 (SUPRA), WE OBSERVE THAT THE IDENTICAL ISSU E HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINAT E BENCH OF THE TRIBUNAL AND THE OPERATIVE PART IS REPRODUCED BELOW : 11. AFTER HEARING BOTH THE PARTIES AND PERUSING TH E MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE HAS SHOWN OUTSTANDING OF RS.72,14,845/- AS DUE TO ARTISTS AND TECHNICIANS WHICH WERE COMING OVER FOR MORE THA N FOUR YEARS. THE LD. A.R. ARGUED BEFORE THE BENCH THAT FIRM HAS STARTED TV SE RIALS NAMELY PARI HU MAIN AND SUJATA AND INCURRED HUGE LOSSES DUE TO THE FACT THA T THE MAIN PARTNER SHRI RAVI CHOPRA WAS NOT KEEPING WELL AND HAS NOT BEEN ABLE T O ATTEND TO HIS WORK. THE LD. A.R. SUBMITTED THAT HE WAS FINALLY SHIFTED TO UNITE D STATES FOR TREATMENT. THE LD. A.R. SUBMITTED THAT DUE TO THE REASON THAT SHRI RAV I CHOPRA WAS NOT LOOKING AFTER THE BUSINESS DUE TO HIS AILING HEALTH AND THUS THES E LIABILITIES WERE MADE OUTSTANDING FOR LONG TIME EVEN THE PARTIES TO WHOM THESE SUMS WERE PAYABLE HAVE NOT PRESSURIZED FOR THE PAYMENTS DUE TO LONG ASSOC IATION WITH THE GROUP REALIZING THAT THE MAIN PERSON WAS NOT WELL. THE LD. A.R. AR GUED EVEN THE CREDITORS HAVE NOT FOREGONE THEIR CLAIMS NEITHER HAS THE ASSESSEE AN Y ATTENTION OF NOT PAYING THE SAID DUES. SINCE THE CLAIMS OF THESE TECHNICIANS AND AR TISTS HAVE BEEN ACCEPTED AS ALIVE, THE SAME CAN NOT BE SUBJECTED TO BE ASSESSED AS INC OME OF THE ASSESSEE AS HAS BEEN DONE BY THE AO AND CONFIRMED BY THE LD. CIT(A) . ITA NO.6790 & 6791/M/2016 M/S. B.R. TV 5 8. SINCE THE FACTS IN THE PRESENT CASE ARE IDENTICA L TO THE FACTS IN THE CASE IN A.Y. 2012-13 AS DECIDED BY THE CO-OR DINATE BENCH OF THE TRIBUNAL (SUPRA), WE, THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, DISMISS THE APPEAL OF THE REVENUE. ITA NO.6791/M/2016 9. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDEN TICAL TO THE ONE AS STATED ABOVE IN ITA NO.6790/M/2016 FOR A.Y. 2007-08. THEREFORE, OUR FINDING IN ITA NO.6790/M/2016 FOR A. Y. 2007- 08WOULD , MUTATIS MUTANDIS , APPLY TO THIS APPEAL A S WELL. ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.10.2019. SD/- SD/- (VIKAS AWASTHY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.10.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.