ACIT 11(1), MUMBAI V. TIPS INDUSTRIES LTD, MUMBAI

ITA 7222/MUM/2012

• Counselvise Citation: 722219914 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 05-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Assessee Lawyers: DEEPAK TRALSHWAL A
• Keywords: Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , , BEFORE SHRI B.R. B ASKARAN , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER . / ITA NO. 7222 / MUM./ 2012 ( / ASSESSMENT YEAR : 20 09 10 ) ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 22 & 30 AAYAKAR BHAVAN, 101, M.K. ROAD MUMBAI 400 020 .. / APPELLANT V/S M/S. TIPS INDU STRIES LTD. FLAT NO.601, DURGA CHAMBERS 278/E, LINKING ROAD KHAR (W), MUMBAI 400 052 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAACT5284A / ASSESSEE BY : MR. DEEPAK TRALSHWALA / REVENUE BY : MR. ASHOK SURI / DATE OF HEARING 1 2 . 0 2 .201 4 / DATE OF ORDER 14.02.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN P REFERRED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER DATED 28 TH SEPTEMBER 2012 , PASSED BY THE COMMISSIONER (APPEALS) I II , MUMBAI, FOR THE QUANTUM OF M/S. TIPS INDUSTRIES LTD. 2 ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSME NT YEAR 20 09 10 . THE SOLE GROUND RAISED BY THE ASSESSEE IS, WHETHER OR NOT THE LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN DELETING THE CAPITALIZATION OF AUDIO RIGHTS EXPENSES OF ` 2,34,08,629 AND CONSEQUENTLY GIVING RELIEF OF ` 1,75,56,472 . 2 . FACTS IN BRIEF : THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF AUDIO CASSETTES, COMPACT DISK OF AUDIO AND VIDEO, PRODUCTION AND DISTRIBUTION OF FEATURE FILMS. THE ASSESSEE HAS DEBITED AUDIO RIGHTS EXPENSES OF ` 2,34,08,629 IN THE PROFIT & LOS S ACCOUNT. THESE EXPENSES WERE HELD TO BE CAPITAL IN NATURE BY THE ASSESSING OFFICER RIGHT FROM THE EARLIER ASSESSMENT YEARS. THE ASSESSING OFFICER NOTED THAT ALL THESE YEARS THIS ISSUE HAS BEEN DECIDED BY THE LEARNED COMMISSIONER (APPEALS) AND THE TRIBU NA L IN FAVOUR OF THE ASSESSEE, HOWEVER, THE SAME IS NOT BEING ACCEPTED BY THE DEPARTMENT AND THE MATTER IS SUBJUDI CE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT. THE LEARNED COMMISSIONER (APPEALS), FOLLOWING THE EARLIER YEARS ORDER IN ASSESSEES OWN CASE , RIGHT FROM THE ASSESSMENT YEAR 1990 91 TO 2007 08, TREATED THE SAID EXPENDITURE AS REVENUE IN NATURE AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 3 . BEFORE US, BOTH THE PARTIES ADMITTED THAT THIS ISSUE STANDS COVERED BY THE DECISION OF THE TRIBUNAL IN AS SESSEES OWN CASE IN SERIES OF DECISIONS FOR THE EARLIER ASSESSMENT YEARS. A COPY OF THE TRIBUNAL ORDER FOR THE ASSESSMENT YEAR 2007 08 AND 2008 09 HAS BEEN FILED BEFORE US. 4 . AFTER CONSIDERING THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) AND ALSO THE EARLIER YEARS M/S. TIPS INDUSTRIES LTD. 3 ORDER OF THE TRIBUNAL, WE FIND THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE RIGHT UPTO THE ASSESSMENT YEAR 2008 09. IN THE LATEST DECISION OF THE TRIBUNAL IN ITA NO.6925/MUM./2011 FOR THE AS SESSMENT YEAR 2008 09, ORDER DATED 29 TH JANUARY 2013, THE TRIBUNAL, AFTER RELYING UPON THE EARLIER YEAR ORDER S HAS OBSERVED AND HELD AS UNDER: 4. WE HAVE THE BENEFIT OF THE DECISION OF THE TRIBUNAL IN ITA NO. 599/MUM/09 WHEREIN THE TRIBUNAL AT PARA - 5, P AGE - 2 H AS HELD AS UNDER: AS REGARDS GROUND NO.1, THE TRIBUNAL HAS DEALT WITH THIS ISSUE AT PARA 3.1 OF ITS ORDER IN I.T.A.NO.2407/M/08 WHICH IS REPRODUCED HEREUNDER FOR EASY REFERENCE - 3.1 GROUND NO.1 IS ON THE ISSUE OF ALLOWABILITY OF EXPENDITURE INC URRED ON PURCHASE OF AUDIO RIGHTS TREATED BY THE ASSESSING OFFICER AS CAPITAL EXPENDITURE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF AUDIO RIGHTS AND CDS AND FOR THIS PURPOSE IT PURCHASES AUDIO RIGHTS OF FILM SONGS FROM PRODUCERS. EXPENDITURE INCURRED ON PURCHASE OF AUDIO RIGHTS, MUSIC FOR WHICH IS RELEASED [ACCEPTED AS AUDIO RIGHTS] IS TREATED BY THE ASSESSEE AS REVENUE EXPENDITURE. THE INCOME - TAX DEPARTMENT HAS BEEN SINCE ASSESSMENT YEAR 1990 - 91, DISALLOWING THE CLAIM OF THE ASSES SEE ON THE GROUND THAT THE EXPENDITURE IS CAPITAL IN NATURE. THE TRIBUNAL FOR ALL THE EARLIER ASSESSMENT YEARS HAS BEEN DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. THE ASSESSING OFFICER MADE THE ADDITION OBSERVING AT PARAGRAPH 3.3 ON PAGE 7 THAT THE RE VENUE HAS NOT ACCEPTED THE DECISION OF THE TRIBUNAL AND HAS FILED AN APPEAL BEFORE HON'BLE BOMBAY HIGH COURT AND THAT THE ADDITION IS MADE BY FOLLOWING THE STAND OF THE REVENUE IN THE EARLIER YEARS TO KEEP THE ISSUE ALIVE. THE FIRST APPELLATE AUTHORITY APP LIED THE DECISION OF THE TRIBUNAL AND DELETED THE ADDITION. WE SEE NO INFIRMITY IN THE SAME. IN FACT, GROUND 1B OF THE REVENUE APPEALS STATES THAT THE GROUND IS TAKEN BECAUSE THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE TRIBUNAL. IN VIEW OF THE ABOV E DISCUSSION, WE RESPECTFULLY APPLY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR EARLIER YEARS AND DISMISS THE GROUND TAKEN BY THE REVENUE. IN VIEW OF THE SAME, GROUND OF APPEAL NO.1 IS REJECTED. M/S. TIPS INDUSTRIES LTD. 4 5. AS NO DISTINGUI SHING FACTS HAVE BEEN BROUGHT ON RECORD BY THE LD. DEPARTMENTAL REPRESENTATIVE, WE HAVE NO HESITATION IN FOLLOWING THE DECISION OF THE TRIBUNAL (SUPRA). ACCORDINGLY, THE REVENUES APPEAL IS DISMISSED. 5 . THUS, RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENCE OF THE EARLIER YEARS, WE DO NOT FIND ANY MERITS ON THE GROUND RAISED BY THE REVENUE AND THE SAME IS DISMISSED. 6 . 6 . IN THE RESULT, REVENUES APPEAL IS DISMISSED . 14 TH FEBRUARY 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY 2014 SD / - . . B.R. B ASKARAN ACCOUNTANT MEM BER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 14 TH FEBRUARY 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI