ACIT 11(1), MUMBAI V. YASH RAJ FILMS P.LTD, MUMBAI

ITA 837/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100679 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 06-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SASMITA MISRA
• Assessee Lawyers: DI LIP J THAKKAR
• Section: 145

Judgement Text

M/S YASH RA J FILMS PVT LTD ITA 847/MUM/2014 1 G IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G , MUMBAI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI R AMIT KOCHAR , ACCOUNTANT MEMBER ITA NO. : 8 3 7 /MUM/20 1 4 ( ASSESSMENT YEAR: 200 6 - 0 7 ) AC IT 11(1) , RO OM NO. 439, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400 020 VS M/S YASH RAJ FILMS PVT LTD , 5, SHAH INDUSTRIAL ESTATE, VEERA DESAI ROAD, ANDHERI (WEST), MUMBAI .: PAN: AA A C Y 1176 E (APPELLANT) (RESPONDENT) APPELLANT BY : MISS SASMITA MISRA RESPONDENT BY : MR. DILIP J THAKKAR AND MR. RAJESH P SHAH /DATE OF HEARING : 2 0 - 0 8 - 201 5 / DATE OF PRONOUNCEMENT : 20 - 08 - 201 5 ORDER , . . : PER AMIT SHUK LA, J M : THE A FORESAID APPEAL HA S BEEN FILED BY THE REVENUE AGAINST IMPUGNED ORDER DATED 11 . 11 .2013 PASSED BY CIT(A) - 3, MUMBAI IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR THE ASSESSMENT YEAR 2006 - 07. THE REVENUE IS MAINLY AGGRIEVED B Y DE L ET ION OF PEN A LTY ON THE ADDITION OF RS. 9,40,00,287/ - . 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE QUANTUM PROCEEDINGS, THE ADDITION ITSELF HAS BEEN DELETED BY THE TRIBUNAL WHICH FACT HAS BEEN NOTED BY THE CIT(A) IN PARA 1.3 ALSO , THEREFORE, THE PENALTY ON THE SAME ADDITION HAS NO LEGS TO STAND. 3. THE LD.CIT DR ADMITTED THAT THE ADDITION OF RS.9,40,00,287 HAS BEEN DEL E TED BY THE TRIBUNAL AND, THEREFORE, NO PENALTY CAN BE SUSTAINED. M/S YASH RA J FILMS PVT LTD ITA 847/MUM/2014 2 4. AFTER CONSIDERING THE AFORESAID FACT, WE FIND THAT SO FAR AS THE ISSUE RELATING TO ADDITION OF RS. 9,40,00,287/ - IN RESPECT OF SET SATEL L ITE SINGAPORE LTDS INCOME, THE SAME HAS BEEN DELETED BY THE TRIBUNAL VIDE ORDER DATED 05.04.2013 (I N ASSESSEES OWN CASE FOR AY 2006 - 07 ) IN ITA NO. 6350/MUM/ 2010 AFTER OBSERVING AND HOLDING AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE DECISIONS RELIED UPON BY THE ASSESSEE ALONG WITH THE MATERIAL EVIDENCES BROUGHT ON RECORD IN THE FORM OF PAPER BOO K. A CAREFUL PERUSAL OF THE AGREEMENT SHOW THAT THE LICENSEE I.E. S E T SATELLITE SINGAPORE LTD ACQUIRED RIGHTS TO EXHIBIT THE MOVIES 24 TIMES DURING THE LICENSE PERIOD AND SINCE THE LICENSE PERIOD IS FOR FOUR YEARS THE S E T SATELLITE COULD EXHIBIT THE MOVIE S NOT MORE THAN SIX TIMES IN EACH YEAR WHICH MEANS THAT THE TRANSFEREE HAS 25% RIGHT OF EXHIBITING THE MOV I ES IN EACH YEAR, WHICH FURTHER MEANS THAT THE RI GHT ONLY FOR 25% OF THE LICENSE FEE HAS ACCRUED TO THE ASSESSEE IN THE FIRST YEAR, THEREFORE, THE PLE A OF THE AO THAT THE ENTIRE INCOME HAS ACCRUED TO THE ASSESSEE AS SOON AS THE AGREEMENTS HAVE BEEN EXECUTED IS NOT CORRECT. THE LICENSE FEE DID NOT ACCRUE TO THE ASSESSEE AS PER TERMS OF THE AGREEMENT. THE TAXABILITY OF THE LICENSE FEE HAS TO BE DECIDED ON THE PROVISIONS OF THE CONTRACT. AS PER THE AGREEMENT THE TRANSFEREE HAS ONLY THE RIGHT TO EXHIBIT THE FILMS OVER A PERIOD OF FOUR YEARS AS THE AGREEMENT IS THAT OF A LEASE THE ASSESSEE HAS RIGHTLY AND CORRECTLY SPREAD THE LICENSE FEE OVER A PERIOD OF FOUR YEARS. THE RELIANCE PLACED BY LD. DR OF RULE 9A APPEARS TO BE MISPLACED AS RULE 9A HAS NO RELATION WITH THE METHOD OF ACCOUNTING AS IT NOWHERE DEALS WITH SECTION 145 OF THE ACT. CONSIDERING THE ENTIRE FACTS IN THE LIGHT OF THE S E T SATELLITE AGREEMENT, IN OUR CONSIDERATE VIEW, THE ADDITION OF RS. 9,40,00,287/ - DESERVES TO BE DELETED. THE AO IS DIRECTED TO DELETE THE ADDITION. GROUND NO. 1 IS ACCORDINGLY ALLOWED. M/S YASH RA J FILMS PVT LTD ITA 847/MUM/2014 3 5. ACCORDINGLY, THE PENALTY U/S 271(1)(C) QUA THE SAME ADDITION CANNOT BE SUSTAINED AS IT HAS NO LEGS TO STAND OR HAS ANY LOCUS STAND I . ACCORDINGLY, GROUND RAISED BY THE REVENUE HAS NO MERITS AND STANDS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH AUGUST , 2015. SD/ - SD/ - ( R AMIT KOCH AR ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 20 TH AUGUST , 2015 / COPY TO: - 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A) - 3 , M UMBAI. 4) THE CIT 11 , MUMBAI. 5) G , , / THE D.R. G BENCH, MUMBAI. 6) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS