ITO (OSD), CHENNAI V. P.V.Ravikishore, CHENNAI

ITA 921/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58161 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-03-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 10-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Section: 143(3)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI D BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 921/MDS/2010 ASSESSMENT YEAR: 2004-05 THE INCOME TAX OFFICER [OSD], MEDIA CIRCLE II (I/C), CHENNAI 34. VS. SHRI P.V. RAVI KISHORE, NO.28, DE MONTE COLONY, ALWARPET, CHENNAI 18. [PAN: AAFPP2294J] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL ASSESSEE BY : NONE DATE OF HEARING : 1 3 . 0 3 .201 2 DATE OF PRONOUNCEMENT : 29.03.2012 ORDER PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE DEPARTMENT AGAINST T HE ORDER OF THE CIT(A) VI, CHENNAI DATED 26.02.2010 IN ITA NO.247/0 6-07 RELEVANT TO THE ASSESSMENT YEAR 2004-05. SHRI K.E.B. RENGARAJAN, JR . STANDING COUNSEL REPRESENTED ON BEHALF OF THE REVENUE. 2. DESPITE SERVICE OF NOTICE ON 28.12.2011 BY THIS TRIBUNAL ON THE ASSESSEE FIXING THE CASE FOR HEARING ON 13.03.2012 [AD ON RECORD], THE ASSESSEE DID NOT APPEAR WHEN THE APPEAL IS CALLED F OR HEARING OR ANY I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.921 921921 921/M/ /M/ /M/ /M/1 11 10 00 0 2 ADJOURNMENT APPLICATION HAS BEEN FILED. HENCE, WE P ROCEEDED TO DECIDE THE APPEAL AFTER HEARING THE LD. DR. 3. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APP EAL IS AGAINST DELETING THE DISALLOWANCE OF ` .10.00 LAKHS PAID TO HERO COORDINATORS AS THEIR REMUNERATION. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF FILM PRODUCTION UNDER A PROPRIETARY CONCERN NAMELY SHRI SHRAVANTHI MOVIES. RETURN FOR THE ASSES SMENT YEAR 2004-05 WAS FILED CLAIMING A LOSS OF ` .1,59,09,288/-. THE ASSESSMENT WAS COMPLETED ON 29.11.2006 UNDER SECTION 143(3) DETERMINING LOSS OF ` .1,44,67,723/-. THE ASSESSING OFFICER DISALLOWED REMUNERATION OF ` .10.00 LAKHS PAID TO THE HERO COORDINATORS TOWARDS REMUNERATION ON THE GROUND THA T THE SAID PAYMENT DID NOT PERTAIN TO FILM PRODUCTION. 5. THE CIT(A) DELETED THE SAID DISALLOWANCE AGAINS T WHICH THE DEPARTMENT CAME UP IN APPEAL BEFORE US. 6. WE HAVE HEARD THE LD. DR. BEFORE THE CIT(A), TH E ASSESSEE SUBMITTED THAT THE PAYMENT TO COORDINATORS OF THE HERO IN MOV IES IS NOT UNCOMMON AND IT IS A PREVALENT PRACTICE IN THE FILM INDUSTRY FRO M 1940S. HE HAS GIVEN NUMBER OF EXAMPLES IN SUPPORT OF HIS ARGUMENTS BEFO RE THE CIT(A) THAT THESE KIND OF PAYMENTS TO HERO COORDINATORS PREVAIL S IN FILM INDUSTRY FOR I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.921 921921 921/M/ /M/ /M/ /M/1 11 10 00 0 3 TELUGU FILM PRODUCTION IN MADRAS. IN THE COURSE OF HEARING BEFORE THE CIT(A), THE ASSESSEE SUBMITTED WRITTEN SUBMISSIONS, WHICH A RE AS UNDER: ADDITION OF ` . 10 LAKHS:- THE INCOME-TAX OFFICER ERRED IN HOLDING THAT THE PA YMENTS TO MR.CHAKRAPANI AND MRS.RAJORAMANI AS REMUNERATION IS NOT A PRACTICE IN THE INDUSTRY AND THERE IS NO CONCEPT OF ENGAGING HERO CO-ORDINATORS. IT IS TO BE NOTED THAT THIS PRACTICE PREVAILS IN FI LM INDUSTRY FROM 40'S AND NOT NEWLY INVENTED BY THE APPELLANT FOR TELUGU FILM PRODUCTION IN MADRAS THE EARLIEST CLASSIC CASE RELATES TO 'KANCHA NAMALA; WHOSE CALL SHEETS AND REMUNERATIONS WERE CONTROLLED BY MR.SS V ASAN OF GEMINI. THIS AGREEMENT BETWEEN THE TWO PARTIES ENTERED IN 1 939. THE NEXT CASE WAS PERTAINING TO MS. VYJANTHIMALA IN 1952-53, WHOSE CALL SHEETS AND SHOOTING SCHEDULES WERE THE B ONE OF CONTENTION HER GRAND MOTHER AND MOTHER MS. VASUNDARA RAJAN THE N A POPULAR ARTISTE OF TAMIL AND TELUGU, WHICH FINALLY LANDED U P IN CIVIL COURT OF MADRAS AND MS. VASUNDARA RAJAN WAS ALLOWED BY THE C OURT TO CONTROL HER AFFAIRS. DURING 1967/68 MS.HEMA MALINI AND MR.B.ANANTASWAMI WHO WAS THE PRODUCER OF HER FIRST HINDI MOVIE ENTERED I NTO AN AGREEMENT IN WHICH THE LATER IS GOING TO CONTROL HER FILM ACTIVI TIES FOR ABOUT 3 YEARS. THE ENTIRE REMUNERATION WAS TO BE PAYABLE TO MR.B.A NANTASWAMI. IT IS A KNOWN FACT THAT ACTRESSES MANJULA AND LATHA WERE CONTROLLED BY M/S. SATYA STUDIOS DURING 1970'S DUE TO THE CONTRACTUAL OBLIGATIONS WITH THE STUDIOS. SO MANY SUCH AGREEMENTS WERE ENTERED IN MADRAS DURI NG THE LAST 70 YEARS IN FILM INDUSTRY AND THE ABOVE ARE SO ME OF THE AGREEMENTS GOT WIDE PUBLICITY IN MEDIA DURING RESPECTIVE PERIO DS AND SOME OF THEM ENDED UP IN LITIGATIONS BEFORE VARIOUS COURTS OF MA DRAS. THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.921 921921 921/M/ /M/ /M/ /M/1 11 10 00 0 4 AGREEMENTS OF SUCH KIND ARE MORE IN BOMBAY AND CALC UTTA FILM INDUSTRIES. IN THE LIGHT OF THESE EXAMPLES THE PAYMENTS MADE TO MR.CHAKRAPANI AND MRS.ROJARAMANI ARE WITHIN THE GEN ERALLY FOLLOWED AGE LONG PRACTICES. MANY OF THIS TYPES CASES SETTLE D BEFORE THE COURTS AND THIS PRACTICE ACCEPTED AND HELD THE PAYMENTS MA DE TO SUCH COORDINATORS IS LEGAL AND UNAVOIDABLE IN THE INDUST RY. HENCE IN THIS CASE TARUN HERO OF THE FILM PRODUCED BY THE APPELLANT GOT HIS CHANCE IN FILMS THROUGH THE GOOD OFFICES OF HIS MOTHER AND FATHER, WHO WERE THE FAMOUS FILM PERSONALITIES OF 60'S - 90'S, THE ASSESSEE, EVEN THOUGH BEING THE PRODUCER OF THE FIL M CANNOT CONTROL THE AGREEMENTS OF THE ACTOR WITH THIS PARTIES. IN FACT FOLLOWING THE AGE OLD PRACTICE OF FILM INDU STRY THE COORDINATOR FOR HERO'S AND HEROINE ARE VERY COMMON MORE SO WHEN THE RECIPIENTS ARE ASSESSED TO TAX, THE QUESTION OF DIS ALLOWING THE EXPENDITURE IN THE HANDS OF THE APPELLANT IS INCORR ECT AND HENCE TO BE DELETED. 7. THE CIT(A), AFTER CONSIDERING THE ABOVE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE HELD THAT THE AMOUNT OF ` .10.00 LAKHS PAID TO HERO COORDINATORS IS REASONABLE AND THE SAME IS REFLECTED IN THE BOOK S OF ACCOUNTS OF M/S. SHRI SRAVANTHI MOVIES, WHEREIN THE ASSESSEE IS THE PROPR IETOR AND THEREFORE, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. WE HAVE DULY CONSIDERED THE SUBMISSIONS OF THE LD. DR AND THE OR DER OF THE CIT(A). WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CI T(A) AND THEREFORE, DISMISS THE GROUNDS OF APPEAL OF THE REVENUE AND CONFIRM TH E ORDER OF THE CIT(A). I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.921 921921 921/M/ /M/ /M/ /M/1 11 10 00 0 5 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.03.2012. SD/ - SD/ - (DR. O.K. NARAYANAN) VICE - PRESIDENT (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI, DATED, THE 29.03.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.