C.Venkataraju, CHENNAI V. ACIT, CHENNAI

ITA 94/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9171 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 15-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-01-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: K HEMALATHA
• Keywords: Reopening of assessment; Depreciation; Principle of natural justice; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 234B; 147; 148

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 94 /MDS/201 6 / ASSESSMENT YEAR : 20 07 - 08 SHRI C. VENKATARAJU, PROP. GITA CHITRA INTERNATIONAL, NEW NO. 19 (OLD NO. 9), MYLAI RANGANATHAN STREET, T. NAGAR, CHENNAI 600 017 . [PAN: A BVPC7837R ] VS. THE ASS ISTANT COMMISSIONER OF INCOME TAX , MEDIA CIRCLE II , C HENNAI - 34 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MS. K. HEMALATHA, C.A. / RESPONDENT BY : SHRI A.V. SREEKANTH , J CIT / DATE OF HEARING : 1 7 . 0 3 .201 6 / DATE OF P RONOUNCEMENT : 15 . 0 6 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 14, CHENNAI DATED 36.11.2015 FOR THE ASSESSMENT YEAR 2007 - 08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE AND IN ANY CASE IS OPPOSED TO THE PRINCIPLES OF EQUITY, NATURAL JUSTICE AND FAIR PLAY. I.T.A. NO . 94 /M/ 16 2 2. RE - OPENING OF ASSESSMENT U/S 147 OF THE INCOME TAX ACT IS BAD IN LAW. 3. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING THE ADDITIONS OF RS. 4,76,387/ - BY TREA TING THE APPELLANTS SHARE OF INCOME ON SHARE OF LAND GREATER THAN THE ACTUAL SHARE OF 1/3RD ON THE PROPERTY SOLD TO THE EXTENT OF RS.22, 11,490/ - . 4. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING THE DISALLOWANCE OF PROGRAMME IN CHARGE REMU NERATION BY INVOKING RULE 9A OF INCOME TAX RULES TO THE EXTENT OF RS. 4,75,102/ - . 5. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING DISALLOWANCE OF INTEREST PAYMENT OF RS. 10, 72,625/ - BY INVOKING PROVISIONS OF SECTION 40(A)(IA). 6. THE LE ARNED COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING THE INTEREST LEVIED U/S 2348 AND 234C. FOR THESE AND SUCH OTHER ADDITIONAL GROUNDS THAT MAY BE ADDUCED DURING THE COURSE OF HEARING, IT IS HUMBLY PRAYED THAT JUSTICE MAY PLEASE BE RENDERED BY REMOVING THE ABOVE DISALLOWANCES MADE IN THE ASSESSMENT ORDER AND PROVIDE OTHER RELIEF AS MAY BE NECESSARY. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF FILM PRODUCTION, DISTRIBUTION, EXHIBITION AND EXPLOITATIO N OF FILM UNDER THE NAME AND STYLE OF M/S GITA CHITRA INTERNATIONAL. THE ASSESSEE IS ALSO A DIRECTOR IN M/S. GURU CARE TECHNOLOGIES AND PARTNER IN M/S. SRI GITA INTERNATIONAL. FURTHER, THE ASSESSEE IS ALSO ENGAGED IN REAL ESTATE BUSINESS. HE FILED HIS RETU RN OF INCOME FOR THE ASSESSMENT YEAR 2007 - 08 ON 19.12.2007 ADMITTING A TOTAL INCOME OF .13,55,501/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] AND THE ASSESSMENT WAS COMPLETED UNDER SE CTION I.T.A. NO . 94 /M/ 16 3 143(3) OF THE ACT ON 23.12.2009 BY MAKING VARIOUS ADDITIONS. ON APPEAL, THE LD. CIT(A), VIDE HIS ORDER DATED 29.06.2012 DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER. LATER, THE ASSESSING OFFICER, AFTER RECORDING THE REASONS FOR REOPENING THE A SSESSMENT UNDER SECTION 147 OF THE ACT, FRAMED THE IMPUGNED ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ON 28.03.2013 BY MAKING VARIOUS ADDITIONS. ON APPEAL, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. 3. THE ASSESSEE IS IN APPE AL BEFORE US AND THE LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY CONTENDED THAT THE ORIGINAL ASSESSMENT WAS REOPENED WITHOUT ANY FRESH TANGIBLE MATERIAL AND AS SUCH, REOPENING IS BAD IN LAW. SHE SUBMITTED THAT THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECT ION 143(3) OF THE ACT AND AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED ALL THE MATERIALS NECESSARY FOR THE PURPOSE OF ASSESSMENT AND THE REOPENING IS BASED ON NO TANGIBLE MATERIAL. THEREFORE, THE REASSESSMENT FRAMED IS BAD IN LAW. 4. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE ASSESSMENT WAS REOPENED BY RECORDING REASONS AS FOLLOWS: 30/03/2012 SHRI C. VENKATARAJU PAN ABVPC7837R A.Y. 2007 - 08 I.T.A. NO . 94 /M/ 16 4 ROI WAS FIL ED ON 19.12.2007 ADMITTING AN INCOME OF . 13,55,501/ - . ASSESSMENT WAS COMPLETED DETERMINING THE TOTAL INCOME AT .33,98,100/ - ON 23.12.2009. 1. TDS WAS NOT REFLECTED ON THE INTEREST PAYMENT OF . 10,72,625/ - 2. EXPENDITURE TOWARDS PROGRAMME IN CHARGE REMUNERATION OF .4,75,102/ - DEBITED BUT NO COR RESPONDING INCOME SHOWN. 3. RECEIPT FROM SALE OF LAND WAS SHOWN AT .28,53,263/ - . BUT FROM THE DETAILS OF LAND THE TOTAL SALE VALUE AS PER THE COPIES OF SALE DEEDS WORKED OUT TO .33,29,650/ - . DIFFERENTIAL VALUE OF .4,76,387/ - ( .38,29,650/ - - .28,53,268/ - NEEDS TO BE BROUGHT TO TAX. THEREFORE I HAVE REASON TO BELIEVE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. NECESSARY APPROVAL HAS BEEN OBTAINED FROM HIGHER AUTHORITY. 5 . AS SEEN FROM THE ABOVE, THE ASSESSING OFFICER WHILE GOING THROUGH THE REAS ON RECORD ED BY THE ASSESSING OFFICER, HE HAS OBSERVED THAT TDS WAS NOT REFLECTED ON THE INTEREST PAYMENT OF .10,72,625/ - . FURTHER, THE E XPENDITURE TOWARDS PROGRAMME IN CHARGE REMUNERATION OF .4,75,102/ - DEBITED BUT NO CORRESPONDING INCOME WAS SHOWN. MOREOVER, THE R ECEIPT FROM SALE OF LAND WAS SHOWN AT .28,53,263/ - . BUT FROM THE DETAILS OF LAND THE TOTAL SALE VALUE AS PER THE COPIES OF SALE DEEDS WORKED OUT TO .33,29,650/ - . DIFFERENTIAL VALUE OF .4,76,387/ - ( .38,29,650/ - - .28,53,268/ - NEEDS TO BE BROUGHT TO TAX. 6 . NOW, THE CONTENTION OF THE AR IS THAT THE REASSESSMENT WAS DONE ONLY ON THE BASIS OF SAME SET OF FACTS, WHICH WERE ALREADY AVAILABLE ON RECORD I.T.A. NO . 94 /M/ 16 5 AND IT CANNOT BE A GROUND FOR REOPENING OF THE ASSESSMENT. IT IS A SETTLED LAW THAT ON THE BASIS OF MATERIAL, PRIMA FACIE, AVAILABLE BEFORE THE ASSESSING OFFICER, OPINED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT CAN BE FORMED. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION. IN CASE THE ASSESSING OFFICER HAS A CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAS ESCAPED ASSESSMENT, ACTION U NDER SECTION 148 OF THE ACT CAN BE TAKEN. BUT OBVIOUSLY, THERE SHOULD BE RELEVANT MATERIAL ON WHICH A REASONABLE MAN COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THIS MATERIAL(S) WOULD CONCLUSIVELY PROVE THE ESCAPEMENT OF INCOME IS NOT THE CONCERN AT THAT PARTICULAR STAGE. SO WHAT IS REQUIRED IS THE SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER BASED ON OBJECTIVE MATERIAL EVIDENCE. IN THE GIVEN CAS E, ORIGINAL ASSESSMENT WAS COMPLETED ON 2 3 . 12 .20 0 9 UNDER SECTION 143(3) OF THE ACT. THE REASON FOR REOPENING WAS RECORD ED AS DISCUSSED ABOVE. THE ARGUMENT OF THE LD. AR IS THAT UNDER SECTION 147 OF THE ACT IN CASE THE ASSESSMENT ORDER IS COMPLETED U NDER SECTION 143(3) OF THE ACT , AS HAS BEEN DONE IN THIS CASE, NO ACTION COULD BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSMENT YEAR, INTER ALIA. I.T.A. NO . 94 /M/ 16 6 7. THE LD. AR CONTENDED THAT IN THIS CASE, THE ASSESSING OFFICER HAVE NO TANGIBL E FRESH MATERIAL FOR THE REASSESSMENT FOR THAT ASSESSMENT YEAR. AS SEEN FROM THE REASONS RECORDED WHICH GIVES A CLEAR PICTURE THAT THE ASSESSING OFFICER HAS GOT MATERIAL EVIDENCE TO FORM HIS OPINION THAT INCOME HAS ESCAPED ASSESSMENT THAT IS WHY HE REOPENE D THE ASSESSMENT AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT. THERE CANNOT BE TWO OPINIONS. AT THAT POINT OF TIME OF REOPENING WHEN THE REASONS ARE RECORDED AFTER FORMING OPINION OF ESCAPEMENT OF INCOME IS ONLY RELEVANT. HENCE, THE PLEA OF THE LD. AR IS NOT TENABLE IN THE EYES OF LAW. UNDER SECTION 147, THE ASSESSING OFFICER CAN EITHER ASSESS OR RE - ASSESS BUT FOR TAKING ACTION THERE UNDER, HE HAS TO RECORD REASONS THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS ALSO MANDATED BY SECTION 148 (2) TO RECORD REASONS IN WRITING. THE REASSESSMENT PROCEEDINGS UNDER SECTION 147 ARE FURTHER SUBJECT TO SECTIONS 148,149,150,151,152 AND 153. I N THE PRESENT CASE, WE ARE REQUIRED TO DECIDE THE LIMITED ISSUE REGARDING THE VALIDITY OF PROCEEDINGS UNDERTAKEN WITHIN FOUR YEARS OF THE ASSESSMENT YEAR IN QUESTION. THE ASSESSING OFFICER IS REQUIRED TO SEE IF THE CONDITIONS LAID IN EXPLANATION 2(C) BECAUSE IN THIS CASE THE ASSESSMENT WAS COMPLETED U/S 143(3) ARE SATISFIED OR NOT. IN CASE, (I) INCOME CHARGEABLE T O TAX HAS BEEN UNDER ASSESSED; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW RATE; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECTIVE OF EXCESS RELIEF UNDER THIS ACT; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THIS I.T.A. NO . 94 /M/ 16 7 ACT HAS BEEN COMPUTED, THE ASSESSING OFFICER WOULD HAVE VALID COGNIZANCE U/S 147 OF THE ACT. THE REASONS RECORDED BY THE ASSESSING OFFICER CLEARLY DEMONSTRATES THAT THOUGH THE ASSESSEE PRODUCED BOOKS OF ACCOUNT, THE DISCREPANCY NOTICED BY THE ASSESSING OFF ICER CAN ONLY BE POINTED OUT THAT DUE DILIGENT OF ASSESSING OFFICER. AS SUCH, THE PRODUCTION OF BOOKS ITSELF CANNOT CONSTITUTE FULL DISCLOSURE OF ALL MATERIAL FACTS FOR THE PURPOSE OF ASSESSMENT. BEING SO, WE ARE SATISFIED THAT THE ASSESSING OFFICER HAS R EASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THIS FACT CONFERS JURISDICTION ON THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT. THE POWER UNDER SECTION 147 TO RE - ASSESS THE INCOME POST 1ST APRIL, 1989 ARE MUCH WIDER THAN THESE USED TO BE BEFORE. B UT STILL THE SCHEMATIC INTERPRETATION OF THE WORDS REASON TO BELIEVE FAILING WHICH SECTION 147 WOULD GIVE ARBITRARILY POWERS TO THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT ON THE POWER TO AN ASSESSING OFFICER TO REOPEN ANY AND EVERY ASSESSMENT ORDER W HICH WOULD SIMPLY AMOUNT TO A REVIEW. THE CONCEPT CHANGE OF OPINION IS AN IN - BUILT TEST TO CHECK THE ABUSE OF POWER BY THE ASSESSING OFFICER. ON THE BASIS OF CHANGE OF OPINION , WHICH CANNOT BE PER SE A REASON TO REOPEN THE ASSESSMENT. IN OUR OPINION, A S SEEN FROM THE ABOVE REASONS RECORDED, THE ASSESSING OFFICER WOULD HAVE ASCERTAINED THE ESCAPEMENT OF INCOME AT THE TIME OF ORIGINAL ASSESSMENT ALSO ONLY WITH DUE DILIGENT. HENCE, THE REOPENING IS HELD TO BE VALID. EVEN OTHERWISE, IT IS THE DUTY OF THE AS SESSEE TO BRING ALL THE FACTS TO THE KNOWLEDGE OF THE ASSESSING OFFICER AT THE TIME OF ORIGINAL I.T.A. NO . 94 /M/ 16 8 ASSESSMENT AND ONLY JUST FILING OF DOCUMENTS AT THE TIME OF ASSESSMENT IS NOT ENOUGH AND HE SHOULD BE DREW THE ATTENTION OF THE ASSESSING OFFICER TO ALL NECESSA RY MATERIAL. CONSEQUENTLY, WE HOLD THAT THE ENTIRE ASSESSMENT IN THIS CASE IS VALID AND THEREFORE, THE REOPENING OF ASSESSMENT IS UPHELD. 8. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) IS ERRED IN CONFIRMING THE ADDITION OF .4,76,387/ - BY TREATING THE ASSESSEE S SHARE OF INCOME ON SHARE OF LAND GREATER THAN THE ACTUAL SHARE OF 1/3 RD ON THE PROPERTY SOLD TO THE EXTENT OF .22,11,490/ - . 8.1 DURING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR, THE ASSESSEE HAS SOLD LA NDS AND THE DETAILS OF SALE OF LAND S ARE AS UNDER: S.NO. NAME OF THE PURCHASERS AMOUNT ( .) 1. SUNITHA NARESH KUMAR 3,72,120 2. MATHEW KASHY & OTHERS 3,36,700 3. K R KRISHNA PRASAD 4,05,300 4. ARUN PRAKASH 3,73,275 5. V. SEKHAR 4,37,920 TOTAL 19,25,315 OUT OF THE TOTAL CONSIDERATION OF .19,25,315/ - , THE ASSESSEE S SHARE WAS ONE THIRD (1/3) AMOUNTING TO .6,41,773/ - AND THE BALANCE TWO THIRD S SHARE (2/3) BELONGS TO A. SENTHAMARAI KANNAN & G. SENTHIL KUMAR . FURTHER, THE ASSESSEE SOLD THE FOLLOWING LANDS IND IVIDUALLY AND THE DETAILS ARE AS UNDER: S.NO. NAME OF THE PURCHASERS AMOUNT ( .) 1. SENTHAMARAI KANNAN & OTHERS 16,44,000/ - 2. THE LANDS 5,67,490/ - TOTAL 22,11,490/ - I.T.A. NO . 94 /M/ 16 9 8.2 THE ASSESSEE HAS FURNISHED COPIES OF ALL THE DOCUMENTS DURING THE COURSE OF ASSESSME NT PROCEEDINGS. THE ASSESSMENT WAS COMPLETED ACCEPTING THE CONTENTIONS OF THE ASSESSEE. ALL THE DOCUMENTS WERE AGAIN SUBMITTED IN THE COURSE OF REASSESSMENT PROCEEDINGS ALSO. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS SHOWN THE RECEIPT FROM SALE OF LAND AS .28,53,263/ - AS PER PROFIT AND LOSS ACCOUNT OF M/S. GITA CHITRA INTERNATIONAL. HOWEVER, AS PER THE DETAILS OF SALE OF LAND AVAILABLE ON RECORD, THE TOTAL SALE VALUE AS PER THE COPIES OF SALE DEEDS WORKED OUT TO .33,29,650/ - . SO, THERE IS A DIFFERENCE OF .4,76,387 [33,29,650 28,53,263]. AFTER VERIFYING THE SALE DEEDS, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE WAS HOLDING MORE THAN 1/3 RD SHARE IN RESPECT OF THE LANDS SOLD FOR .19,25,315/ - . ACCORDING TO THE ASSESSING OFFICER, MAJOR PORTION OF THE SALE CONSIDERATION WOULD HAVE BEEN RECEIVED BY THE ASSESSEE AND NOT INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. THEREFORE, THE DIFFERENCE BETWEEN THE TOTAL SALE VALUE OF THE LAND AND THE SALE VALUE ADMITTED BY THE ASSESSEE OF ..4,76,387/ - WAS BROUGH T TO TAX. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 8. 3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS ON RECORD. THE ASSESSING OFFICER SIMPLY CONCLUDED THAT THE ASSESSEE WAS HOLDING MORE THAN 1/3 RD S HARE IN RESPECT OF THE LANDS SOLD FOR .19,25,315/ - I.T.A. NO . 94 /M/ 16 10 AND MAJOR PORTION OF THE SALE CONSIDERATION WOULD HAVE BEEN RECEIVED BY THE ASSESSEE AND NOT INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. HE HAS NOT PASSED A DETAILED SPEAKING ORDER. THE ASSESSING OFFICER HAS NOT NARRATED THE ACTUAL EXTENT O F LAND SOLD IN WHICH WHAT IS THE SHARE OF THE ASSESSEE. WITHOUT THIS FACT, IT IS NOT ACCEPTABLE TO SAY THAT THE ASSESSEE WAS HOLDING MORE THAN 1/3 RD SHARE IN RESPECT OF THE LAND SOLD. THERE IS NOTHING AVAILABLE ON RECORD WITH REGARD TO THE RECEIPT OF SALE CONSIDERATION OF OTHER SHARE HOLDERS ADMITTED IN THEIR PROFIT AND LOSS ACCOUNT. WITHOUT VERIFYING THE SAME, THE ASSESSMENT WAS HURRIEDLY CONCLUDED. IF EXACTLY THE ASSESSEE WAS HOLDING ONE THIRD SHARE OF THE LAND, THE DIFFERENCE OF .4,76,387/ - SHOULD ALSO BE SHARED AMONG THE THREE SHARE HOLDERS. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO FIRST VERIFY THE PROFIT AND LOSS ACCOUNT OF ALL THE TH REE SHARE HOLDERS WITH REGARD TO THE ADMISSION OF SALE CONSIDERATION IN ALL THEIR ACCOUNTS, CLEARLY ASSESS THE EXACT EXTENT OF SHARE OF LAND OF THE ASSESSEE AND OTHER SHARE HOLDERS AND THEREAFTER WORKOUT THE DIFFERENCE PERTAINING TO THE ASSESSEE AS WELL AS OTHER SHARE HOLDERS. WITH THE ABOVE OBSERVATION, WE REMIT THE ISSUE BACK TO THE ASSESSING OFFICER TO DECIDE AFRESH AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO ALL THE SHARE HOLDERS OF THE PROPERTY. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. I.T.A. NO . 94 /M/ 16 11 9. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF PROGRAMME - IN - CHARGE REMUNERATION BY INVOKING RULE 9A OF INCOME TAX RULES TO THE EXTENT OF .4,75,102/ - . 9.1 A CCORDING TO THE ASSESSING OFFICER, AS PER THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAS DEBITED EXPENDITURE TOWARDS PROGRAMME - IN - CHARGE REMUNERATION OF .4,75,102/ - BUT HAS NOT SHOWN ANY CORRESPONDING INCOME. WHEN QUESTIONED, THE ASSESSEE HAS SUBMITTED THA T THE PAYMENT WAS MADE TO TWO PERSONS AS BALANCE REMUNERATION DUE TOWARDS THE OLD FILM S , WHICH WERE NOT PAID AT THAT TIME DUE TO AN UNRESOLVED DISPUTE BUT HAS OFFERED THE INCOME FOR THE SAID FILMS IN THOSE RESPECTIVE YEARS. THEREFORE, THE EXPENDITURE OF . 4,75,102/ - WAS CLAIMED IN THE ASSESSMENT YEAR 2007 - 08. BY INVOKING THE PROVISIONS OF RULE 9A, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE CAN CLAIM EXPENSES ONLY WHEN THE FEATURE FILM WAS CERTIFIED FOR REL EASE AND ACCORDINGLY DISALLOWED THE SAID AMOUN T AND BROUGHT TO TAX. 9.2 ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING THE DECISION IN THE CASE OF V. VERGHESE & ANR. 210 ITR 526 WITH REGARD TO THE CONSTITUTIONAL VALIDITY OF RULE 9A, CONFIRMED THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER. I.T.A. NO . 94 /M/ 16 12 9.3 WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE BALANCE REMUNERATION DUE ON ACCOUNT OF OLD FILM PRODUCTIONS, WHICH WAS NOT PAID OVER TO AN UNRESOLVED DISPUTE WAS CL AIMED IN THE YEAR UNDER CONSIDERATION. IT MAY BE TRUE THAT THE EXPENDITURE WAS NOT CRYSTALLIZED IN THE YEAR THERE WAS INCOME , HOWEVER, IN THE YEAR UNDER CONSIDERATION, WHEN THE RE WAS NO INCOME , NO EXPENDITURE COULD BE CLAIMED. THUS, WE UPHOLD THE ORDER OF THE LD. CIT(A) CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 10. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF I NTEREST PAYMENT OF .10,72,625/ - BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 10.1 ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAS DEBITED A SUM OF .10,72,625/ - IN THE PROFIT AND LOSS ACCOUNT TOWARDS INTEREST PAYMENT BUT NO TAX WAS DEDUCTED AT SOURCE. SINCE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THE ASSESSEE SHOULD HAVE DEDUCTED N TDS ON THE AMOUNT, WHETHER IT WAS PAID OR PAYABLE. SINCE NO TDS WAS DEDUCTED, THE ASSESSING OFFICER DISALLOWED THE SAME AND BROUGHT TO TAX. 10.2 ON APPE AL, BY FOLLOWING THE DECISION IN THE CASE OF DSM SOFT PVT. LTD. V. ACIT IN I.T.A. NOS. 1897 & 1898/MDS/2015, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. I.T.A. NO . 94 /M/ 16 13 10.3 WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE ASSESSEE HAS MADE INTEREST PAYMENT OF .10,72,625/ - , BUT NO TDS WAS DEDUCTED. BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE ASSESSING OFFICER DISALLOWED THE SAME. ON APPEAL, THE L D. CIT(A) CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER BY FOLLOWING THE DECISION IN THE CASE OF DSM SOFT PVT. LTD. V. ACIT (SUPRA) . NOW THE CASE OF THE ASSESSEE IS THAT IT HAS ALREADY PAID ALL THE AMOUNTS AND NO AMOUNT IS PENDING. ONCE ALREADY AMOUN TS ARE PAID, THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL.CIT (SUPRA) SQUARELY APPLIES TO THE CASE OF THE ASSESSEE. AGAINST THE DECISION OF THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. VECTOR S HIPPING SERVICES P. LTD. 357 ITR 642(ALL), WHEREIN, THE DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL.CIT (SUPRA) HAS BEEN CONSIDERED AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, THE DEPARTMENT HAS PREFERRED SLP BEFORE THE HON BLE SUP REME COURT AND THE HON BLE SUPREME COURT HAS DISMISSED THE SLP IN CC NO. 8068/2014 VIDE ORDER DATED 02.07.2014. IN VIEW OF THE DISMISSAL OF THE SLP FILED BY THE DEPARTMENT, THE ORDER PASSED BY THE HON BLE ALLAHABAD HIGH COURT HAS BECOME FINAL. THEREFORE, I T CAN BE SAFELY CONCLUDED THAT THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. I.T.A. NO . 94 /M/ 16 14 10.4 . UNDER THE ABOVE FACTS AND CIRCUMSTANCES AND IN VIEW OF THE DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL.CIT (SUPRA), THE SECTION 40(A)(IA) IS NOT AP PLICABLE WHEN THERE IS NO OUTSTANDING BALANCE AT THE END OF THE CLOSE OF THE YEAR RELEVANT TO THE ASSESSMENT YEAR IN RESPECT OF THESE PAYMENTS. HOWEVER, THE ASSESSEE HAS NOT BROUGHT ON RECORD, THE DETAILS OF OUTSTANDING EXPENSES OR SCHEDULE OF SUNDRY CREDI TORS SHOWING WHETHER THE IMPUGNED AMOUNT IS OUTSTANDING AT THE END OF THE CLOSE OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR EITHER IN THE NAME OF THE PARTY OR OUTSTANDING EXPENSES. ON SIMILAR FACTS AND CIRCUMSTANCES, THE COORDINATE BENCH OF THE TR IBUNAL IN THE CASE OF DCS BPO (P.) LTD. V. ACIT [2015] 63 TAXMANN.COM 288 (CHENNAI TRIB) REMANDED THE MATTER TO THE ASSESSING OFFICER FOR FRESH CONSIDERATION. HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE CASE OF DSM SOFT PVT. LTD. V. ACIT (SUPRA) AND ALSO IN THE INTEREST OF JUSTICE, WE REMIT HE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE AND THE ASSESSEE SHALL PLACE NECESSARY EVIDENCE IN SUPPORT OF HIS CLAIM. THUS, THE GRO UND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11. THE LA ST GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT. THOUGH THE LEVY OF INTEREST IS MANDATORY AND CONSEQUENTIAL, SINCE WE HAVE SET ASIDE SOME OF I.T.A. NO . 94 /M/ 16 15 THE ISSUES TO THE FILE OF THE ASSESSING OF FICER TO DECIDE THE ISSUES AFRESH , THE INTEREST MAY BE CHARGED ACCORDINGLY. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 15 TH JUNE, 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJA RI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 15 . 0 6 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.