M/S SURESH PRODUCTIONS PVT. LTD.,HYDERABAD V. ACIT,CIRCLE-13(1), HYDERABAD

MA 41/HYD/2024

AI Insights

The case revolves around a dispute concerning the accounting treatment of a film purchase transaction involving Suresh Productions Pvt. Ltd., Ramanaidu Charitable Trust, and M/s. Suresh Productions. The primary issue was the difference in the revenue recognized by the ultimate beneficiary (the firm) and the expenditure claimed by the assessee (the Trust) in their respective books for the Assessment Year 2006-07. The ITAT initially added Rs.2.25 Crores to the assessee's income, which was contested through a Miscellaneous Application. The Tribunal's decision to rectify the earlier order was influenced by the fact that the firm had already included this amount in its income under the VSVS, and thus, there was no actual loss of revenue.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 28997 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 29-11-2024
• Assessment Year: 2006-2007
• Appeal Filed On: 11-09-2024
• Other Referred Cases: Federal Mogul Goetze (India) Ltd. Vs. ACIT, Honda Siel Power Products Ltd. Vs. CIT, Azmal Limited Vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K.C.DEVDAS
• Keywords: Assessment record
• Section: 254(2)

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ’ Bench, Hyderabad BEFORE SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER M.A. No.41/Hyd/2024 आ.अपी.सं /In ITA No.1633/Hyd/2014 (निर्धारण वर्ा/Assessment Year:2006-07) M/s. Suresh Productions Pvt. Ltd., Hyderabad. PAN : AADCS0841F …..Appellant. Vs. Asst. Commissioner of Income Tax, Circle 13(1), Hyderabad. ….Respondent. निर्धाररती द्वधरध/Assessee by: Shri K.C. Devdas, C.A. रधजस् व द्वधरध/Revenue by:: Shri Srinath Sadanala, SR-DR सुिवधई की तधरीख/Date of hearing: 29/11/2024 घोर्णध की तधरीख/Pronouncement: 06/12/2024 आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M.: This Miscellaneous Application (“M.A.”) has been filed by the assessee u/s.254(2) of the Income Tax Act, 1961 (“the Act”) with a request to modify the order passed by the co-ordinate bench of ITAT on 16.07.2024 in ITA No.1633/Hyd/2014 for A.Y. 2006-07 (“impugned order”). 2. The brief facts with regard to the issue are that, the assessee had purchased a film named “Soggadu” from Ramanaidu Charitable M.A. No.41/Hyd/2024 (In ITA No.1633/Hyd/2014) Page 2 Trust (“the Trust”), who in turn had purchased the same film from M/s. Suresh Productions (“firm”/”ultimate beneficiary”). The firm had sold the film to the Trust at Rs.5.20 Crores with a condition of payment of Rs.3 Crores in the year of sale and the remaining balance of Rs.2.20 Crores was to be paid in equal instalments in twenty years following the year of sale. The Trust in turn sold the film to the assessee at Rs.5.25 Crores on the condition of payment of Rs.3 Crores in the year of sale and the remaining balance of Rs.2.25 Crores was to be paid in equal instalments in twenty years following the year of sale. Accordingly, as per the method of accounting regularly followed, the Trust and the firm accounted for revenue of Rs.3 Crores in their respective books in A.Y. 2006-07. However, the assessee accounted for an expenditure of Rs.5.25 Crores in their books of account. Accordingly, the difference of Rs.2.25 Crores i.e. difference of expenditure accounted for by the assessee and the revenue offered by the actual beneficiary was added to the income of the assessee by the Ld. AO and later on confirmed by the Ld. CIT(A) and ITAT. 3. With the above facts, the Ld. AR submitted that the firm was the ultimate beneficiary in the aforesaid sale / purchase transaction of the film during the year under consideration and an amount of Rs.2.20 Crores were added in the total income of the firm during the assessment proceedings for A.Y. 2006-07. On appeal by the firm, the M.A. No.41/Hyd/2024 (In ITA No.1633/Hyd/2014) Page 3 Ld. CIT(A) deleted the additions and against the order of Ld. CIT(A), the revenue went to ITAT in appeal. However, to put quietus to all the litigations, the firm offered the said addition of Rs.2.20 Crores under Vivad Se Viswas Scheme-2020 (“VSVS”) and finally got the Form No.5 from the Pr. CIT after payment of all the requisite taxes. However, the copy of declaration filed by the firm under the VSVS and Form No.5 issued by the Pr. CIT could not be filed by the Ld. AR before the ITAT during the appellate proceedings. In this regard, the Ld. AR has filed an Affidavit confirming the lapses of not filing the relevant paper during the appellate proceedings before the ITAT. The Ld. AR also submitted that even the Ld. DR also did not brought this fact before the bench during the appellate proceedings, when all the facts were forming part of the assessment record. Accordingly, the Ld. AR prayed that the impugned order suffered from recording of facts which constitute mistake apparent from record and the impugned order may be rectified u/s.254(2) of the Act. In support of their submission, the Ld. AR placed reliance on the decision of Hon'ble Delhi High Court in the case of Federal Mogul Goetze (India) Ltd. Vs. ACIT, 439 ITR 204 wherein the Hon'ble Delhi High Court held that the power available to Tribunal u/s.254(2) of the Act is not limited to a mistake committed by the Tribunal. The amendment to the order of Tribunal can also be made if it is triggered on account of a mistake of the counsel for the M.A. No.41/Hyd/2024 (In ITA No.1633/Hyd/2014) Page 4 party. He also relied on the decision of Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd. Vs. CIT, 295 ITR 466 (SC) and the decision of ITAT (Third Member) in the case of Azmal Limited Vs. ACIT (M.A. No.583/Mum/2012, arising out of ITA No.5070/Mum/2011). 4. Per contra, the Ld. DR also did not made any objection against the submission made by the Ld. AR. 5. We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. As there was lapses on the part of the Ld. AR of the assessee, in our considered opinion, the same can be treated as a mistake in the impugned order which is apparent from record u/s. 254(2) of the Act. Accordingly we recall the impugned order and proceed to adjudicate the matter on merits. 6. On merits, the Ld. AR submitted that, the main reason behind the addition of Rs.2.25 Crores was that, the assessee had claimed the expenditure of Rs.5.25 Crores and on the other hand, corresponding revenue of Rs.3 Crores only had been offered as income by the ultimate beneficiary. Therefore, the difference of Rs.2.25 Crores was added in the hands of the assessee. The Ld. AR further submitted that, the firm has offered income of Rs.2.20 Crores in VSVS and the corresponding documents have been submitted before the bench. M.A. No.41/Hyd/2024 (In ITA No.1633/Hyd/2014) Page 5 Hence, after payment of taxes on income of Rs.2.20 Crores offered under VSVS, there is no loss of revenue to the department. Therefore, the Ld. AR prayed for rectification of the order and to delete the addition made by the Ld. AO. 5. Per contra, the Ld. DR also accepted that the firm has offered Rs.2.20 Crores of income in VSVS and in the result, there is no loss of Revenue. The Ld. DR did not raise any objection with regard to the submission of the Ld. AR for deletion of the addition made by the Ld. AO. 6. We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We have gone through the copy of the declaration filed by the firm under VSVS and Form NO.5 issued by the Ld. PCIT. On perusal of the documents, we find that the actual beneficiary has offered income of Rs.2.20 Crores in VSVS and in the result, there is no loss of any revenue to the department. Therefore, we delete the addition made by the Ld. AO. Accordingly, we allow the Miscellaneous Application filed by the assessee and rectify the para No.9.4 of the impugned order and dismiss the ground no.4 raised by the revenue in ITA No.1633/Hyd/2014. 7. As we have allowed the M.A. of the assessee, we did not adjudicate on other objection raised by the assessee in the M.A. with M.A. No.41/Hyd/2024 (In ITA No.1633/Hyd/2014) Page 6 regard to ground no.4 raised by the revenue in ITA No. 1633/Hyd/2014. 8. In the result, the Miscellaneous Application of the assessee is allowed. Order pronounced in the open Court on 6th Dec., 2024. Sd/- Sd/- (K. NARAIMHA CHARY) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad. Dated: 06.12.2024. * Reddy gp Copy of the Order forwarded to : 1. M/s. Suresh Productions Pvt. Ltd., Ramanaidu Studios, Filmnagar, Jubilee Hills, Hyderabad. 2. ACIT, Circle 13(1), Hyderabad. 3. Pr.CIT-V, Hyderabad. 4. DR, ITAT, Hyderabad. 5. Guard file. BY ORDER, "