Ravinder B. Walia, Mumbai vs Department Of Income Tax

आयकर अपीलीय अिधकरण, Ûयायपीठ, मुंबई अिधकरण मुंबई डȣ, Ûयायपीठ, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES 'D' MUMBAI ौी जोिग᭠दर ᳲसह, ᭠याियक सद᭭य एवं ौी राजेÛि, लेखा सदःय के सम¢ BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER

आयकर अपील सं. / ITA No.4365/MUM/2013 िनधा[रण वष[ /Assessment Year: 2008-09

ACIT-11(1), Shri Ravinder B. Walia, Room No.439, Aaykar Vs. 401, A.N. chambers, Bhavan, M.K. Marg, Turner Road, Bandra (W), Mumbai-400020 Mumbai-400050 (राजःव /Revenue) (ू×यथȸ /Respondent) P.A. NUMBER : AAJPW9207C

राजःव कȧ ओर से /Revenue by : Shri Akhilendra Yadav ू×यथȸ कȧ ओर से /Respondent by None

सुनवाई कȧ तारȣख / 29/12/2014 Date of Hearing : घोषणा कȧ तारȣख / 01/01/2015 Date of Pronouncement :

ORDER

PER JOGINDER SINGH, JM:

The Revenue is aggrieved by the impugned order dated 28/03/2013 of the ld. First Appellate Authority, Mumbai. The Revenue has raised the following grounds:

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i. The ld. Commissioner of Income tax (Appeals) erred in allowing the cost of Rs.3,38,58,888/- towards abandoned film by relying on the ratio of the Bombay High Court in the case of Sh. Rajesh Khanna, thereby ignoring the fact that the department has filed a review petition against the said decision.

ii. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the Assessing Officer be restored.

2. At the time of hearing, Shri Akhilendra Yadav, ld. counsel for the Revenue defended the conclusion arrived at in the assessment order by submitting that the ld. Commissioner of Income tax (Appeals) granted relief to the assessee without assigning any valid reason and the observation made in the assessment order was ignored.

2.1. On the other hand, nobody appeared for the assessee in spite of issuance of notice, therefore, we have no option but to proceed ex-party qua the assessee and proceed to dispose of the appeal on the basis of material available on record.

2.2. We have considered the submissions put forth by the ld. DR and perused the material available on record. Before coming to any conclusion, we are reproducing hereunder the relevant portion from the impugned order:-

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"I have considered the facts and find that the appellant is film producer, the film is to be treated as stock-in- trade, and hence cost of abandoned film is written off as revenue expenditure. The Assessing Officer has proposed disallowance on the ground that expenditure is capital in nature. However, the appellant has treated the film production as stock in trade. The film has been abandoned, therefore, the expenditure is allowable as deduction in the light of decision in the case of Mr. Rajesh Khanna vs ACIT cir 1(6) (ITA No.4804/Bom/2000) (Assessment Year 1992-93) D- Bench Mumbai dated 17/01/2003 as well as in the case of ACIT 11(1) vs J Radical Entertainment (I) Pvt. Ltd. (ITA No.4550/M/2004 Assessment Year 1998-99) dated 31/01/2007 and ACIT vs Dream Merchants Enterprise (ITA No.3243 and 3245/Mum/2009 (Assessment Year 2006-07 & 2004-05) dated 09/02/2010 and ACIT vs Rajiv Tolani (ITA NO.2522/Mum/2010 Assessment Year 2007-08) dated 27/04/2011 wherein following the ratio of decision in the case of Mr. Rajesh Khanna and above decision, disallowance made on account of cost of abandoned film were deleted. Further the decision in the case of Rajesh Khanna is also affirmed by Bombay High Court in the case of CIT vs Rajesh Khanna (ITa No.3875 of 2010) decided on 19/09/2011. The said decision has

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been followed in the case of Venus Records and Tapes Pvt. Ltd. vs ACIT (ITA NO.666/Mum/2010) dated 07/09/2012. In the light of above facts, the issue squarely covered in favour of the appellant by the aforesaid decision of Hon'ble Tribunal. Therefore, respectfully following the aforesaid decisions, the disallowance cannot be made on account of cost of abandoned film; hence no addition is being made on this account."

2.3. If the observation made in the assessment order, conclusion drawn in the impugned order, assertions made by ld. DR and the material available on record, if kept in juxtaposition and analyzed, we note that the assessee is in the business of film production, claimed Rs.3,38,58,888/- as allowable deduction on the project "fauz mein mauz" as there was no taker of the film, consequently, the assessee abandoned the same and debited the expenditure so incurred on the production of the same as work in progress and routed the same in its profit & loss account. The ld. Assessing Officer opined that the expenditure claimed to be nature in stock in trade is not a capital expenditure. The assessee place reliance upon the decision from Hon'ble Bombay High Court in the case of Rajesh Khanna (ITA No.3875/2010). The stand of the assessee right from assessment stage is that the film was treated as stock in trade, hence the cost of abandoned film is written off as revenue expenditure. We note that the ld.

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Commissioner of Income tax (Appeals), identically, place reliance upon various judicial pronouncements from the Tribunal and also from Hon'ble jurisdictional High Court. In the case of Rajesh Khanna also disallowance was made on account of cost of abandoned film. However, the Hon'ble Bombay High Court affirmed the decision of the Tribunal and that decision was also followed in the case of Venus Records & Tapes Pvt. Ltd. (ITA No.666/Mum/2010) order dated 07/09/2012. No contrary facts/decision was brought to our notice by the Revenue, therefore, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income tax (Appeals). It is affirmed leading to dismissal of appeal of the Revenue.

Finally, the appeal of the Revenue is dismissed.

This order was pronounced in the open court in the presence of ld. Representatives from both sides at the conclusion of the hearing on 29/12/2014.

Sd/- Sd/- (RAJENDRA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER

MUMBAI, DATED - 01/01/2015 f{x~{tÜ? P.S/.िन.स. आदे श कȧ ूितिलǒप अमेǒषत/Copy षत of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. ू×यथȸ / The Respondent. 6 Shri Ravinder B. Walia, . 3. आयकर आयुƠ(अपील) / The CIT(A)- 4. आयकर आयुƠ / CIT

5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai

6. गाड[ फाईल / Guard file.

आदे शानुसार/ ार BY ORDER, स×याǒपत ूित //True Copy// उप/सहायक उप सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अिधकरण मुब ं ई / ITAT, Mumbai