Income Tax Appellate Tribunal - Mumbai
Inox Lesiure Ltd, Mumbai vs Asst Cit 11(1), Mumbai on 7 August, 2017
आयकर अपीलीय अिधकरण, अिधकरण मुंबई " आई"
आई खंडपीठ Income-tax Appellate Tribunal -"I"Bench Mumbai सव ी राजे ,ले लेखा सद य एवं, राम लाल नेगी, ी याियक सद य Before S/Shri Rajendra,Accountant Member and Ram Lal Negi,Judicial Member आयकर अपील सं./I.T.A./2382/Mum/2015, िनधा रण वष /Assessment Year: 2009-10 Inox Leisure Ltd. ACIT - Circle-11(1) 5th Floor, Viraj Towers, W.E. Highway now ACIT Range-16(1), Room No.467 Next to Andheri flyover,Andheri (E) Vs. Aayakar Bhavan, M.K. Road Mumbai-400 093. Mumbai-400 020.
PAN:AADCS 7809 P (अपीलाथ /Appellant) ( यथ / Respondent)
आयकर अपील सं./I.T.A./2912/Mum/2015, िनधा रण वष /Assessment Year:2009-10 आयकर अपील सं./I.T.A./5212/Mum/2015, िनधा रण वष /Assessment Year:2010-11 आयकर अपील सं./I.T.A./5213/Mum/2015, िनधा रण वष /Assessment Year:2011-12 ACIT - Circle-11(1) Inox Leisure Ltd.
Aayakar Bhavan, M.K. Road Vs. (Andheri (E), Mumbai-400 093. Mumbai-400 020.
(अपीलाथ /Appellant) ( यथ / Respondent)
Revenue by: Shri B.C.S. Naik-CIT-DR
Assessee by: Shri R. Deshpande
सुनवाई क तारीख / Date of Hearing: 07.08.2017
घोषणा क तारीख / Date of Pronouncement: 07.08.2017 आयकर अिधिनयम,1961 अिधिनयम क धारा 254(1)के के अ तग त आदे श Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद य राजे के अनुसार PER RAJENDRA, AM-
Challenging the orders dated 17.08.2015 and 24/02/2015 of CIT(A)-4,Mumbai the assessee and the Assessing Officer(AO)have filed the above mentioned appeals.For the Assessment Year(AY.)2009-10 AO and the assessee have filed cross appeals.For the subsequent two AY.s only the AO has filed the appeals.As the issue involved in the appeals are almost identical,so, we are adjudicating them together.Assessee-company, is engaged in the business of owning,operating and management of multiplex theatres.Details of filing of returns, returned income date of assessment etc. can be summarized as under :-
A.Y. ROI filed on Returned Income Assessment dt. Assessed Income 2009-10 30.09.2009 Rs.Nil 21.11.2011 Rs.Nil 2010-11 14.10.2010 Rs.18.88 crores 15.03.2013 (-)Rs.4.67 crores 2011-12 29.09.2011 Rs.Nil 24.02.2014 Rs.5.47 crores ITA/2912/Mum/2015-AY 2009 -10:
Solitary Ground of appeal,raised by the AO,is about entertainment tax subsidy of Rs.13.71 crores granted by the various state Governments.The assessee had claimed that entertainment tax subsidy was capital receipt whereas the AO was of the opinion that it was revenue receipt and it was taxable.
2382+3 Inox Leisure
2.1.It was brought to our notice that identical issue was dealt with by the Tribunal while deciding the appeal for AY 2006-07, 2007-08 and 2008-09 at para 5.7 at page-17 (ITA/ 6365/ Mum/2010 & Other appeals,dated 21.8.2015).We are reproducing the relevant portion of the order and same reads as under :-
"5.7 Though the learned DR has raised a pertinent issue that the subsidy in this case was given to enable the assessee to run their business of multiplexes more profitably and therefore he has supported his contention by the decision of the Hon'ble Supreme Court in the case of Ponni Sugars and Chemicals Ltd (supra) however, as it is apparent that the Hon'ble jurisdictional High Court while deciding the issue of subsidy under the same scheme has considered both the judgments of the Hon'ble Supreme Court in the case of Sahney Steels Ltd. (supra) as well as Ponni Sugars and Chemicals Ltd (supra). Therefore, in view of the binding precedent of Hon'ble jurisdictional High Court, we hold that entertainment duty/tax subsidy received by the assessee is on capital account and therefore, not taxable income of the assessee."
Respectfully following above order of the Tribunal for the earlier AY.s we decide the effective Ground of appeal against the AO.
ITA/2382/Mum/2015,2009-10:
3.The effective Ground of appeal (GOA 1&2),raised by the assessee ,is about non allowance of deduction of Rs.14.27 crores being,foreign exchange fluctuation loss(FEFL)on conversion of liability of foreign currency convertible bonds (FCCB).During the assessment proceedings, the AO found that in the AY 2007-08 the assessee had issued US $ 12 million zero coupon series-A, i.e. FCCB and US $ 0.5% per annum series-B unsecured FCCB, that proceeds/funds from both the series were utilized in various multiplex projects,that during the year under consideration it restated its foreign currency assets and liability at the exchange rate existing as on 31.3.2009 as per the provisions of AS-11,that the restatement liability resulted in net foreign exchange loss of Rs.14.27 crores.However,the AO was of the opinion that loss arising out of the foreign exchange fluctuation was to be assessed as capital loss. 3.1.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority (FAA)and made elaborate submissions.After considering the submission of the assessee and the assessment order,the FAA held that the assessee had not revised its ROI for the AY 2009-10 in order to claim the loss as rev loss. He referred to the case of Goetze (India) Ltd. (284ITR323).
3.2.Before us,the Authorised Representative (AR) referred to the case of Prithvi Brokers and Shareholders(349ITR336) of the Hon'ble Jurisdictional High Court. He further stated that profits arising on account of fluctuation in the earlier years were treated as revenue item by the AO,that there was no justification for given two treatments for same item of income. The Departmental Representative (DR )supported the order of the FAA. 3.3.We have heard the rival submissions and perused the material before us. In our opinion to disallow the foreign exchange loss and tax foreign exchange profit cannot be permitted as 2 2382+3 Inox Leisure per the provisions of law.The AO is supposed to give the similar kind of treatment to Profit and loss arising out of Foreign exchange fluctuation.
3.3.1.In the case of Prithvi Brokers and Shareholders (supra) the Hon'ble Bombay High Court has held that the appellate authorities can entertain new relief filed by the assessee, that there was no need to file revised return in such cases.As the judgment of Prithvi Brokers and Shareholders was not available at the time of disposal of the appeal,so, n the interest of justice we are remitting back the issue to the file of the FAA to decide the matter on merits. He is directed to afford a reasonable opportunity to the assessee and to consider the submi- ssions made before us.Effective Ground of appeal raised by assessee stands partly allowed. ITA/5212& 13/Mum/2015-AY.s 2010-11 & 2011-12:
4.First Ground of appeal,filed by the AO for both the years,is about entertainment tax subsidy.Following our order for the AY 2009-10 we dismiss Ground No.1 for both the AY.s. Ground No.2 is about deleting the disallowance,made by the AO, on depreciation of plant and machinery, amounting to Rs. 1.23 crores and Rs. 1.76 crores for the AY.s 2010-11 and 2011-12 respectively.
4.1.It was brought to our notice that similar issue was decided by Tribunal while adjudicating the appeal for AY.2006-07 to 2008-09(supra).We are reproducing para 6.2 at pg-18 of the said order and it reads as under :-
"6.2 We have considered the rival submissions and perused the relevant material on record. An identical issue has been considered by the Delhi Bench of the Tribunal in the case of M/s PVR Ltd. vs. Addl. CIT (supra) and it was held that entertainment subsidy was for promotion of cinema/multiplex industry and will not mean to reduce the cost of the asset directly or indirectly in terms of-Explanation 10 to sec.43(1), We further note that by following the said decision of the Delhi Bench of the Tribunal in the case of M/s PVR Ltd. vs. Addl. CIT (supra), Ahmedabad Bench of the Tribunal in the case of M/s.Inox Leisure Ltd. vs. DCIT (supra) has taken a similar view. Since the issue has been considered and decided by the Tribunal in the abovementioned cases, and in absence of any contrary decision brought to our notice therefore, to maintain consistency, we follow the finding of the Tribunal in the above mentioned cases and decide this issue in favour of the assessee.The CIT(A)'s finding on this issue is set aside."
Respectfully following the above order we decide both Grounds against the AO for both the AY.s As a result Appeals filed by AO are dismissed and appeal of the assessee is partly allowed.
फलतः िनधा रती अिधकारी ारा दािखल क गई अपील नामंजूर क जाती ह और िनधा रती ारा दािखल क गई अपील अंशतः मंजूर क जाती है.
Order pronounced in the open court on 7th August, 2017.
आदेश क घोषणा खुले यायालय म दनांक त
07 अग , 2017 को क गई ।
(राम लाल नेगी / Ram Lal Negi) (राजे / Rajendra)
Sd/- Sd/-
याियक सद य / JUDICIAL MEMBER लेखा सद
य / ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक/Dated : 07.08.2017.
Jv.Sr.PS.
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
32382+3 Inox Leisure
1.Appellant /अपीलाथ 2. Respondent / यथ
3.The concerned CIT(A)/संब# अपीलीय आयकर आयु&, 4.The concerned CIT /संब# आयकर आयु&
5.DR " I " Bench, ITAT, Mumbai /िवभागीय ितिनिध, खंडपीठ,आ.अ.'याया.मुंबई
6.Guard File/गाड फाईल स यािपत ित //True Copy// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai.
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