Income Tax Appellate Tribunal - Mumbai
Abdul G. Nadiadwala, Mumbai vs Department Of Income Tax on 12 June, 2013
आयकर अपील य अ धकरण, धकरण मंुबई यायपीठ मंुबई ।
IN THE INCOME TAX APPELLATE TRIBUNAL " A " BENCH, MUMBAI
सव ी आई.पी.बंसल, या यक सद य.एवं
एवं ी संजय अरोड़ा, लेखा सद य के सम
BEFORE SHRI I.P. BANSAL, JM AND SHRI SANJAY ARORA, AM आयकर अपील सं./I.T.A. No. 2896/MUM/2011 ( नधारण वष / Assessment Years : 2006-07 The ITO 11(1)(1), बनाम/ बनाम Mr. Abdul G. Nadiadwala, Room No.436A, Vs. Empire House, 1 s t Floor, Aaykar Bhavan, MK Road, 10, Shah Industrial Mumbai 400 020 Estate, Veera Desai Road, Andheri (W), Mumbai -53 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAAPN 5162A (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से/ Appellant by: Shri Manoj Kumar यथ क ओर से/Respondent by : Shri Sanjiv M. Shah सनवाई ु क तार ख / Date of Hearing : 12/06/2013 घोषणा क तार ख /Date of Pronouncement : 12/06/2013 आदे श / O R D E R PER I.P.BANSAL,J.M:
This is an appeal filed by the revenue. It is directed against order passed by Ld. CIT(A)-3, Mumbai dated 13/1/2011 for the assessment year 2006-07. The grounds of appeal read as under:
"1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-3, Mumbai erred in deleting addition of Rs.60.00 lacs without appreciating the fact that the expenditure incurred on an abandoned film is in the nature of a capital loss and not a loss which is revenue in nature as an incomplete film is in the nature of capital work in progress.
2. The appellant prays that the order of CIT(Appeals) on the above grounds to set aside and that of the Assessing Officer be restored."
2. The assessee is engaged in the business of hiring of cine equipments, distribution of films and export of films. He claimed loss of Rs.60.00 lacs in respect of abandoned film "Love Junction". The A.O disallowed the said loss on 2 आयकर अपील सं./I . T . A . N o . 2 8 9 6 / M U M / 2 0 1 1 ( नधारण वष / A s s e s s me n t Y e a r s : 2 0 0 6 - 0 7 account of non advancing of any legal justification for allowance of the claim. In the order passed by Ld. CIT(A) the facts are narrated as follows:
" It has been submitted that Appellant was in the business of production and distribution of 'cinematographic films. He had entered into an agreement with A.H.N. Production for acquiring worldwide rights of the film "Love Junction" and Rs.60 lakhs was paid over a period of time as Appellant's investment. However, the project had to be shelved half way as the hero Inder Kumar met with a serious accident during shooting of one of his other film and shooting schedules got disrupted for a long time. By the time, shooting resumed the hero had lost his draw at box office because his other film bombed. Further, the heroine Ayesha Julka got married which proved another drawback and the Films Director (Esmayeel Shroff) turned out to be negative effect as his other film had no buyers, even the Satellite Channels were not ready and the music company with whom the producer was negotiating backed out. The project became a dead horse and Appellant and producer after considering all aspects and market trends concluded that project had no viability. Instead of increasing further loss, they decided to shelve the project and write off the amounts advanced/incurred. As on the date of scrap i.e.l7th Feb. 06 the producer had incurred cost of Rs.1.06 crores out of which Appellant's share was Rs. 60 lakhs."
3. On these facts, Ld. CIT(A) relying upon several decisions, which inter-alia includes decisions rendered by Mumbai ITAT has held that the expenditure incurred by the assessee in respect of abandoned film is allowable. The revenue is aggrieved, hence, filed aforementioned appeal.
4. At the outset it was submitted by Ld. A.R that this issue is no more res- integra as there are several decisions of Hon'ble Jurisdictional High Court which have confirmed the view taken by ITAT that expenditure in respect of abandoned film is an allowable expenditure. Reference was made to the following decisions:
1. Bombay High Court decision in the case of CIT vs. Shri Rajesh Khanna in Income Tax Appeal No.3875 of 2010 dated 14th September, 2011.
2. Bombay High court decision in the case of CIT vs. Mukta Arts Pvt. Ltd. in Income Tax Appeal No.584 of 2001 dated 25th Aug.2008.
3. Bombay High /court decision in the case of CIT vs. M/s. A.K.Films Pvt. Ltd. in ITX.A 1199/2010 dated 14th Feb.2011.
4. Bombay High Court decision in the case of CIT vs M/s. Dream Merchants Enterprises in Income Tax Appeal No.4252 of 2010.
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5. Mumbai ITAT decision in the case of Venus Records and Tapes P. Ltd. in ITA No.6667/Mum/2011 (A.Y.2005-06) order dated 7/9/2012. Copies of all these decisions are placed on our record and were also given to Ld. D.R
5. In this view of the situation, after hearing both the parties we find that Ld. CIT(A) did not commit any error in allowing proper relief to the assessee. For the sake of completeness we may reproduce the relevant observation Hon'ble Bombay High Court from the decision in the case of CIT vs. M/s. Mukta Arts Pvt. Ltd. (supra) "1. Heard the learned counsel appearing for the appellant and the learned Counsel appearing for the respondent.
2. We have perused the order of the Income Tax Appellate Tribunal dated 2nd May, 2001 and also the question of law sought to be raised in the above appeal which reads as under:
"(a) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in holding that the cost of production of the abandoned film "DEVAA" is trading loss.?
(b) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT justified in not appreciating the fact that character of negative film which cannot be exhibited is that of the capital nature and not as stock-
in-trade?"
3. After hearing the parties for some time, the learned Counsel for the appellant concedes that there is no question of law involved in the above appeal and the appeal is actually misconceived and especially in view of the fact that the film in question was admittedly not released and hence it is merely a stock in trade and there is no question of the same being capital asset. Mr.Shivram also pointed out that the Assessing Officer has given effect to the order of the Commissioner of Income Tax. Hence the above appeal is totally misconceived and therefore, stands dismissed."
In view of the above discussions the appeal filed by the revenue is dismissed.
Order pronounced in the open court on 12/06/2013 . आदे श क धोषणा खले ु यायालय म दनांकः 12/06//2013 को क गई ।
Sd/- Sd/-
( SANJAY ARORA) (I.P.BANSAL)
या यक सद य /ACCOUNTANT MEMBER लेखा सद य /JUDICIAL MEMBER
मंुबई Mumbai; दनांक Dated 12/06/2013
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आदे श क त ल प अ े षत/Copy
षत of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु (अपील) / The CIT(A)-
4. आयकर आयु / CIT
5. वभागीय त न ध, आयकर अपील य अ धकरण, मंुबई / DR, ITAT, Mumbai
6. गाड फाईल / Guard file.
आदे शानसार
ु / BY ORDER,
स या पत त //True Copy//
उप/सहायक
उप सहायक पंजीकार
(Dy./Asstt. Registrar)
आयकर अपील य अ धकरण,
धकरण मंुबई / ITAT, Mumbai
व. न.स.Vm , Sr. PS
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Date Initials
1. Draft dictated on: 12/06//2013 Sr.
PS/PS
2. Draft placed before author: 12/06/.2013 Sr.
PS/PS
3. Draft proposed & placed before the JM/AM
second member:
4. Draft discussed/approved by Second JM/AM
Member:
5. Approved Draft comes to the Sr. Sr.
PS/PS: PS/PS
6. Order pronounced on: Sr.
PS/PS
7. File sent to the Bench Clerk:
8. Date on which file goes to the Head Sr.
Clerk: PS/PS
9. Date on which file goes to AR
10. Date of dispatch of Order: