TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 1337
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....eleting the addition of Rs. 1.38 crores made on account of disallowance of cost of production.During the assessment proceedings,the AO observed that there were discrepancies in the impounded books of accounts and regular books maintained by the assessee,that the production expenses were shown at Rs. 57.35 crores, that under the head other production expenses the assessee had shown an amount of Rs. 5.41 crores.Considering these facts,he held that these expenses were mostly in cash and were part of the adjustment entries made by the assessee to reduce its profit. He made an addition of Rs. 1,38,14,588 to the total income of the assessee under the head bogus expenditure. 2.1.Aggrieved by the order of AO the assessee preferred an appeal before the First Appellate Authority(FAA). Before him,it was stated that the details of other production expenses were furnished to the AO during the assessment proceedings vide its letter dated 09.11.2011, that the AO had not denied the filing of details.After considering the submission of the assessee and the assessment order the FAA held that the AO had not pointed out any discrepancy in the details filed by the assessee, that he had not proved that....
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....restricted the disallowance to Rs. 10.00 lakhs. 3.2.Before us, the DR and the AR supported the order of the AO and the FAA respectively. We find that the AO had made a disallowance @20% of total expenditure on adhoc basis, that he had not given the details of expenditure that was covered by section 40A(3), that the FAA had verified the cash book and had observed that most of the expenditure were less than Rs. 20,000/-.So, in our opinion he was justified in restricting the disallowance at Rs. 10 lakhs considering the fact that there were certain expenses that were more than Rs. 20,000/-. His order does not suffer from any infirmity.Ground No.2 is dismissed. 4.Next Ground deals with deleting the addition of Rs. 96.50 lakhs.The AO,during the assessment proceedings noted that there was a difference of Rs. 96.50 lakhs between the impounded books of account and financial statement filed with return of income on account of miscellaneous receipts.As per the direction of the AO the assessee furnished reconciliation statement in that regard.However,the AO rejected the explanation filed by the assessee on the ground that in the AY.2007-08 the assessee's books were held to be unreliable. The....
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....e.The FAA referred to the order of the CIT(A) -40, Mumbai for the AY.2007-08,where he had allowed the appeal filed by the assessee, following the order of the Tribunal for AY.2006-07(ITA/6350/Mum/2010/,5.4.2013).We find that while deciding the appeal for the subsequent year the Tribunal has dealt the issue as under :- "After considering the submissions and the facts and the evidence brought on record, we find that the assessee had actually returned in its FBT return the entertainment expenses so claimed. Therefore, a further disallowance would definitely amount to double addition of the same expense.Further, we find that the AO disallowed the expenses being of personal in nature. The assessee is a private limited company, therefore, there cannot be any personal expense so far as a legal person is concerned, therefore, we do not find any reason in sustaining an addition of Rs. 6,05,545/-.The AO is accordingly directed to delete this addition.Ground No.11 is accordingly allowed." Considering the above,Ground No.4 is decided against the AO. 6.Next Ground pertains to deleting the addition of Rs. 5.15 crores on account of remuneration paid to the directors.During the assessment proc....
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.... and single screen theatres regarding profit sharing. Therefore, it cannot be said that the producers have no role to play after the movie is completed. Further considering the magnitude of the production house of the assessee, it cannot be said that Shri Aditya Chopra and Mrs. Payal Chopra have not put any extra effort.All these facts have not been appreciated by the Revenue authorities who have gone by general observations, therefore, considering the entire facts involved in this line of business, in our considerate view, the remuneration paid to the Directors was reasonable and commensurate with the services provided by them. Accordingly, we direct the AO to delete the addition made by him and also delete the enhancement done by the Ld. CIT(A). Ground No. 3 is accordingly allowed." Following the order for the AY.2006-07 of the Tribunal,we decide Ground No.5 against the AO. 7.Next ground is about deleting the addition of Rs. 1.71 crores,on account of various expenses including payment made to junior artists and expenses related with dress/make up/ costumes/dubbing and mixing etc. 7.1.We find that identical issue was decided by the Tribunal for the AY.2006-07(supra).Vide para ....
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....nrecognition of Rs. 1.5 crores, the assessee submitted that the right to air the movie is effected only after the date mentioned in the agreement and the effective date was from 1.4.2006 and so far as applicability of Rule 9A(5) and 9A(6) is concerned, the assessee submitted that the producer is uncertain towards the future revenue and hence it is not possible to allocate the proportionate cost of the movie towards various stream of revenue. The assessee further explained that Rule 9A(5) only refers to Revenue of a film to be credited to the profit & loss account related to the current year and not of the further 4 to 5 years. As regards applicability of Rule 9A(6), the assessee submitted that the Rule is applicable only when the rights of exhibition of the feature films have been transferred by a mode not covered by the provision of Rule 9A. Therefore, Rule 9A(6) cannot be applied. 45.1.After considering the facts and the submissions of the assessee, the Ld. CIT(A) was of the firm belief that Rule 9A squarely applied on the facts of the case. The Ld. CIT(A) further observed that in terms of Rule 9A(5) the cost of production claimed by the assessee is not admissible because it is....
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....d gains of such previous year; or (b) the film producer- (i) himself exhibits the film on a commercial basis in all or some of the areas; or (ii) sells the rights of exhibition of the film in respect of some of the areas; or (iii) himself exhibits the film on a commercial basis in certain areas and sells the rights of exhibition of the film in respect of all or some of the remaining areas, and the film is released for exhibition on a commercial basis at least [ninety] days before the end of such previous year, the entire cost of production of the film shall be allowed as a deduction in computing the profits and gains of such previous year. 49.A perusal of this Rule show that when the movie is released for exhibition on commercial basis, atleast 90 days before the end of such previous year, the entire cost of production of the film shall be allowed as deduction in computing the profits and gains of such previous year. It is only when the film is not released atleast 90 days before the end of such previous year , It is provided that the cost of production is restricted to the amount realized by the film producer. In the instant case, we find that all the three movies were releas....
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.... by the division which was duly incorporated into the financial accounts under cost of production, that audited accounts of distribution division, production division and home entertainment division formed part of the final balance sheet, that in the earlier years the then FAA had accepted the contention of the assessee in that regard,that the FAA had admitted that it was a question of mere transfer from one division to another division, that he had upheld the method of accounting followed by the assessee and had deleted the addition made by the AO,that the AO did not object to clubbing of distribution divisions income with the production division income,that he objected the inclusion of expenses of one division being paid by other,that the cost of production,as reflected in audited balance sheet,was duly verified by the AO completed under section 143(3),that at that time the AO did not make any observation regarding difference in cost of production. After considering the submissions of the assessee and the assessment order,the FAA held that similar issue arose in the earlier assessment years, that the then FAA had accepted that the books of all three divisions, namely production e....