AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (9) TMI 473
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....t taken into consideration the fact that payment of service tax is to be allowed purely on payment basis which the Assessing Officer had categorically mentioned in the assessment order. 4. The Ld. CIT(A) has erred by not taking into the consideration that the matter has not attained legal finality as the judgment of Honorable Supreme Court on the issue is still awaited and any change in the liability would have direct bearing on the issue at hand. 5. That the appellant craves for the permission to add, delete or amend grounds of appeal before or at the time of hearing of appeal. 3. The assessee has raised following cross-objections: "Without prejudice to the judgment of the Ld. CIT (A), the Respondent raises the following cross-objections: 1. The Assessing Officer erred in law and facts in framing the assessment order under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") in the name of Fun Multiplex Private Limited without appreciating that the said entity stood dissolved consequent to its merger with Cinepolis India Private Limited w.e.f. 01.04.2014. The Assessing Officer failed to appreciate that assessment order on a non-existing compan....
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.... issue in question is squarely covered in favour of the assessee by decision of the Hon'ble Supreme Court in the case of CIT Vs. Chapalkar Brothers (400 ITR 279). 10. We have heard rival submissions and perused the material available on record. The learned CIT(Appeals) has adjudicated the ground, inter alia, by observing as under: "6.3 I have carefully considered the facts of the case, oral contentions and written submission of the assessee, discussion of the AO in the assessment order and material available on record. The issue is covered in the appellant's own case for the A.Yr 2008-09 and A.Yr 2009-10 wherein it was held by the Hon'ble ITAT that entertainment duty subsidy is a capital receipt. The Hon'ble ITAT held as under: "After carefully going through the findings of the Assessing officer and Ld. Commissioner (Appeals), we find that this issue of entertainment subsidy in case of multiplexes and theaters has been dealt by the jurisdictional High Court after analyzing the object and the purpose of the subsidy and came to the conclusion that it is a capital receipt. The Jurisdictional High Court has referred and relied upon the decision of the hon'ble Supreme Court in ....
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....f CIT vs. Bougainvillea Multiplex Entertainment Centre (P) Ltd. (55 taxmann.com 26), the Hon'ble Delhi High Court has expressed identical view. 10. Undisputedly, learned Commissioner (Appeals) while deciding the issue has followed the ratio laid down in the decisions cited supra. That being the case, we do not find any infirmity in the order of learned Commissioner (Appeals) on this issue. Accordingly, the order in upheld and grounds raised by the revenue are dismissed." 12. The order of the learned CIT (Appeals) being in consonance with earlier decision of the Tribunal in assessee's own case as also the issue being squarely covered in favour of the assessee by the decision of the Apex Court in the case of Chapalkar Brothers (supra), we see no reason to interfere with the order of learned CIT(Appeals) on the issue in question. Ground is rejected. 13. Apropos to ground no. 2, learned counsel for the assessee submitted that the issue relating to depreciation, involved in ground no. 2 is also squarely covered in favour of the assessee by the aforesaid decision dated 30.09.2022 of the ITAT in assessee's own case (supra), wherein the Tribunal has followed the decision of Coordin....
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....s a whole and not for any specified assets directly or indirectly. He held, since, the subsidy granted is not used for payment of actual cost of any fixed asset, it cannot be reduced from the written down value of the assets for computing depreciation. While doing so, he followed the decision of Tribunal in case of PVR Ltd. vs. Addl. CIT, ITA No. 1897/Del/2010 dated 20.04.2012. 12. Before us, both the parties agreed that the issue is squarely covered in favour of the assessee by the decision of the co-ordinate Bench in case of of PVR Ltd. (supra). 13. Having considered the submissions of the parties and examined the facts on record in the light of decisions cited before us, we are of the view that that entertainment tax subsidy granted by the State Government is not for the purpose of utilizing on any particular or specified assets. That being the factual position emerging on record, the reasoning of the assessing officer that such subsidy would go to reduce the cost of assets is unacceptable. More so, when the revenue has failed to bring any material on record to demonstrate that the subsidy has actually gone to reduce the cost of any specified assets on which the assessee cla....
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....to be either overstated or disproportionate to the appellant's actual liability which as on today exists and would finally be paid depending upon the outcome of the decision of the Hon'ble Supreme Court. It is in respect of such situations when the liability is fairly ascertainable and legally existing that the accounting standard 29 stipulates making a provision for such liabilities. In view of such facts and circumstances and discussion hereinabove, the conclusion of the A.O that such provision created by the appellant towards the liability of service tax is an unascertained liability and therefore, not allowable as deduction is not found to be justifiable. Accordingly, the disallowance so made by the AO is directed to be deleted. The AO has also added the amount of provision towards service tax while working out the book profit of the Appellant, however, he has not discussed the issue in the assessment order. On the other hand, the appellant has contended that such provision created cannot be added back while working out the book profit u/s 115JB of the Act. In this regard, it is stated that in the discussion hereinabove, such liability towards service tax has been held to be ex....