TaxTMI 
TaxTMI 
2025 (2) TMI 1751
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....TDS done thereon since ld. Assessing Officer treated the same as bad debts written off for the purpose of making disallowance u/s.36(1)(vii). 3. Facts of the matter are that, assessee is in the business of motion pictures and film production and distribution. Return of income was filed on 20.01.2021, reporting total income at Rs. 15,71,94,280/-. While reporting the total income in the return, assessee had claimed write off of old advances as expenditure. In the submissions made before the ld. Assessing Officer, assessee categorically submitted that advances written off in the books of account are old advances given for the new ventures in ordinary course of business for new movies proposed to be released in near future. However, due to unforeseen reasons, new ventures did not materialise. Assessee tried to recover the advances or utilise the same with other ventures with the same party, but all the efforts went in vain. Since the projects could not be materialised and the advances never got converted into revenue, they were never offered for income in any of the preceding years. Further, these advances were non-recoverable business advances and were not in the nature of loan. Ac....
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....-OFF SR. NO. NAME PAN NOS. PROFESSION GROSS AMOUNT TDS NET AMOUNT 1 GAUTAM MENON AFRPM0775L DIRECTOR 11,00,000 1,24,630.00 9,75,370.00 2 KEN GHOSH AACPG2639K DIRECTOR 7,00,000 39,270.00 6,60,730.00 3 K.P.S PRODUCTION PRODUCTION HOUSE 4,50,000 4,50,000.00 4 NKUMAR (PR.16) AOCPK3500M DIRECTOR 5,00,000 24,170.00 4,75,830.00 5 ADITYA DUTT (NV) AFJPDS534J DIRECTOR 3,00,000 16,830.00 2,83,170.00 6 AKARSH KHURANA AMLKP0532C STORY WRITER 2,00,000 19,545.00 1,80,455.00 7 ANAND RATHORE ANWPR5193C DIALOGUE WRITER 1,75,000 18,025.00 1,56,975.00 8 APOORVA LAKHIA ABJPL5013E DIRECTOR 22,25,098 2,37,930.00 19,87,168.00 9 ASHWINI CHOUDHARY DIRECTOR 4,50,000 50,985.00 3,99,015.00 10 BOBBY KHAN AVRPK6984F DIALOGUE WRITER 4,50,000 5,150.00 4,44,850.00 11 BUZI ENTERTAINMENT APSPS0274H WRITER 5,00,000 50,000.00 4,50,000.00 12 ELAN MODELLING AGENCY PVT. LTD. AADCE7139A PROVIDING SIDE ARTISTS & MODELS 25,00,000 - 25,....
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....CREENPLAY WRITER 1,30,000 13,390.00 1,16,610.00 40 HIMESH RESHAMIYA AABPR3574R MUSIC DIRECTOR REMU. 5,00,000 27,500.00 4,72,500.00 41 VINAY SAPRU AAJPS8187R DIRECTOR 5,00,000 56,650.00 4,43,350.00 42 ZAYED KHAN AHOPK4293N ARTISTE 25,00,000 2,26,050.00 22,73,950.00 43 MOTURI CREATIONS PRODUCTION HOUSE 6,12,000 - 6,12,000.00 44 ABHISHEK BACHHAN AEHPB1823P ARTISTE 1,64,99,000 12,57,630.00 1,52,41,370.00 45 FILMALAYA PVT. LTD. AAACF2586R STAGE BOOKING 1,00,000 1,00,000.00 46 K K FILMS ADUPP9251D PRODUCTION HOUSE 3,30,000 3,30,000.00 47 M J FILMS PRODUCTION HOUSE 5,00,000 5,00,000.00 48 ODBALL MOTION PICTURFS PVT LTD AACCO2947H PRODUCTION HOUSE 1,46,73,526 1,46,73,526.00 49 RADHIKA RAO ACPPR9843R STORY & DIRECTION 5,00,000 56,650.00 4,43,350.00 50 ROSSHAN ANDRREWS (Pr.22) AHGPA7371P DIRECTOR 1, 10,000 1,10,000.00 51 SAI KABIR SRIVASTAV BBYPS5858Q SCREENPLAY & D1SALOGUE 10,20,000 1,05,3....
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....cceptances of the agreement by both the parties is recited in clause 1, which states as under: "The Producers have agreed to appoint the Director to direct and write the story, screenplay and dialogues of the said feature Film tentatively to be titled to be produced by Producers and the Director has irrevocably agreed to perform the work to the best of his abilities for the remuneration herein set out hereunder." 5.1.1. Further, clause-2 which deals with Term/Tenure is also reproduced which is in line with the modus operandi explained by the ld. Counsel, as noted in the above paragraphs. "2.1 The Director shall direct and start the Film tentatively to be titled on or before January, 2012 from the date hereof and during the making of the said Film. The said Film will be based on a Original story, screenplay and Dialogues written by the Director and his team. The Producers will be responsible for all artistic and other talents and money made available for the said Film, as deemed fit and proper as soon as possible after execution of this Agreement, the Director will concentrate on the subject, further conceptualize and develop the story, screenplay and dialogue w....
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....RY AND DIRECTION 30,50,000 5,00,000 113 - 116 SA: KABIR SRIVASTAV SCREENPLAY AND DIALOGUE 15,00,000 10,00,000 117 - 142 ODDBALL MOTION PICTURES PRIVATE LIMITED FINANCE AGREEMENT FOR MOVIES 3,54,90,000 1,46,73,526 143 - 158 MR. MUSTAQUE SHAIKH ASSISTANT SOUND RECORDIST 35.000 35,000 159 - 160 TOTAL 15,25,75,000 4,21,44,526 PUJA ENTERTAINMENT INDIA LIMITED F.Y. 2019-20 ; A.Y. 2020-21 LEDGER CONFIRMATIONS FROM PARTIES NAME PROFESSION Amount Paper Book - III - Page No. NITIN KAKKAR DIRECTOR 21,00,000 161 - 162 APOORVA LAKHIA DIRECTOR 21,00,000 163 - 164 SHAWN ARANHA DIRECTOR 1,00,000 165 - 166 MILAP ZAVERI DIRECTOR 5,00,000 167 - 168 KEN GHOSH 7,00,000 169 - 170 MOHANA KRISHNA 2,00,000 171 - 172 ADITYA DUTT DIRECTOR 3,00,000 173 - 174 PANKAJ PARASHAR DIRECTOR 10,00.000 175 - 176 TOTAL 70,00,000 TOTAL 4,91,44,526 5.3. Assessee also brought on record various e-mail communications between different parties who confirmed the ....
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....rred by it, in the conduct of business and thus, claimed it as business loss/deduction permissible u/s.37(1) of the Act. Contrary to this, ld. Assessing Officer has treated the same as bad debts written off u/s. 36(1)(vii) subject to conditions prescribed u/s. 36(2) and held assessee not eligible for the same having failed to meet the requirements of these sections. 7.2. In our view, even if deduction of advances written off by assessee, during the year are not allowable as bad debt, same would not jeopardize claim of assessee for deduction of it as business loss. Assessee has evidently demonstrated that money advanced by it was in the nature of business expediency and is an allowable deduction u/s.37(1), if not under this section then as a business loss u/s. 28(1). 7.3. Repeatedly, authorities below have alleged that assessee has failed to furnish necessary documentary evidences including confirmation from the parties on the advances paid by the assessee. To this effect, we take note that required documentary evidences are placed on record by the assessee in the form of paper book, summary of which is extracted above in the table form. Having gone through the material on rec....
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....and Mahindra Ltd. (supra), the substantial question of law which came up before the Hon'ble Court has a direct bearing on the issue in hand addressed by us in the present appeal. The substantial question framed by the Hon'ble Court is reproduced below" "Whether on the facts and in the circumstances of the case as well as in law the Tribunal was right in not allowing expenses of Rs. 42.89 lakhs incurred by the appellant company for MMC and not allowing deduction of write off of Rs. 622,01 lakhs (not Rs. 578.09 lakhs as originally put) u/s. 28 of the Act being the amount lent to MMC including interest due thereon and advances for purchase of machineries given in the course of business dealings with MMC?" 7.4.2. Fact in brief in relation to the above substantial question of law is that assessee claimed deduction of Rs. 622.01 lakhs in computing the taxable income. This amount was considered not recoverable by the assessee and was written off while computing income under the head "profits and gains of business or profession". Hon'ble Court examined whether the expenditure incurred or the deduction claimed arose in carrying on business of assessee or incidental t....
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....1994 has not considered the issue, whether or not a loss claimed by the assessee is allowable as a business loss on the basis of the evidence produced by the assessee. The Tribunal proceeded on a premise that once a claim is made for deduction as bad debts, then the deduction can be granted only if the provision of section 36 of the Act are satisfied and it is not open to an assessee to claim a deduction in the alternative under any other provision of the Act. In view of the above, we are not making any observation with regard to whether the claim of the assessee on merits is allowable as a business loss. We are only examining the issue posed for us viz. that when the claim made for bad debts is not satisfied, could it be considered as a allowable business loss. 10. Section 28 of the Act imposes a charge on the profits or gains of business or profession. The expression "Profits and gains of business or profession" is to be understood in its ordinary commercial meaning and the same does not mean total receipts. What has to brought to tax is the net amount earned by carrying on a profession or a business which necessarily requires deducting expenses and losses incurred in ca....