PVR LTD.,NEW DELHI vs. DCIT, CIRCLE- 19(2), NEW DELHI

That in any case the Ld. AO has erred in disallowing and the Ld. CIT (A) has erred in sustaining the disallowance at Rs.13,13,250/- as against Rs. 6,56, 625/- actually claimed as expense by the appellant.

That the disallowance as made in respect of said previously disputed service tax contractual liability is based on erroneous views and / or erroneous facts and law, without appreciating, rebutting or fully considering the appellants submissions and without fully considering or rebutting the binding case law relied upon by the appellant.

That the Ld. CIT(A) has erred on relying on an old decision under the Indian Income-Tax Act, 1922 in Indian Molasses Co. P. Ltd. v. CIT [1959] 37 ITR 66 (SC) which is not applicable to the facts and principles involved in the case of the appellant. The statutory liability of the multiplex property owner has arisen, inter alia, as per decision of the Hon'ble High Court and under Service Tax law. In any case, the appellant has accepted and settled its contractual liability this year in favour of the said owners and as such too, the said expense of Rs. 13,13,250/- is admissible.

That the assessment as made and order of the Ld. CIT(A) are against law and facts of the case involved.

That the grounds of appeal as herein are without prejudice to each other.

That the disallowance as made in respect of said previously disputed service tax contractual liability is based on erroneous views and or erroneous facts and law, without appreciating, rebutting or fully considering the appellants submissions and without fully considering or rebutting the binding case law relied upon by the appellant.

That the Ld. CIT(A) has erred on relying on an old decision under the Indian Income-Tax Act, 1922 in Indian Molasses Co. P. Ltd. v. CIT [1959] 37 ITR 66 (SC) which is not applicable to the facts and principles involved in the case of the appellant. The statutory liability of the multiplex property owner has arisen, inter alia, as per decision of the Hon'ble High Court and under Service Tax law. In any case, the appellant has accepted and settled its contractual liability this year in favour of the Page 5 of 21

In the facts and circumstances of the case, the ld. CIT(A) erred in deleting the addition of Rs.23,41,15,755/- made by the AO treating entertainment tax subsidy as capital receipt.

In the facts and circumstances of the case, the ld. CIT(A) erred in allowing the expenses on "leasehold premises for improvement" as revenue expenditure, where assessee has neither claimed the said deduction in the original return of income nor in the revised return of income.

On the facts and under the circumstances of the case, the Id. CIT(A) has erred in law and on the facts in deleting the disallowance of Rs.21,77,373/- made by the Assessing Officer u/s 14A by ignoring the mandatory provisions of sub-rule 2 of Rule 8D r.w.s 14A of the Income Tax Act, 1961.

On the facts and under the circumstances, the Id. CIT(A) has erred in law in deleting the addition of Rs.2,41,09,383/- treating the Notification No.56/2012 dated 31.12.2012 effective from 01.01.2013 for the deduction of tax payment to Indian Bank under the Income Tax Act, 1961 as merely of a clarificatory in nature.

On the facts and in the circumstances of the case, the Id. CIT(A) has erred in deleting the disallowance u/s 14A of Rs.21,77,373/- made by the Assessing Officer for the purpose of computation u/s 115JB. 6. The Appellant craves to add, modify or delete any of the grounds on or before the date of hearing of appeal"

Brief facts of the issue is that under the States scheme, the assessee was extended exemption from Entertainment tax @ 100% for the first year and 75% for the 2nd and 3rd year. Subsequently, the scheme was extended for 5 years providing exemption @ 100% of Entertainment Tax. This E-tax subsidy schemes involved in this year relate to same E-tax subsidy schemes of same states which were involved in earlier and subsequent years. The AO has made addition based on similar addition made in AY 2006-07, 2007-08 & 2008-09.

It is the say of the ld counsel of the assessee that this Issue is no more res integra as the issue is covered in favour of assessee by the decision of Hon'ble High Court at Delhi and ITAT.

Per contra the ld DR relied on the orders of the AO.

We find that the issue of Entertainment Tax is covered in favour of the assessee by the by the decision of Hon'ble High Court at Delhi

Undisputedly, the purpose of the Scheme in the present case is also to encourage the development of the multiplex theatre complexes, which are capital intensive in nature. Thus, the questions sought to be raised are squarely covered in favour of the Assessee by the decision of the Supreme Court in Commissioner of Income Tax-1, Kolhapur v. M/s Chaphalkar Brothers Pune (supra).

In the aforesaid view, no substantial question of law arises for consideration of this court in these appeals.

Ground No.2 in appeal in M/s PVR ltd relates to the deletion by the CIT(A) of addition made by the AO on account expenses of Rs.4,54,94,999/- (Net of Depreciation) on leasehold improvements capitalized in books but claimed as revenue expenses in computation of income. The AO made addition based on similar addition made in Page 8 of 21

The ld AR submitted that the issue is covered in favour of assessee by the decisions of Co-ordinate Benches of Hon'ble ITAT, Delhi in the case of assessee itself.

The ld DR fairly conceded the said statement.

We find that the said issue is covered in favour of assessee by the decisions of Co-ordinate Benches of Hon'ble ITAT, Delhi in the case of assessee itself vide consolidated order of the ITAT dated 23.10.2024 for AY 2008-09 to 2010-11 & 2014-15. Further the said consolidated order of the ITAT has been accepted by department as this issue though raised, was not pressed by the department in appeal before the High Court. Subsequent consolidated order of the ITAT dated 29.10.2025 for AYs 2011-12 and 2013-14 passed in favour of assessee after the said High Court order. The ground is therefore dismissed.

Ground No.3 in M/s PVR ltd relates to deletion of the addition of Rs.21,77,373/-made by the Ld. AO under section 14A read with Rule 8D by considering total investments irrespective of exempt income received thereon as against investments on which exempt income was received.

The CIT(A) deleted the entire addition based on judicial precedents and held that that since there is no investments yielding exempt income, no disallowance u/s 14A is warranted. It is submitted that this is a covered issue in favour of assessee by the consolidated order of the ITAT.

We are of the considered view that disallowance as per Rule 8D is to be computed only in respect of investments where exempt income (dividend) was received and not on entire investments. We also find that this is a covered issue in favour of assessee by the consolidated order of the ITAT dated 23.10.2024 for AY 2008-09 to 2010-11 & 2014- 15 in the case of assessee itself and the decisions of High court relied therein. Subsequent consolidated order of the ITAT dated 29.10.2025

Ground no.4 relates to deletion of disallowance of Rs.2,41,09,383/- made u/s 40(a)(ia) towards expenses on account of various charges paid to banks on account of; Service fee on credit card sales: Rs.1,89,70,675 Bank Guarantee Commission : Rs.8,86,578/- Cash management charges : Rs.23,32,653/- CC Avenue Charges : Rs.19,19,477/-

Facts of the issue, basis of disallowance and the submissions of the assessee are same as in AY 2011-12. The ld AR submitted that this is a covered issue in favour of assessee by CBDT Circulars and judicial precedents as per which no TDS applicable on any of the aforementioned bank charges. The ld AR relied on :

We find that the issue is covered issue in favour of assessee by the consolidated order of the ITAT dated 29.10.2025 for AY 2011-12 &

Ground no.5 relates to addition of Rs.21,77,372/-in Book Profit for computing MAT on account of estimated disallowance u/s 14A read with Rule 8D under normal provisions of the Act. It is submitted that the AO, based on addition made under normal provisions, also made addition u/s 115JB. Based on addition deleted under normal provisions and also judicial precedents, the CIT(A) deleted the addition. The ld AR stated that the issue is covered issue in favour of assessee by judicial precedents as per which no adjustment in Books Profit permitted on account of notional disallowance u/s 14A and relied on:

The assessee has filed an additional Ground on 27.11.2018 contesting as follows:

It is submitted by the ld AR that the basis of claim and submissions of the Appellant are similar to the submission made in years involved in the said orders of the ITAT. The ld AR stated that the issue is covered issue in favour of assessee.

We find that the issue is covered issue in favour of assessee by the Consolidated ITAT order dated 23.10.2024 for AY 2008-09 to 2010- 11 & 2014-15 in the case of assessee itself. We also find that the said consolidated order of the ITAT has been accepted by department as this issue though raised, was not pressed by the department in appeal before the High Court and Subsequent consolidated order of the ITAT

Ground Nos. 1,2 & 3 relates to disallowance of disputed contractual Service tax liability of Rs.14,16,24,348/- in the case of PVR Ltd and Rs. 13,13,250/- in the case of Odean Shrine Multiplex P Ltd on renting of commercial properties relating to prior years which was settled this year.

The ld AR argued that such service tax is not a statutory liability of the company but is liability of the landlord/licensor of the rented premises. Furthermore, it was a disputed contractual liability which was crystalised/settled during the year and a large amount paid in the relevant previous year by the assessee being Tenant/Licensee of the premises. It is submitted that vide Finance Act 2007 read with Notification No. 24/2007-ST dated 22.5.2007, service tax was levied on renting of commercial properties w.e.f. 1.6.2007. On writ by various parties including the assessee, Hon'ble Delhi High Court in the case Home Solution Retail India Ltd. 158-(2009)-DLT-722-(DB) vide order dated 18.4.2009 struck down the Notification and the subject levy.

On a SLP against the above said HC order, Hon'ble Supreme Court, vide its interim order dated 1.10. 2011 directed the appellants as under:

As directed by the Hon'ble Supreme Court, during the year, the assessee deposited 50% of the arrears of Service Tax up to 30.9.2011 amounting to Rs. 10,18,79,576/- in 3 instalments i.e. on 20.11.2011,

The Ld. A.O. disallowed the said claim of Rs. 14,16,24,348/- terming it to be pertaining to prior periods up to 31st March, 2011 and observed that in the relevant years neither the same was accounted for nor any provision was created. For the reasons discussed in the appellate order, Ld. CIT(A) held the ST liability as a contingent liability and confirmed the disallowance made by the Ld. AO.

The ld AR submitted that the liability pertaining to this year was accepted and allowed pursuant to High Court order upholding the said levy of Rs. 14.16 crore which was passed this year thus making it a present ascertained liability of this year i.e. as covered by AY-2012-13, the year of this appeal. In this regard, the assessee places reliance on the following judicial precedents in its favour:

On the decision of Ld. CIT(Appeals) who confirmed the disallowance of service tax liability treating the same as contingent liability, the ld AR stated that the service tax liability in this matter is a liability in presenti/ascertained liability and not contingent liability.

Finally, the ld AR stated that the Revenue should follow the consistency principle as the arrears of liability from 1.4.2011 to 30.9.2011 and for the subsequent period from 1.10.2011 to 31.3.2012 and in subsequent years provided by the appellant has been accepted and allowed as existing/ascertained liability. The ld AR questioned that how on same facts, arrears up to 31.3.2011 can be a contingent

Per contra, the ld DR relied on the orders of the AO and the CIT(A).

We have heard the rival submissions and have carefully perused the materials on record. Ground Nos. 1,2 & 3 relates to disallowance of disputed contractual Service tax liability of Rs.14,16,24,348/- in the case of PVR Ltd and Rs. 13,13,250/- in the case of Odean Shrine Multiplex P Ltd, (now merged with PVR Ltd) on renting of commercial properties relating to prior years which was settled this year.

We find that it is an admitted fact that such service tax was a disputed contractual liability between the assessee and the landlord/lessor. It is also an uncontroverted fact that in view of the hon’ble Delhi High Court and the hon’ble Supreme Court’s decisions, the said contractual liability, previously disputed, was settled/ crystalised for payment this year i.e. year ending 31st March 2012. It is also an admitted fact that a 50% of the said amount was paid/settled in the relevant previous year by the assessee being Tenant/Licensee of the premises. In such factual matrix, we are of the considered view

We are also inclined to agree with the assessee that the Revenue ought to follow the principle of consistency as the arrears of liability from 1.4.2011 to 30.9.2011 and for the subsequent period from 1.10.2011 to 31.3.2012 and in subsequent years provided by the assessee has been accepted and allowed as existing/ascertained liability. Following the decisions in 193 ITR 321 (S.C.) - Radhasoami Satsang v. CIT; 281 ITR 346 (Del) CIT Vs. Dalmia Promoters (P) Ltd and 358 ITR 295 (SC) - CIT V. Excel Industries Ltd 193 ITR 321 (S.C.),

In the result, the Revenue’s appeals in and are dismissed while the assessee’s appeal in are allowed. Order pronounced in the Open Court on 5th March, 2026.