ODEAN SHRINE MULTIPLEX PVT. LTD,NEW DELHI vs. DCIT, CIRCLE- 19(1), NEW DELHI

ITA 3844/DEL/2017Status: DisposedITAT Delhi05 March 2026AY 2012-1320 pages
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What did the Tribunal hold?

The Tribunal held that the entertainment tax subsidy issue was not decided in this order, as the appeals primarily focused on the service tax liability. Regarding the service tax liability, the Tribunal found it an admitted fact that it was a disputed contractual liability. It was also admitted that the liability was settled/crystallized for payment in the year ending March 31, 2012, following High Court and Supreme Court decisions. The Tribunal noted that 50% of the amount was paid in the relevant previous year. The Tribunal agreed with the assessee that once the Delhi High Court finalized the issue, the service tax liability became a liability in presenti/ascertained liability, no longer contingent. Following CIT vs. Swadeshi Cotton & Flour Mills (P) Ltd. and CIT v. Modipon Ltd., the Tribunal held that the disputed contractual liability is admissible as an expense in the year it is settled. Furthermore, applying the principle of consistency, as liabilities for subsequent periods were accepted as ascertained, the arrears up to March 31, 2011, should also be treated as ascertained in the year of crystallization and payment. The assessee's grounds were allowed, and the Revenue's appeals were dismissed.

What were the facts?

The appeals by the Revenue and the assessee (M/s Odean Shrine Multiplex Pvt. Ltd, now merged with PVR Limited, and M/s PVR Limited) are against orders of the CIT(A) for Assessment Year 2012-13. The Revenue's appeal challenges the deletion of an addition of Rs. 1,98,66,972/- made by the AO, treating entertainment tax subsidy as capital receipts. The assessee's appeals contest the disallowance of previously disputed contractual liabilities pertaining to service tax paid/payable to multiplex property owners, settled during the year. For M/s Odean Shrine Multiplex Pvt. Ltd, the disputed amount is Rs. 13,13,250/-, of which Rs. 6,56,625/- was debited to the P&L account. For M/s PVR Limited, the disputed amount is Rs. 14,16,24,348/-. The AO and CIT(A) treated these service tax liabilities as contingent.

What were the issues?

1. Whether the Tribunal had to decide whether the entertainment tax subsidy of Rs. 1,98,66,972/- was a capital receipt or revenue receipt. The Revenue contended that the CIT(A) erred in deleting the addition made by the AO, treating it as capital receipt. The assessee's arguments on this point are not explicitly recorded. 2. Whether the Tribunal had to decide whether the previously disputed contractual liability pertaining to service tax, settled during the year, was allowable as a deduction under the mercantile method of accounting. The assessee argued that the liability was settled pursuant to High Court and Supreme Court orders, making it a crystallized, admissible, and ascertained liability, not a contingent one. They relied on CIT vs. Swadeshi Cotton & Flour Mills (P) Ltd., CIT v. Modipon Ltd., CIT Vs Phalton Sugar Works Ltd., and CIT (Central), Kanpur vs. Raj Motors. The assessee also argued that the Revenue should follow the principle of consistency, as similar liabilities for subsequent periods were allowed. The Revenue relied on the orders of the AO and CIT(A), arguing that the liability was contingent.

Which sections of the Income-tax Act were involved?

Section 250(6),Section 143(3)

AI-generated summary — verify with the full judgment below

Heard together (3 matters)

ITA No.3656/Del/2017
ITA No.3844/Del/2017
ITA No.3842/Del/2017

Read from the judgment's own cause title. This page is filed under one of them.

M/s Odean Shrine Multiplex Pvt. Ltd/ M/s PVR Limited ITA No.3656-4071/Del/2017 ITA No.3842-3844/Del/2017 IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH ‘F’, NEW DELHI

BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER And SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER Assessment Years:2012-13

Asst. Commissioner of Vs_| M/s Odean Shrine Multiplex

Income Tax, Circle-19(1), Pvt. Ltd. (Now merged with Room No.199C, PVR Limited) 61, Basant Lok,

C.R. Building, I.P. Estate, Vasant Vihar,

New Delhi New Delhi-110057 (APPELLANT) (RESPONDENT)

PAN No.AAACO5416H Assessment Years:2012-13

M/s Odean Shrine Multiplex | Vs | Asst. Commissioner of Income

Pvt. Ltd. (Now merged with Tax, Circle-19(1), PVR Limited) Room No.199C, 61, Basant Lok, Vasant C.R. Building, I.P. Estate, Vihar, New Delhi New Delhi-110057 (APPELLANT) (RESPONDENT)

PAN No.AAACO5416H Assessment Years:2012-13

M/s PVR Limited Vs | Dy. Commissioner of Income 61, Basant Lok, Vasant Tax, Circle-19(2), Vihar, New Delhi New Delhi-110057 (APPELLANT) (RESPONDENT)

PAN No.AAACP4526D

M/s Odean Shrine Multiplex Pvt. Ltd/ M/s PVR Limited

ITA No.3656-4071/Del/20

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