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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI. SUNIL KUMAR YADAV & SHRI. INTURI RAMA RAO
Per Sunil Kumar Yadav, Judicial Member This appeal is preferred by the assessee against the order of CIT(A), inter alia, on the following grounds:
1. The order of the Learned CIT Appeals is not justified in law and on facts and circumstances of the case.
2. The appellant has submitted sufficient evidence in the form of confirmation letters, bank statements and financials as sought by the CIT(A). The learned CIT(A) has erred in not considering these submissions and making the additions to the declared income by stating in the order that appellant has failed to produce any confirmation.
3. The learned CIT Appeals has failed to recognize the advance received as Advances and erroneously upheld the additions made by the assessing officer treating the same as income.
Page 2 of 3 (ADDITION 1 OF 3) - Rs. 75,00,000 RECEIVED AS ADVANCE a. Amount of Rs. 75,00,000 was received as advance from Zee Entertainment Enterprises Limited towards sale of satellite rights of Kannada feature film "Ondu Kshanadalli" but erroneously considered by the assessing officer as Income. b. The film was Certified for Public Exhibition by the Central Board of Film Certification on 21-06-2012 (Anx - 5) which falls in the next assessment year. c. The Kannada film, "Ondu Kshanadalli" was still under production as on 31-03-2012. Therefore, the assessing officer has erred in treating the advance amount. d. The satellite rights under reference were agreed to be sold for a total consideration of Rs.90,00,000 (as evidenced by the agreement with Zee Entertainment Enterprises Ltd Anx-6) and the sum of Rs. 75,00,000 was only part consideration. The balance was received in succeeding years as per the agreement on the date of release of the film. e. The learned CIT Appeals has failed to appreciate that the profits and gains of business of production of feature films has to be computed, having regard to Rule 9A of Income Tax Rules, 1962. The said rule provides for computation of profits and gains of business of production of films only after the film is certified by the Board of Film Censors. Since the film was certified on 2106-2012, the act of the learned CIT Appels and the assessing officer in bringing the impunged amount to tax for the assessment year 2012-13 is in violation of the statutory provisions. f. Also, this advance amount of Rs. 75,00,000 was treated as income in the next assessment year (AY2013-14) in which the film was certified for public exhibition by the Central Board of Film Certification on 21-06-2012 (Anx - 7- Financials of AY 2013-14) g. The advance cannot be treated as income having regard to the matching principles of accountancy. Thus the learned CIT Appeals has erred in bringing the said advance to tax.
During the course of hearing, the learned counsel for the assessee has invited our attention to the assessment order as well as the order of the CIT(A) with the submission that during the course of assessment proceedings, the AO has not afforded sufficient opportunity to the assessee to present the relevant evidence in support of his claim and he accordingly made an addition of Rs.75,00,000/- which was received as advance from Zee Entertainment Enterprises Limited, before the CIT(A). Though the assessee has filed the detailed explanation it was not considered by the CIT(A) and in few lines he confirmed the order of the AO. Since the CIT(A) has not properly applied his mind to the detailed submissions of the assessee and has confirmed the assessment order, the order of the CIT(A) be set aside and Page 3 of 3 matter be restored to his file with a direction to readjudicate the issue afresh on merit.
The learned DR placed reliance upon the order of the CIT(A).
Having carefully examined the orders of the lower authorities we find that AO has initiated the assessment proceedings by issuing a notice under section 142(1) on 18.12.2014 and completed the assessment on 27.03.2015. It is evident from the assessment order that AO has fixed few dates of hearing for the assessment. He has not discussed the evidences filed before him. In appeal detailed evidence was also filed before the CIT(A). We find the assessee has made the detailed submissions. The CIT(A) reproduced the detailed submissions of the assessee and has decided the issue only in few lines. He has not given any reason as to why the explanation furnished by the assessee was not acceptable to him.
Keeping in view the totality of the facts of the case, we are of the considered opinion that since the CIT(A) has not adjudicated the issue properly, we set aside his order and restore the matter to his file with a direction to readjudicate the impugned issues by passing a reasoned order after affording opportunity of being heard to the assessee.
In the result, appeal of the assessee stands allowed for statistical purposes. Pronounced in the open court on 23rd March, 2018.