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Facts
The Revenue appealed against the order of the CIT(A) who deleted the disallowance of Rs. 8,30,23,893/- made for professional and technical services. The assessee had paid this amount for satellite rights and to various professionals for film production. The AO disallowed the expenditure, stating that the payments were not properly verified and some recipients had not filed income tax returns. The assessee provided additional evidence during appellate proceedings.
Held
The Tribunal noted that the CIT(A) admitted additional evidence and called for a remand report from the AO. However, the AO merely reiterated the assessment order without commenting on the merits of the additional evidence. The Tribunal observed that TDS was duly deducted on the payments and that the assessee provided necessary documentation, including agreements and bank statements, to support the expenditure. The Tribunal found no justification for the addition made by the AO.
Key Issues
Whether the disallowance of professional and technical expenses amounting to Rs. 8,30,23,893/- was justified, especially when TDS was deducted and additional evidence was provided by the assessee.
Sections Cited
250, 194J, 133(6), 46A
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Income Tax Appellate Tribunal, PATNA ‘DB’ BENCH AT KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the Revenue is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2021-22 dated 07.05.2024. 2. The Revenue is in appeal before the Tribunal raising the following grounds of appeal: “(i) Whether on the facts and circumstances of the case, the Ld. CIT(A), NFAC has erred in allowing the appeal of the assessee and deleted disallowance of expenditure amounting to Rs. 8,30,23,893/- made under professional and technical services without verify the facts that large payment made under section 194J to the person who have not filed return of income in comparison to total payments on TAN corresponding to PAN in form 26A for section code 194J. (ii) Whether on the facts and circumstances of the case, the Ld. CIT(A) has not appreciated the facts that the assessee could have submitted these ITA No.: 462/PAT/2024 Assessment Year: 2021-22 Yashi Films Private Limited. additional evidences documents before the AO during assessment proceedings, but assessee opted to remain silent. (iii) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in allowing the appeal, in spite of that the assessee was provided ample opportunities to file details and documents related to expenditure of Rs. 8,30,23,893/- during assessment proceedings but the assessee has failed this golden opportunities and submit additional evidences before the Ld. CIT(A) during appellate proceedings. (iv) Any other ground that may be urged at the time of hearing.”
Brief facts of the case are that the assessee had filed its return of income electronically on 16.02.2022 vide acknowledgement No.221365310160222 declaring total income of ₹2,24,92,710/-. The case was selected for Complete Scrutiny under Computer Assisted Scrutiny Selection (CASS) for the reason "Large payments made under the section 194J to persons who have not filed return of income in comparison to total payments on TAN corresponding to PAN in Form 26Q for section code 194J". Statutory notices as required under the Act were issued. On perusal of the return of income, it was gathered that the assessee had derived income from video production and distribution and had shown income from business at ₹2,24,92,710/-. In response to the notices issued, the assessee responded before the Ld. AO that during the year under consideration it was engaged in the business of producing feature films, selling and purchasing satellite rights, producing music, producing serials, producing web series, managing events, etc. and had made several payments to its artists engaged directly in the production of films, music, serials, etc., and the same had been debited to the Profit and Loss Account under the Direct Cost category. The assessee had deducted the tax at source thereon under the provisions of Section 194J of the Income Tax Act, 1961. It was further informed that during the year under consideration, the assessee ITA No.: 462/PAT/2024 Assessment Year: 2021-22 Yashi Films Private Limited. had paid a sum of ₹8,30,23,893/- towards professional and technical services for the purchase of satellite rights, payment to actors, directors, composers, and other professionals for the production of movies, serials, series, etc. The amount so paid or provided had been deducted in the profit and loss account as direct cost and the tax had been deducted at source in accordance with Section 194J of the Act. Further, professional and technical services also related to the indirect cost of ₹12.18 lakh which had been debited under the head legal and professional charges and specifically reported in the ITR under the details of deduction of tax under the section 'professional and technical services.' The Ld. AO noted that, there was discrepancy in the reply of the assessee and the amount claimed in the profit and loss account and required further details; which were however, not filed. Therefore, professional and technical services expenses and society maintenance expenses were disallowed and the total income was assessed at ₹10,59,86,7421/-. Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who vide order dated 07/05/2024 allowed the appeal. Aggrieved with the order of the Ld. CIT(A), the Revenue has filed the appeal before the Tribunal.
Rival submissions were heard and the record and the submissions made have been examined.
The Ld. DR argued that additional evidences were filed which were accepted by the Ld. CIT(A). The Ld. AR on the other hand stated that one of the parties was paid a sum of ₹2 crore and notice u/s 133(6) of the Act was issued to M/s Enter10 Television Private Limited (third party) to verify the correctness / genuineness of the payments made for technical services which was not responded. It was stated that no ITA No.: 462/PAT/2024 Assessment Year: 2021-22 Yashi Films Private Limited. payment was made to that party and therefore, there was no question of deducting any tax at source u/s 194J of the Act, but on the other hand, M/s Enter10 Television Pvt. Ltd. is a customer of the assessee company and the assessee company has received payments from M/s Enter10 Television Pvt. Ltd. for selling rights of programs and films made by the assessee. There were society maintenance expenses of ₹4,70,139/- for which the rent agreement was produced. It was submitted that the Ld. CIT(A) had called for the remand report, but no rebuttal was made by the Ld. AO. In the remand report, the Ld. AO relied upon the original assessment order. It was stated that the email ID/mobile number were mentioned but there was no mention of any comments which were uploaded on the portal. The email/mobile number on which notice was issued was incorrect and in the remand report, the Ld. AO had not rebutted the evidence filed by the assessee. It was requested that the order of the Ld. CIT(A) may be confirmed as the same was made on the appreciation of the facts of the case.
We have considered the facts of the case, the submissions made and the documents filed. The Ld. CIT(A) has decided the appeal as under while giving relief to the assessee: “Ground No.4:- The ground of appeal pertains to disallowance of Rs. 8,30,23,893/on account of Professional and Technical Services (PTS) rendered by the appellant assessee. During the course of assessment proceedings, the Ld. AO stated that the assessee is engaged in producing feature films, purchase and sale of satellite rights, payment to actors, directors, composers and other professionals for the production of movies, serials etc. and it was observed that assessee had paid a sum of Rs. 8,30,23,893/- towards PTS which was deducted from Pal account as per provisions of section 194J of the Act and debited as expense in its ITR. The Ld. AO further observed that as per the tax audit report the assessee had paid 7,72,56,061/-towards PTS and an additional sum of Rs.2,69,08,000/- to M/s Enter 10 Television Pvt. Ltd. Due to the absence of any reply from the assessee or any third party confirmations, the payments made thereof ITA No.: 462/PAT/2024 Assessment Year: 2021-22 Yashi Films Private Limited. remained unverified. The Ld. AO added a sum of Rs.8,30,23,893/- to the income of the assessee. During the course of appellate proceedings, the appellant has preferred to file additional evidence under Rule 46A of the Income Tax Rules providing the details of payments made for PTS comprising of payments made to artist and other professionals and purchase of satellite rights of Rs.8,30,23,893/- , details of TDS deducted and deposited, copies of TDS returns, copies of bank statements, copies of invoices etc. The additional evidence was sent to the Ld. AO for seeking his comments in respect of the admissibility and on its merits thereof on 17.11.2023. The remand report from the Ld. AO was received on 15.01.2024. The Ld. AO has not commented on the admissibility of the additional evidence and has only reiterated the assessment order without commenting on the merits of the additional evidence submitted by the appellant. Hence, it can be seen that the Ld. AO relied on his assessment order to submit the remand report. The rejoinder comments of the appellant were received on 05.03.2024. After considering the nature of additional evidence and its importance, in the interest of justice and fair-play the same is being admitted and adjudicated upon. It is seen that the appellant has submitted all the relevant details in respect of the expenditure of Rs.8,30,23,893/- as debited in the P&L on account of PTS. Further, it has been submitted that the appellant has not made any payments to M/s Enter10 Television Pvt. Ltd. for any services, in fact the said company is a customer of the appellant and the appellant has received payments from them for selling rights of programmes and films made. A copy of agreement with M/s Enter10 Television Pvt. Ltd. has also been attached by the appellant. In view of the submissions made by the appellant and facts and circumstances of the case, the addition of Rs.8,30,23,893/- made by the Ld. AO is not sustainable and deserves to be deleted. The ground of appeal no.4 is allowed.”
Thus, we note that on the evidences filed by the assessee, a remand report was called for from the Ld. AO but instead of filing any comments on the admissibility of the additional evidence or upon the veracity of the same, the Ld. AO only repeated the contents of the assessment order, although the facts mentioned in the assessment order were different from what was submitted by the assessee before the Ld. CIT(A). Since TDS was duly deducted on the payment for professional and technical services availed by the assessee, therefore, ITA No.: 462/PAT/2024 Assessment Year: 2021-22 Yashi Films Private Limited. there was no justification for making any addition and the finding of the Ld. CIT(A) in this regard are upheld and Ground Nos. i, ii, and iii of the appeal of the Revenue are dismissed. Ground No. iv is general in nature and does not require any separate adjudication.
In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 28th January, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 28.01.2026 Bidhan (Sr. P.S.) ITA No.: 462/PAT/2024 Assessment Year: 2021-22 Yashi Films Private Limited. Copy of the order forwarded to:
ACIT, Circle-1, Patna.
Yashi Films Private Limited, M-22, Road No.25, Sri Krishna Nagar, Patna, Bihar, 800001. 3. CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Patna Benches, Patna.
Guard File. //// By order