ACIT 10(3)(1), MUMBAI vs. NIKMO ENTERTAINMENT LTD, MUMBAI

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ITA 4944/MUM/2016Status: DisposedITAT Mumbai22 September 2017AY 2012-134 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the CIT(A) correctly treated the entertainment duty as a capital receipt, relying on the jurisdictional High Court's decision in CIT vs. Chaphalkar Brothers and the assessee's own case. The pendency of an appeal before the Supreme Court did not restrict the assessee's claim.

What were the facts?

The assessee, engaged in the business of multiplex theatres, claimed entertainment duty collected as a capital receipt. The Assessing Officer treated it as a revenue receipt, but the CIT(A) allowed the assessee's claim. The revenue appealed this decision.

What were the issues?

Whether entertainment duty collected by the assessee is a capital or revenue receipt, and if the CIT(A) erred in treating it as capital receipt despite a pending appeal in the Supreme Court.

Which sections of the Income-tax Act were involved?

Section 115JB,Section 143(1),Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: SHRI G.S. PANNU, AM & SHRI AMARJIT SINGH, JM

Hearing: 07.08.2017Pronounced: 22.09.2017

O R D E R

PER AMARJIT SINGH, JM:

1.

The revenue has filed the present appeal against the order dated 16.05.2016, passed by the Commissioner of Income Tax (Appeals)-21 Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the AY.2012- 13.

2.

The revenue has raised the following grounds:- “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding Entertainment Duty collected by the assessee as Capital receipt relying on the decision of Hon’ble Bombay High Court in the Case of CIT Vs. Chaphalkar Brothers without appreciating the fact that the ITA. No. 4944/M/2016 A.Y. 2012-13 department has not accepted the said decision and has filed SLP which is pending before the Hon’ble Supreme Court. The appellants prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restore. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary.”

3. The brief facts of the case, are that the assessee filed its return of income on 14.09.2012 declaring total income to the tune of Nil after set off of b/f business loss and unabsorbed depreciation of Rs.58,84,999/-. The assessee has paid the tax on book profit u/s 115JB of Rs.1,78,80,277. The return was processed u/s 143(1) of the Act, 1961. Thereafter, the case was selected for scrutiny and accordingly notice u/s 143(2) of the Act dated 08.08.2013 and noticed u/s 142(1) of the Act dated 02.04.2014 and 08.12.2014 were issued and served upon the assessee. The assessee was a company engaged in the business of Multiplex Theatres. On verification, it was observed that the assessee has claimed the incentive received on account of entertainment tax benefit of Rs.1,53,43,776/- treated as capital receipt. Notice was given and after considering the reply the said receipt was treated as revenue receipt in the hands of the assessee and the income of the assessee was assessed to the tune of Rs.2,12,28,780/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee. Therefore, the revenue has filed the present appeal before us

4.

We have heard the argument advanced by the Ld. Representative of the parties and perused the record. The contention of the revenue is that the CIT(A) has wrongly treated the entertainment tax collected by the assessee as capital receipt relying upon the decision in the case of the Chaphalkar

ITA. No. 4944/M/2016 A.Y. 2012-13 Brother (2013) 351 ITR 309 (Bom) whereas the appeal of the said case was pending before the Supreme Court, therefore, in the said circumstances, the entertainment duty collected by the assessee is liable to be treated as revenue receipt and accordingly the finding of the CIT(A) is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has refuted the said contention. Before going further, it is necessary to advert the finding of the CIT(A) on record .:-

“I have considered the submissions of the appellant carefully. The Hon’ble High Court in the order dt. 08.06.2016 in the case of Chaphalkar Brothers have held that the object of granting entertainment tax subsidy is to promote construction of multiplex entertainment taxs subside is to promote construction of theatre complexes and the receipt of subsidy would be on capital account. The Hon’ble ITAT in the appellants case for A.Y. 2008-09 has relied upon the decision of the Hon’ble Bombay High Court in the case of Chaphalkar Brothers 2013 351 ITR 309 (BOM) held that the appellants claim to treat the same as on capital account is correct. In these facts and the binding decision of the jurisdictional High Court, the appellants ground of appeal is allowed and the addition made by the AO is deleted.”

5. On appraisal of the above mentioned order, we noticed that the CIT(A) has passed the order on the basis of the finding given by the Hon’ble High Court in the case of CIT Vs. Chaphalkar Brother (2013) 351 ITR 309 (Bom) and dated 08.06.2011 ITAT Mumbai Bench in the appellants own case for the A.Y. 2008-09 in which the said receipt has been treated as capital in the nature. The said order has passed the on the basis of order passed by the Hon’ble High Court in the case of Chaphalkar Brother (2013) 351 ITR 309 (Bom). The facts are not disputed. No distinguishable law has been produced before us. Pendency of the appeal before the Hon’ble Supreme Court nowhere restricted the claim

ITA. No. 4944/M/2016 A.Y. 2012-13 of the assessee. Therefore in view of the said circumstances, we are of the view that the CIT(A) has passed the order judiciously and correctly which is not liable to be interfered with at this appellate stage. Accordingly, this issue is decided in favour of the assessee against the revenue.

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