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Income Tax Appellate Tribunal, “A”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI, JM
O R D E R PER R.C.SHARMA (A.M): These are the appeals filed by the assessee and revenue against the order of CIT(A), Mumbai, for the assessment year 2006-2007, in the matter of order passed u/s.143(3) r.w.s.263 of the I.T.Act.
At the outset, ld. AR pointed out that tax effect in the appeal of revenue (i.e. is less than Rs.10 lakhs, insofar as 2 ITA No.1181&1907/13 addition deleted by CIT(A) amounts to Rs.13.04 lakhs in respect of disallowance deleted u/s.40A(2) and Rs.4.12 lakhs in respect of disallowance deleted u/s.14A of the I.T.Act.
In view of the CBDT Circular No.21/2015, dated 10-12-2015, since the tax effect in the appeal of revenue is less than Rs.10 lakhs, we dismiss the appeal (i.e. ITA No.1907/Mum/13) filed by the revenue.
The assessee in its appeal (i.e. ITA No.1181/Mum/2013) is aggrieved for upholding the addition of Rs.21.99 lakhs made by the AO u/s.40A(2) of the I.T.Act.
Rival contentions have been heard record perused. During the course of assessment the AO has disallowed assessee’s claim of compensation and made addition u/s.40A(2) amounting to Rs.34.03 lakhs. By the impugned order the CIT(A) restricted the disallowance to Rs.21.99 lakhs. The assessee is in further appeal for the disallowance so upheld by the CIT(A).
We have considered rival contentions and found that assessee is a renowned singer, who has been awarded Highest Civilian Award “Bharat Ratna” by Government of India. During the year under consideration, assessee claimed compensation of Rs.2.47 crores paid to Musicurry Records and Entertainment Pvt. Ltd. (in short MREPL) for cancellation of contract. As per AO’s view since the company comes within the purview of 40A(2), the compensation so paid was not reasonable, therefore, he disallowed a sum of Rs.34,03,159/-. The AO opined that MREPL would have got not more than Rs.2,88,76,841/- . However, the assessee has