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2017 (3) TMI 803 - AT - Income TaxDisallowance of interest - Held that:- Keeping in view the similar stand taken by the assessee in assessment year 2005-06, a direction was given by the learned CIT(A) to the Assessing Officer to verify the exact amount of interest expenditure incurred by the assessee with respect to the residential building at Ramoji Film City and make a disallowance to that extent. In his impugned order for assessment year 2006-07, the learned CIT(A) has followed his own order for the assessment year 2005-06 and has given a similar direction to the Assessing Officer to verify the exact amount of interest expenditure claimed by the assessee with respect to the residential building at Ramoji Film City and make disallowance to that extent. We therefore, find no infirmity in the impugned order of the learned CIT(A) on this issue and upholding the same, we dismiss ground of the assessee’s appeal Disallowance of the written off expenditure - Held that:- In this remand report, during appeal proceeding appellant almost reiterating the submissions and enumerating the developments before the Assessing Officer on this issue, filed a letter purportedly filed by Sri Raj Kumar Santoshi, wherein it was claimed that the appellant failed to adhere to the time schedule agreed upon for making the film and in the same letter a passing remark was made by the said Santoshi “The amount of ₹ 2,20, 00,000/- which was paid / was due to me as per the terms of the arrangements between us and………" From the contents of the above letter, apparently no conclusive finding can be made that the appellant had actually given an advance of ₹ 2.20 crores. Thus, the appellant fails on all fronts to prove the claim of even the major amount of ₹ 2.20 crores. Accordingly, I am not inclined to accept that amount of ₹ 3.20 was advanced to technicians and that the same was written off. As such, the disallowance made by the Assessing Officer is upheld Disallowance of expenditure written off during the year - Held that:- As there is no doubt about that payment of the amount, we are not sure why Revenue has not accepted the same and CIT(A) doubts the same that no conclusive finding can be made. The contents of the letter is very clear that assessee has entered into an agreement for production of film ‘Mahabharat’ to be directed by Shri Raj Kumar Santoshi and as a part of that, paid ₹ 2.20 Crores and incurred incidental expenditure, ultimately due to delay in start of the shooting of the picture, the project was abandoned. Since assessee has furnished evidence before the authorities, we do not find any reason to disbelieve the same. Accordingly, the ground raised by assessee with reference to expenditure of ₹ 3.20 Crores is considered allowable and AO is directed to allow the same Expenditure written-off towards production cost of feature film ‘In the shadow of Cobra’ - Held that:- Assessee supports the expenditure by various payments made through banks or through other concerns and the evidences were furnished before the AO in the remand. However, neither the AO nor the CIT(A) examined the same in correct perspective. However, assessee also has not furnished the complete details before us to examine whether such expenditure was incurred except that the balances are shown in the annual reports every year. This requires verification by the AO. Assessee is directed to furnish necessary evidences of production of film, persons employed or contracted, schedules of shooting etc, necessary agreements if any, in support of claim of incurring of the expenditure, if not the actual vouchers of the earlier period and AO is directed to examine and allow the claim after due verification.
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