TMI Blog2014 (3) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenditure before invoking provisions of section 40(a)(ia) of the Act – thus, the matter is remitted back to the AO for fresh assessment – Decided in favour of Assessee. - ITA No. 315/Hyd/2013 - - - Dated:- 7-3-2014 - Shri Chandra Poojari And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Sri Anil Nair For the Respondent : Sri D. Sudhakar Rao ORDER Per Chandra Poojari, AM:- This appeal preferred by the Assessee is directed against the order of the CIT(A)-II, Hyderabad dated 30/01/2013 for the assessment year 2008-09 wherein the assessee has raised the following substantial grounds: 1)The CIT(A) erred in overruling the contention of the appellant that the cost of remake rights written off was require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07]293 ITR 226 (SC). 5) The appellant submits that what is contributed as share capital is not transfer except for computation of capital gains u/s 45(3), so that it is not payment, so as to be covered by TDS provisions and the fact that is shown as an item of investment, that is a credit for goods and not hire charges or royalty. 6) The appellant further submits that the order of the CIT(A) dismissing the claim of the appellant is based on incorrect appreciation of provisions of law and facts and therefore needs to be set aside and claim of the appellant allowed. 2. The assessee also filed the following additional grounds of appeal: The only issue under contention is disallowance u/s 40(a)(ia) of the IT Act, 1961 towards non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment observed that the claim of the assessee at Rs. 15,47,88,000/- written off towards remake rights of Lage Raho Munna Bhai in the computation of income as follows: Profits and gains from business or profession. 4.1 The amount claimed by the assessee company is not allowed by the AO as there is no deduction of TDS u/s 194J of the IT Act and, therefore, by invoking the provisions of section 40(a)(ia) of the Act, the Assessing Officer disallowed the said claim. On appeal, the CIT(A) confirmed the action of the Assessing Officer. 5. Aggrieved, the assessee is in appeal before us. 6. Before us the learned AR of the assessee submitted that the said picture right valued at Rs. 15.46 crore happened in the preceding p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. The payment is, in any case, between to third parties who are not involved in this transaction. d. The CIT(A) has not brought any evidence on record to show that the transfer of rights has not in fact happened on 1st April, 2006, as evidenced by the books and records produced by the assessee. e. The findings and conclusions of the CIT(A) are not supported by the Assessing Officer. 6.2 Relying on the judgment of the Hon ble Bombay High Court in the case of CIT Vs. Kotak Securities Ltd., 348 ITR 333, the AR submitted that the Court has granted relief to the assessee on the basis of the finding that the assessee was not liable to deduct tax at source until the year immediately before the amendment to the Act and where the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 397127 Kotak Mahindra Bank Ltd., Chennai 11,25,00,000 18/10/2006 443369 Kotak Mahindra Bank Ltd., Chennai 75,00,000 31/03/2007 Kotak Mahindra Bank Ltd., Chennai 46,88,000 Total 15,46,88,000 8.1 Thereafter, M/s Gemini Industries Imaging Ltd., was a partner in the partnership firm Manorama Films, the rights relating to Lage Raho Munnabhai were acquired by Manorama Films and the same was withdrawn by debiting the capital account of the partner Gemini Industries Imaging Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made in the form of credit to partner s capital account and while making the entry i.e. crediting the account of M/s Gemini Industries Imaging Ltd., TDS is required to be made as per the provisions of section 194J of the Act. Since the assessee failed to deduct tax at source u/s 194J, the expenditure disallowed u/s 40(a)(ia) of the Act. 8.4 In this case, the Assessing Officer invoked the provisions of section 40(a)(ia) as expenditure is otherwise allowable as deduction while computing the income of the assessee. In our opinion, first of all, the issue has to be decided whether the expenditure laid out or expended wholly or exclusively for purpose of business so as to allow the expenditure as a deduction. In our opinion, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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