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The Commissioner of Income Tax Versus K. Sera Sera Productions Ltd.

2015 (5) TMI 937 - BOMBAY HIGH COURT

Revision u/s 263 - CIT was of the view that Assessing Officer erred in addition of alleged suppressed business profit aggregating to ₹ 11 crores - Assessing Officer erred in disallowing the alleged cost of production claimed - ITAT quashed revision order - Held that:- We do not find that the Tribunal erred in holding that clause (c) of the Explanation to subsection (1) of section 263 cannot be applied. In the present case, that has no application because the matters which have been conside .....

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icer, his initial order, the order of the first appellate authority, the direction issued by the first appellate authority and which was given effect to by the Assessing Officer. All these would denote that something which was very much part and parcel of the appellate authority's order and dealt with extensively therein is now sought to be revised and revisited.

We fully agree with the Tribunal when it concluded in para 14 that it is evident from the order of the Commissioner (Appea .....

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by the Commissioner, the Tribunal in para 15 found that this was also very much before the authorities and hence, even in relation thereto, it cannot be said that the Assessing Officer at the time of making the assessment order did not consider the applicability of Rule 9A vis a vis the claim of the Assessee on the aspect of cost of production of the film. - Decided against revenue. - Income Tax Appeal No. 1027 of 2013 - Dated:- 18-3-2015 - S. C. Dharmadhikari And A. K. Menon,JJ. For the Petiti .....

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power under section 263 of the Income Tax Act, 1961 and the correctness of that exercise was put in issue by the Assessee before the Tribunal. 3. Mr. Mohanty appearing for the Revenue, after inviting our attention to section 263 of the Income Tax Act, 1961 and particularly Explanation( c) to subsection (1) of the said section, submitted that clause (c) of the said Explanation to subsection (1) will not be attracted, as the Commissioner sought to revise the order of the Assessing Officer on matt .....

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9A of the Income Tax Rules to submit that the applicability of this Rule and to the given facts and circumstances was not subject matter of the appellate exercise. In such circumstances, he submits that the Appeal deserves to be admitted. 4. Mr. Mistrilearned Senior Counsel appearing for the Assessee/Respondent, on the other hand, submits that there is no merit in this Appeal. Once there is a finding of fact by the Tribunal that clause (c) of the Explanation below subsection (1) does not apply, .....

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Officer has given effect to the direction in the appellate authority's order. It is that order, whereby the Assessing Officer gives effect to the above direction, which is sought to be revised by the Commissioner under section 263 of the Income Tax Act, 1961. That was plainly and clearly impermissible given the above doctrine. Thirdly, the Commissioner did not put the Assessee to notice on certain aspects which he took into consideration, inasmuch as he directed by the order passed on 29th .....

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t December, 2009 did not mention this sale of share of theatrical rights to M/s. RGV Enterprises. If the Assessee was not put to notice of this issue, then, the final order of the Commissioner revising the Assessing Officer's order takes into consideration something which is not part of the show cause notice. On that ground also the Tribunal rightly interfered with the revisional authority's order. Consequently, this Appeal does not raise any substantial question of law. More so, when th .....

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ion, financing and distribution of cinematographic films, filed return of income on 10th September, 2009 declaring income at ₹ 87,64,620/-. The assessment order under section 143(3) read with 153A of the Income Tax Act, 1961 was passed by the Assessing Officer on 31st December, 2009 assessing income of the Assessee at ₹ 14,37,20,890/-. 7. The order passed by the revisional authority, copy of which is at Annexure 'C', in para 2 makes specific reference to the Assesse's pro .....

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00/- from this film. Later on, however, the Assessee claimed before the Assessing Officer that this was not income from the production of the film, but this was a sum received as share application money from various persons. The breakup of the receipt and to the tune of ₹ 11 crores was provided by the Assessee to the Assessing Officer. The Assessing Officer, therefore, had before him explanation of the Assessee that this amount of ₹ 11,25,00,000/- could not be considered as income fr .....

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exhibition on a commercial basis at least ninety days before the end of previous year, then, the cost of production of the film is to be allowed as deduction and that is restricted to the extent of income earned and the balance part of cost of production expenses are to be allowed as income of the previous year. Film "Darna Zaroori Hai" was released on promotional basis on 22nd February, 2006 and its commercial release was on 28th April, 2006. The computation of the expenses was also p .....

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ssee has preferred an Appeal to the Commissioner of Income Tax (Appeals). Ground No. 1 of that Appeal was whether on the facts and circumstances and in law, the Assessing Officer erred in addition of alleged suppressed business profit aggregating to ₹ 11 crores as per the order dated 31st December, 2009 (para 9.2). The first appellate authority, in dealing with this ground, in its order dated 12th October, 2011, concluded that after that consideration of the submissions of the Assessee, in .....

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, if the amount of ₹ 11,25,00,000/- is not taken to be the income of the Assessee from film "Darna Zaroori Hai", then, by applying Rule 9A, the cost of production of this film deserves to be deducted and in full as claimed by the Assessee. From para 2.1 onwards in the appellate order, this aspect has been dealt with. When this aspect was considered by the first appellate authority, not only did he have before him the record pertaining to the Assessing Officer's order dated 31 .....

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8377; 27,19,28,504/- only a sum of ₹ 4,01,467/was deleted. 10. We find that despite this position emerging from the record and being undisputed, the order under section 263 of the Income Tax Act makes detailed reference to the show cause notice. The show cause notice as also this order passed under section 263 make detailed reference to the claims of the Assessee and which were part of the Appeal before the Commissioner and dealt with by him in his order dated 12th October, 2011. The order .....

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fect to the order of the first appellate authority, as submitted by the Assessing Officer, came to be reconsidered and revisited. In addition thereto, one more aspect of sale of theatrical rights of "Darna Zaroori Hai" to M/s. RGV Enterprises was considered. Naturally, therefore, the doctrine of merger was invoked by the Assessee and it was applied by the Tribunal to uphold the objection raised by the Assessee. 11. In the above factual circumstances, we do not find that the Tribunal er .....

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idered and decided in the Appeal. We do not find any merit in Mr. Mohanty's submission because detailed references have been made in the foregoing paragraphs to the case of the Assessee before the Assessing Officer, his initial order, the order of the first appellate authority, the direction issued by the first appellate authority and which was given effect to by the Assessing Officer. All these would denote that something which was very much part and parcel of the appellate authority's .....

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