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M/s. AVM Film Studios Versus The Income Tax Officer, Media Ward I, Chennai.

2015 (10) TMI 17 - ITAT CHENNAI

Reopening of assessment - pre-received income undisclosed - Held that:- As decided in assessee’s own case for the assessment year 2008-09 the assessee was bifurcating the trading receipts of one year into five years, thereby shifting the profits of one year into five years which was not a correct method of computing the profits and gains of business. When the assessee had debited the entire cost of acquisition of rights of distribution, exploitation and exhibition of the films to the profit and .....

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assessee and received by her in all the accounting years. See Smt. G. Krishnammal. Versus DCIT [1997 (8) TMI 122 - ITAT MADRAS-C] - Decided against assessee. - I.T.A. Nos. 1358 & 1359/Mds/2015 - Dated:- 31-7-2015 - Shri A. Mohan Alankamony and Shri V. Durga Rao,JJ. For The Appellant : Mrs. J. Sree Vidya, Advocate for Mr. V.S. Jayakumar, Advocate For The Respondent : Shri P. Radhakrishnan, JCIT PER V. DURGA RAO, JUDICIAL MEMBER: Both the appeals filed by the same assessee are directed against the .....

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ompleted under section 143(3) of the Income Tax Act, 1961. Thereafter, the assessment was reopened. In the assessment order, the Assessing Officer has observed that during the previous year, the assessee has received an amount of Rs..77,83,000/- from sale of film rights in the AVM Productions and Entertainment. However, the assessee firm has offered only Rs..10,52,171/- as current year income and the balance amount of Rs..67,30,829/- is not admitted as income for the current year claiming the sa .....

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essee by observing that it is evident that the sum received by the assessee is not an advance and it takes only the character of income. The nomenclature used by the assessee is immaterial. Accordingly, the appeal filed by the assessee was dismissed. 4. On being aggrieved, the assessee carried the matter in appeal before the Tribunal. 5. The ld. Counsel for the assessee has fairly accepted that the issue involved in this appeal is squarely covered against the assessee by the decision of the Trib .....

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hts and home video copy rights etc. during this assessment year holding that these amounts accrued to the assessee during this assessment year only and it cannot be spread over during the lease period. The Commissioner of Income Tax (Appeals) sustained the action of the Assessing Officer holding that receipt partakes the character of accrued and received during the year and therefore liable to be taxed in the year of receipt. While coming to such conclusion, the Commissioner of Income Tax (Appea .....

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if receipt does not fall within the ambit of any of the sub-clauses in Section 2(24) it may still be income if it partakes the nature of the income. Further, Hon'ble Supreme Court in the case of Emil Webber Vs CIT (200 ITR 433) held that anything which can be properly described as income is taxable under the Act unless it is exempted under one or other provisions of the Act. The sum received by the appellant is neither advance nor deposit but only a consideration for transfer of movie rights .....

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The argument of the AR that the appellant is following mercantile system of accounting and hence there is justification for spread over of income to future years is devoid of merit as the appellant has performed his part of the contract of sale and consideration is also received in full and hence there is no case for spreading of income to future years. The reliance placed by the appellant on various judgements is also misplaced since the appellant on sale of movie rights has fully rendered ser .....

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by assigns, transfers and sells to the Assignee the video copyrights and home video copyrights of 73 Tamil films as mentioned in Schedule 1 absolutely, irrevocably and free from any encumbrances / obstruction from any person/s, party/s, company/s or organization whatsoever, for the Territory of India for a Perpetual and permanent period. b) The Assignee shall be entitled to re-assign license and/or exercise in any other manner, either by itself or through any third party of its choice, the right .....

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al and permanent period. We also find that co-ordinate Bench of this Tribunal has considered a similar situation in the case of Smt. G.Krishnammal Vs. DCIT (supra) wherein it was held as under:- The entire amount received by the assessee was neither refundable by the assessee nor could be claimed by the lessees from the assessee under any circumstances. As per agreement, in the event of the lessees violating any part of the agreement by distributing or exploiting the rights of the film outside t .....

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actually received the sum of ₹ 2.10 lakhs during the relevant year. The bifurcation of this amount for different periods as mentioned in the agreement had no meaning except a crude untenable device to avoid tax, because such a device had no foundation at all. Since the amount was neither refundable by the assessee nor the assessee was bound to pay any interest on that sum to the lessees and the amount was received by the assessee for grant of the rights of exploitation, distribution and e .....

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