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2015 (11) TMI 577 - ITAT CHENNAI

2015 (11) TMI 577 - ITAT CHENNAI - [2015] 41 ITR (Trib) 282 (ITAT [Chen]) - Accrual of income - addition being token advance received by the appellant from UTV Motion Pictures - Held that:- The advance received by the assessee from UTV Motion Pictures (Mauritius) Ltd. during the relevant assessment year cannot be treated as the income of the assessee for the assessment year 2009-10, since the income has not crystallised to the assessee. Accordingly we hereby direct the learned Assessing Officer .....

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nt to double taxation - Held that:- Considering the claim of the assessee, in the interest of justice we hereby remit the matter to the file of the learned Assessing Officer for verifying whether the claim of the assessee is true. If the submission of the assessee is found to be correct, then the learned Assessing Officer is duty bound to delete the addition made once again in the hands of the assessee for the relevant assessment year.

Addition towards the value of gold jewellery - H .....

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's father. The learned authorised representative had also stated before the learned Commissioner of Income-tax (Appeals) by furnishing an affidavit of Shri R.Sivakumar dated February 25, 2013 that Shri R. Sivakumar was in the profession of acting nearly 40 years from 1965 to 2005 and his present source of income is from royalty received from the books written by him and public lectures. These facts were not taken into consideration by the Revenue. Therefore, we do not find it appropriate on the .....

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or the respondent. ORDER The order of the Bench was delivered by 1. A. Mohan Alankamony (Accountant Member).-These two appeals are filed by the assessee, aggrieved by the separate order of the learned Commissioner of Income-tax (Appeals)-II, Chennai, both order dated March 27, 2014 in I. T. A. No. 198/11-12/A-II for the assessment year 2009- 10 passed under section 143(3) read with section 153A of the Income-tax Act, 1961, and in I. T. A. No. 199/11-12/A-II for the assessment year 2010- 11 passe .....

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Motion Pictures. (ii) The learned Commissioner of Income-tax (Appeals) had erred in adding a sum of ₹ 92,25,750 received from Photon Factory and ₹ 1,11,50,000 received from AVM Production as income of the assessee ignoring the fact that the said amount was already declared as income for the earlier assessment years. Assessment year 2010-11 (i) The learned Commissioner of Income-tax (Appeals) had erred in enhancing the taxable income by ₹ 1,50,00,000 received by the appellant f .....

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rs 2009-10 and 2010-11 on July 21, 2011 admitting his total income as ₹ 7,26,06,810 and ₹ 6,49,78,270 respectively. The case was selected for scrutiny for both the assessment years and additions were made against which the assessee is now in appeal before us. Assessment year 2009-10 : Ground No. 1 : Addition of ₹ 2.5 crores received from M/s. UTV Motion Pictures (Mauritius) Ltd. It appears that the learned Assessing Officer has treated the amount of ₹ 2.5 crores received .....

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professionals due to which fees are treated as income on receipt basis. (iv) The production houses also treat their payment to the artist as expenditure on actual payment basis. (v) Most of the businesses take place by the oral contracts, mutual understandings and promises, and there is no practice of refunding any amount once received. (vi) Because of the aforesaid reasons, any amount received by the assessee has to be treated as his income and every payment he makes has to be treated as his ex .....

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be treated as token advance in any stretch of imagination. (iii) Token advance by its nature has to be a small sum compared to the total amount receivable for actual performance of the contract. (iv) Since the appellant is following cash system of accounting, the advance amount received by the assessee has to be treated as his income. (v) This amount of ₹ 2.5 crores is not returned to M/s. UTV Motion Pictures (Mauritius) Ltd., till date. (vi) As per the agreement the appellant has a right .....

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re specified. (ii) As per the terms of the agreement, the amount of ₹ 2.5 crores was paid to the assessee on June 25, 2008 by wire transfer as an advance. (iii) The total consideration for complying with the obligations specified in the agreement was ₹ 5 crores, which was to be paid in instal ments on specified period stipulated in the agreement. (iv) The script and title of the motion picture, in which the assessee has to perform has not been finalised as on the date of the agreemen .....

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ions specified in the contract. 6. The learned Departmental representative argued in support of the orders of the learned Assessing Officer and the learned Commissioner of Income-tax (Appeals) by reiterating their observations and pleaded that the order of the Revenue may be sustained. 7. We have heard both parties and carefully perused the materials available on record and also the agreement entered into between the assessee and UTV Motion Pictures (Mauritius) Ltd., dated June 17, 2008. At the .....

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ceipt of notice, to cure such default. If the artist fails to cure such default within that period, the artist shall refund all amounts already paid to the artist under this agreement and the producer shall ter minate this agreement upon written notice to the artist immediately upon expiration of the remedy period set out hereinabove." 8. From the above it is crystal clear that the amount of ₹ 2.5 crores received by the assessee is only advance and the same will crystallise as income .....

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enue does not hold water, because even in cash system of accounting the advance received cannot be treated as income. The advance received will remain as advance received until the same has crystallised as income to the assessee, i.e., on the fulfilment of the conditions stipulated in the agreement. The learned Departmental representative had relied on the decision of the hon'ble Madras High Court in the case of Lakshminarayana Films v. CIT [2000] 244 ITR 344 (Mad), however we find that the .....

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in I. T. A. Nos. 1329/596 & 597/Mds/2009 dated January 19, 2010 and August 21, 2009 respectively held the issue in favour of the assessee wherein also the decision of the hon'ble Madras High Court in the case of Lakshminarayana Films v. CIT [2000] 244 ITR 344 (Mad) was distinguished. The relevant portion of the order in R. S. Suriya v. Deputy CIT I. T. A. No. 1329/Mds/2009 dated January 19, 2010 [2010] 2 ITR (Trib) 746 (Chennai) is reproduced hereinbelow (page 749) : "8. We have pe .....

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ot against any particular films. The assessee's contention that income could not be recognised till the artist had acted in the film, for which the advances were received, carries great strength. Storyline was not fixed, neither was the name, not even the co-artists were known. Just because the assessee was following the cash system, it was not obliged to consider all sums received by it as income unless such receipt could be categorised as income. Whether it is the cash system or mercantile .....

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ed assignments had materialised. Though the learned Departmental representative put great efforts to submit that fact situation for the impugned assessment year could have been different from that of the earlier years, which was dealt with by the Tribunal in I. T. A. No. 596/597/Mds./09, as aforesaid. We find that the learned Commissioner of Income-tax (Appeals) had confirmed the order of the Assessing Officer for the impugned assess ment year based on his own decision for the earlier years, whi .....

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eceived from two parties with no clear crystallisation of film or the storyline or other aspects of the proposed film. Hence, we are of the opinion that D. Meena's case (supra) is not applicable here on facts. In any event, since this Tribunal had taken a view in favour of the assessee in the assessee's own case for the earlier years, on similar fact situation, we find no compelling reasons to depart from the view taken earlier. Therefore, we find that amount of ₹ 55 lakhs received .....

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be treated as the income of the assessee for the assessment year 2009-10, since the income has not crystallised to the assessee. Accordingly we hereby direct the learned Assessing Officer to delete the addition made for ₹ 2.5 crores which was further confirmed by the learned Commissioner of Income-tax (Appeals) for the relevant assessment year being advance received by the assessee for future performance. Ground No. 2-Addition of ₹ 92,25,750 being amount received from Photon Factory .....

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e claim of the assessee. The learned Departmental representative did not have any objection for the matter to be verified by the learned Assessing Officer in order to avoid the hardship of double taxation to the assessee. Considering the claim of the assessee, in the interest of justice we hereby remit the matter to the file of the learned Assessing Officer for verifying whether the claim of the assessee is true. If the submission of the assessee is found to be correct, then the learned Assessin .....

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0,000 which has been received by the assessee during the relevant assessment year from M/s. Red Giant. The assessee had explained that the amount received by the assessee was an advance and the same was offered to the income of the assessee during the subsequent assessment year 2011-12, however the learned Commissioner of Income-tax (Appeals) directed the learned Assessing Officer to treat the abovesaid amount as income of the assessee during the relevant assessment year and thereby enhanced the .....

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l representative on the other hand argued in support of the orders of the Revenue. 14. After hearing both sides, we hereby remit the matter back to the file of the learned Assessing Officer to examine the agreement executed by the assessee with M/s. Red Giant and pass appropriate order as per law and merits and in the light of the decision rendered by us with respect to the advance received by the assessee for ₹ 2.5 crores from UTV Motion Pictures (Mauritius) Ltd., for the earlier assessme .....

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without payment and without consideration, therefore, the learned Assessing Officer added the same to the income of the assessee under the head "Income from profession". Before the learned Commissioner of Income-tax (Appeals), the learned authorised representative had stated that the learned Assessing Officer had erred in arriving at the value of the cement which was only ₹ 1,68,000 and further referred to the ledger copy received from Bharthi Cement, which was said to be enclose .....

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in the interest of justice, we remit the matter to the file of the learned Assessing Officer in order to provide one more opportunity to the assessee for justifying his claim with cogent materials. Ground No. 3-Addition of ₹ 34,30,000 towards the value of gold jewellery. 16. The learned Assessing Officer observed that during the course of the search, sufficient documentary evidence were found to establish that the assessee had acquired jewellery. The assessee explained that the jewellery b .....

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fore us, the learned authorised representative, submitted that the father of the assessee Shri R.Sivakumar, is an eminent artist and he and his family had sufficient declared source of income for acquiring the jewellery of the value ₹ 39,90,000. It was therefore pleaded that the addition may be deleted. The learned Departmental representative on the other hand argued in support of the orders of the Revenue. 17. We have heard both parties and carefully perused the materials available on rec .....

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