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2011 (12) TMI 668 - ITAT MUMBAI

2011 (12) TMI 668 - ITAT MUMBAI - TMI - ITA No. 2233/Mum/2010, ITA No. 2574/Mum/2008, ITA No. 2575/Mum/2008, ITA No. 2236/Mum/2010, ITA No. 2213/Mum/2010, ITA No. 2634/Mum/2008, ITA No. 2635/Mum/2008 - Dated:- 23-12-2011 - D. K. Agarwal (Judicial Member) And R. S. Syal (Accountant Member) For the Revenue : Pavan Ved (CIT-DR) For the Assessee : Dr. K. Shivaram ORDER This batch of seven appeals comprising of 3 by the assessee and 4 by the Revenue relate to assessment years 1998-99, 2003-2004 and 2 .....

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ng amounts in the original assessment order passed u/s 143(3) on 05.02.2001:- (i) Album - Mohini Singh Project ₹ 1,37,515 (ii) Album - Pushpanjali Project ₹ 18,587 (iii) Aabha Film Production No.2 ₹ 10,00,000 (iv) Album - Vikas Bhalla Project ₹ 73,133 (v) Ateet - Cine communications ₹ 23,00,000 3. The Assessing Officer did not consider such debts as bad debts eligible for deduction under sections 36(1)(vii) because no amount was treated as income in respect thereof .....

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d debt. Not convinced, the Assessing Officer made addition. The matter travelled to the Tribunal, which restored this issue to the A.O. for a fresh decision. Again in the fresh proceedings before the A.O. giving effect to the Tribunal order, the assessee reiterated the submissions that the advances were given towards certain projects which could not be finished and has to be abandoned hence it was claimed that the expenditure should be considered as loss u/s 37. Not convinced with the assessee s .....

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trading loss. The learned Counsel on behalf of the Revenue conceded before the Hon ble High Court that no question of law was involved and the appeal itself was misconceived in view of the fact that the film in question was admittedly not released and hence it was stock-in-trade and there was no question of the same being capital asset. The learned A.R. has placed on record a copy of this judgment available on page no.166 of the paper book. Another judgment dated 29th August, 2011 of the Hon ble .....

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ilms which were subsequently abandoned was to be allowed as deduction. 5. Adverting to the facts of the instant case it is noticed that the assessee incurred the above expenditure for the production of music albums which were abandoned due to commercial expediency as going ahead with such projects would have entailed further cost without any equivalent market. In the light of the afore-noted judgments it is clear that the amount in question cannot be considered as capital loss but has to be allo .....

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e case and in law the CIT(A) was justified in holding that 90% of the net commission and not 90% of the gross commission as held by the Assessing Officer is to be reduced from business income for computing the profit of business u/s 80HHC of the Income-tax Act. 7. Both the sides are in agreement that the facts and circumstances of these grounds are similar to those considered and decided by the Tribunal in assessee s own case in the immediately succeeding year i.e. assessment year 1999-2000. Cop .....

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y the Tribunal, respectfully following the precedent, we set aside the impugned order on this issue and restore the matter to the file of A.O. for taking a fresh decision in accordance with the guidelines laid down by the Tribunal in the afore-noted order. 9. In the result, the assessee s appeal is allowed and the departmental appeal is allowed for statistical purposes. Assessment Year 2003-2004 10. First ground of the assessee s appeal is against the confirmation of disallowance u/s 43B on acco .....

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ate for filing of return u/s 139(1) of the Act, then no disallowance can be made. Respectfully following the precedent, we order for the deletion of this disallowance upheld in the first appeal. This ground is allowed. 12. Ground no.2(i) is against the computation of deduction u/s 80HHF. The only issue is as to whether interest income earned by the assessee should be considered as falling under the head Profits and gains of business or profession or Income from other sources and the resulting co .....

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consideration came up for adjudication before the Tribunal in ITA No.265/Mum/2008. Copy of the tribunal order is available at pages 104 onwards of the paper book. Vide para 13 of the said order it has been held that the interest income is to be considered under the head Profits and gains of business or profession and resultantly the action of the A.O. by reducing 90% of the interest income has been upheld. The learned A.R. has submitted that this order was assailed before the Hon ble High Court, .....

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s observed that the A.O. has not dealt with this issue at all inasmuch as there is no discussion about the components of such Miscellaneous income. Unless the composition of miscellaneous income is taken into consideration, no decision can be rendered as to whether the same should be deducted from the profits of the business or not. Under such circumstances we set aside the impugned order and restore the matter to the file of A.O. for passing a speaking order on this issue as per law after allow .....

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ced from the profits of business and it should have been taxed under the head Income from Other Sources . 16. It is observed that the only issue is about the decision as to whether interest income should be considered as falling under the head Profits and gains of business or profession or Income from other sources . We have noticed above that the Tribunal in its order against the one passed by the CIT u/s 263 has held that the interest income is to be considered as falling under the head Profit .....

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(3) of the Act. The Assessing Officer made the disallowance u/s 40A(3) on the ground that the expenditure was incurred in cash and it was not covered under Rule 6DD. The learned CIT(A) upheld the assessment order on this issue. 19. After considering the rival submissions and perusing the relevant material on record it is fairly admitted by the learned A.R. that the payment made under the instant circumstance is not covered under any of the clauses of Rule 6DD. In such a situation there is no que .....

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ar 1998-99 above, we have decided this issue in assessee s favour. In view of the admitted similarity of the facts, we allow this ground of appeal. 21. Ground no.3(i) is against the computation of deduction u/s 80HHF on the interest income which ground is similar to ground no.2(i) of assessment year 2003-2004. In view of the similarity of the facts of this ground with those of assessment year 2003-2004 decided above, we overturn the impugned order on this issue. This ground is allowed. 22. Groun .....

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