TMI Blog2018 (11) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the A.Y 2011-12 against the order of the CIT (A)-6, Hyderabad, dated 16.10.20145. 2. Brief facts of the case are that the assessee company engaged in the business of entertainment industry and film distribution, filed its return of income on 30.08.2012 for the A.Y 2011-12 admitting total income of ₹ 53,96,970. During the assessment proceedings u/s 143(3) of the Act, the AO observed that the assessee had debited a sum of ₹ 1,50,00,000 in the P L A/c towards lease rights of a film. The assessee was asked to produce the copy of the agreement in support of its claim. The assessee submitted a note stating that the assessee had purchased lease rights relating to Krishnaarjuna movie during the financial year 2007-08 on outright basis excluding the cost of prints and publicity expenses for a consideration of ₹ 1,75,00,000 from Sri Lakshmi Prasanna Pictures for the area of NIZAM as known in the film trade for a period of five years from the date of its first release and that the movie was released on 1.2.2008 and exhibited the same in theatres. It was submitted that since the realization from the movie were less than the cost of acquisition and also since the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manjith Singh Secunderabad 18,58,918 4 Miryalguda Lalitha Mahal 16,00,000 5 Durga Devi Enterprises-Secunderabad 21,00,000 6 Haritha Enterprises Karimnagar 20,70,365 7 Raja Rajeswari Enterprises Secunderabad 25,00,000 8 Sri Aavula Sundara Rao 13,11,648 9 Surapeta RDR Cinemas 12,77,542 10 Warangal M/s. Ram Theatre 3 0,00,000 11 Vyjayanthi Entertainment Properties P Ltd 10,50,021 Total 2,25,94,918 5. The AO observed that as per section 68, where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nilaterally written it off in its books of account u/s 68 of the Act. As regards the addition of ₹ 2,25,94,918 u/s 68 of the Act, the CIT (A) directed the AO to examine the assessee s record and delete the addition wherever the assessee has submitted confirmation letters, as there is no positive finding by the AO that the credits are unexplained. In so far as the deletion of additions where there is no confirmation letters, the CIT (A) held that the quantum thereof should the net of opening balances. Thus, the CIT (A) partly allowed the appeal and the assessee is in second appeal before us. 10. Initially along with Form No.36, the assessee had raised its ground of appeal. Thereafter, it filed the revised grounds of appeal which are as follows: 1. The learned CIT (A) -6 Hyderabad has erred on facts and in law while passing the appellant order. 2. (a) The learned CIT (A) is not justified in sustaining additions amounting to ₹ 1,64,55,601 u/s 41(1) of the I.T. Act, 1961 made in the assessment order. ( b) The learned CIT (A) has failed to appreciate that section 41(1) applies only in case of trading liability in the course of business or profession al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of law, that is section 41(1) of the I.T. Act . 12. The learned Counsel for the assessee reiterated the submissions made by the assessee before the authorities below, while the learned DR objected to the admission of additional grounds of appeal. The learned DR also filed the copy of the docket sheet order wherein it is recorded that the representative of the assessee had agreed for the additions, taking the same into consideration and also the assessee s representatives written submissions before the CIT (A) on 16.07.2015, challenging the admissions made by the A.R of the assessee before the AO, we find that it is a settled position that the representative of the assessee can only represent the assessee as per the instructions of the assessee and cannot, on his own, admit to any income, much less, if it is not exigible to tax. The learned Counsel for the assessee submitted that the amounts credited to the account of the assessee were trade liabilities and therefore, they could not have been considered as creditors and treated as cessation of liabilities u/s 41(1) of the Act. 13. We find that these additional grounds need to be admitted and sent back to the file of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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