THE ACCC-22, CR.5, MUMBAI v. M/S. ASHWAL INVESTMENT PVT. LTD, MUMBAI

ITA 4863/MUM/2007 | 2003-2004
Pronouncement Date: 05-07-2013 | Result: Dismissed

Appeal Details

RSA Number 486319914 RSA 2007
Assessee PAN AAACA3748G
Bench Mumbai
Appeal Number ITA 4863/MUM/2007
Duration Of Justice 5 year(s) 11 month(s) 30 day(s)
Appellant THE ACCC-22, CR.5, MUMBAI
Respondent M/S. ASHWAL INVESTMENT PVT. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 05-07-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 05-07-2013
Date Of Final Hearing 26-06-2013
Next Hearing Date 26-06-2013
Assessment Year 2003-2004
Appeal Filed On 06-07-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH MUMBAI .. ! '#$ % % % % &' . '.(. .%) * '#$ '+ BEFORE SHRI P.M. JAGTAP AM AND DR. S.T.M. PAVALAN JM './ I.T.A. NO. 4863/MUM/2007 ( *) - %.- *) - %.- *) - %.- *) - %.- / / / / ASSESSMENT YEAR : 2003-04) ACCC 22 R. NO. 403 4 TH FLOOR AAYAKAR BHAVAN M.K. MARG MUMBAI 400 020. ) ) ) ) / VS. M/S ASHWAL INVESTMENT PVT. LTD. 161 STARCITY 2 ND FLOOR MANMALA TANK ROAD MAHIM (W) MUMBAI 400 016. $/ ! './ PAN : AAACA3748G ( /0 / // / APPELLANT ) .. ( 12/0 / RESPONDENT ) /0 3 4 ' / APPELLANT BY : SHRI S.K. MAHAPATRA 12/0 3 4 ' / RESPONDENT BY : SHRI HIRA RAI ')% 3 ! / // / DATE OF HEARING : 26-06-2013 56. 3 ! / DATE OF PRONOUNCEMENT : 05-07-2013 # 7 / O R D E R PER P.M. JAGTAP A.M . .. ! '#$ : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT CENTRAL (A) IV MUMBAI DATED 30-04-2007 AND IN THE SOLITARY GROUND RAISED THEREIN THE REVENUE HAS CHALLENGED THE ACTION OF T HE LD. CIT(A) IN DELETING THE ADDITION OF RS. 50 LACS MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE FOR CONSULTANCY F EES PAID TO M/S IDREAM PRODUCTIONS PVT. LTD. ITA 4863/MUM/2007 2 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF TRADING AND INVESTMENT IN SHARES AND DE BENTURES. DURING THE YEAR UNDER CONSIDERATION IT VENTURED INTO FILM PRO DUCTION BY ENTERING INTO PRODUCTION AGREEMENTS WITH M/S SAHARA INDIA TV NETW ORK. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y IT ON 28-11-2003 DECLARING TOTAL INCOME AT NIL AFTER ADJUSTING THE ENTIRE BUSINESS PROFITS ARISING FROM TRADING IN SHARES AGAINST BROUGHT FORW ARD DEEMED SPECULATION LOSS OF A.Y. 2001-02 AND 2002-03. IN THE PROFIT AN D LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN A SUM OF RS. 50 LACS WAS DEBI TED BY THE ASSESSEE ON ACCOUNT OF CONSULTANCY FEES PAID TO M/S IDREAM PROD UCTIONS PVT. LTD. FOR IDENTIFYING AND INTRODUCING PARTY FOR THE REQUIREME NT OF ASSESSEES PRODUCTION VENTURES. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THE ASSESSEE WAS CALLED UPON BY THE A.O. TO SUPPORT AND SUBSTANTIATE ITS CLAIM FOR THE DEDUCTION CLAIMED ON ACCOUNT OF CONSULTANCY FEES PA ID TO M/S IDREAM PRODUCTIONS PVT. LTD. IN REPLY THE FOLLOWING SUBMI SSIONS WERE MADE ON BEHALF OF THE ASSESSEE IN ORDER TO JUSTIFY ITS CLAIM FOR T HE SAID DEDUCTION:- WE MOST RESPECTFULLY SUBMIT THAT THE COMPANY (YOUR ASSESSEE) IS A COMPANY ENGAGED IN THE BUSINESS OF TRADING INVESTME NT AND AMONGST OTHER OBJECTS OF BUSINESS INCLUDES TO APPLY FOR TENDER PURCHASE OR OTHERWISE ANY CON TRACTS SUB - CONTRACTS LICENSES AND CONCESSIONS FOR OR IN RELATI ON TO THE OBJECTS OR BUSINESS MENTIONED OR ANY OF THEM AND TO UNDERTAKE EXECUTE CARRY OUT DISPOSE OF OR OTHERWISE TURN TO THE SAME. IN PURSUANCE TO OBJECT CLAUSE THE COMPANY HAS UNDE RTAKEN FOUR CONTRACT FROM M/S SAHARA INDIA T.V. NETWORK AND RE CEIVED ADVANCE OF RS. 20 CRORES - VIDE AGREEMENT DT. 24/09/2002. WE M AY RESPECTFULLY SUBMIT THAT THE COMPANY HAS STARTED BUSINESS OF UND ERTAKING CONTRACTS FOR PRODUCTION OF FILM. THEATRICAL - T. V . CHANNEL ETC. WE FURTHER SUBMIT THAT THE COMPANY HAS COMMENCED ITS BUSINESS AS SOON AS IT HAS RECEIVED CONTRACTS FROM M/S SAHARA INDIA TV NETWORK FOR THE PRODUCTION OF FILM/T. V. SERIALS. THE SIGNING OF CO NTRACTS WITH M1S SAHARA INDIA TV NETWORK DID AMOUNT TO COMMENCEMENT OF BUSINESS AND COROLLARY TO THAT THE EXPENSES INCURRED AFTER THE COMMENCEMENT OF BUSINESS TO ALLOWABLE EXPENSES. IN SUPPORT OF THIS PROPOSITION WE RELY ON FOLLOWING JUDGEMENTS. ITA 4863/MUM/2007 3 A) CIT VS. SAURASHIRA CEMENT & CHEMICALS INDIA LTD. 91 ITR 1 70(GUJ) WHICH WAS FOLLOWED BY BOMBAY HIGH COURT I N THE CASE CIT VS RALIWOLF LTD 121 ITR 262 202 ITR 662 (BOM). (COPY ENCLOSED) B) SARABHAI MANAGEMENT CORPORATION LTD V. CIT 102 I TR 25).(COPY ENCLOSED) C) CIT VS. WESTERN INDIA SEAFOOD (F) LTD 199 JTR 777)( COPY ENCLOSED) WE MOST RESPECTFULLY SUBMIT THAT FOR ALLOWANCE OF A NY BUSINESS EXPENDITURE WHAT IS REQUIRED IN BUSINESS SHOULD BE SET UP AND NOT NECESSARY BUSINESS SHOULD COMMENCE. WE MAY DRAW YOU R ATTENTION TOWARDS THE JUDGEMENTS IN THE CASE OF COM. OF INCO ME TAX VS. WESTERN INDIA SEA FOOD (P) LTD PARTICULARLY PARA 8 WHEREIN THERE IS REFERENCE OF CASE LAW OF PREM CONDUCTORS VS. CIT 10 8 ITR 654 GUJARAT. THE PARA 8 OF THE JUDGEMENT IS REPRODUCED FOR READY REFERENCE. IN PREM CONDUCTORS CASE (SUPRA) THE FACTS WERE THAT THE ASSESSEE COMPANY WAS TO MANUFACTURE AND SELL ALUMINUM AND CO PPER CONDUCTORS AND PRIOR TO MANUFACTURING OF ALUMINUM C ONDUCTORS THE COMPANY HAD ALREADY RECEIVED ADVANCE ORDERS FOR MAN UFACTURE AND SALE OF CONDUCTORS TO BE MANUFACTURED BY IT IN FUTURE. T HE SAID STEP TAKEN BY THE COMPANY WAS CONSIDERED TO BE A STEP TOWARDS THE SETTING UP OF THE BUSINESS BEING AT LEAST PART OF THE MAIN BUSINE SS AND THEREFORE THE EXPENDITURE INCURRED BY THE ASSESSEE COULD BE CONSI DERED FOR DECIDING THE BUSINESS EXPENSES. IN THIS CONNECTION THE FOLL OWING PERTINENT OBSERVATIONS WERE MADE BY BI DIVAN C.J. SPEAKING FOR THE DIVISION BENCH (AT PAGE. 666). ONE BUSINESS ACTIVITY MAY PRECEDE THE OTHER. WHAT IS REQUIRED TO BE SEEN IS WHETHER ONE OF THE ESSENTIAL ACTIVITIES FOR THE CARRYING ON OF THE BUSINESS OF THE ASSESSEE COMPANY AS A WHOLE WAS OR WAS NOT COMMENCED. WE MAY ALSO REFER PARA 10 & 11 OF THE SAME JUDGEMEN TS WHICH IS READ AS UNDER 10) WE MAY AT THIS STAGE REFER TO ANOTHER JUDGEMENT OF THIS COURT IN HOTEL ALANKAR VS. CIT (1981) 22 CTR (GUJ) 252: ( 1982) 133 1TR 866. IN THAT CASE THE ASSESSEE WAS TO COMMENCE A HOTEL BUSINESS SAID WAS TO START A BOARDING AND LODGING HOUSE. ONE OF THE P ARTNERS OF THE FIRM PLACED HIS BUILDING AT THE DISPOSAL OF THE FIRM AS HIS CAPITAL CONTRIBUTION. EXPENSES AMOUNTING TO P.S. 45 708 WER E INCURRED IN INSTALLING LIGHTS MAKING THE BUILDING MORE VENTILA TED ETC. THE HOTEL WAS FORMALLY INAUGURATED IN FEBRUARY 1968. THE QUE STION WAS WHETHER THE EXPENSES INCURRED IN FEBRUARY 1968 CAN BE CON SIDERED TO BE ITA 4863/MUM/2007 4 BUSINESS EXPENSES. FOR ANSWERING THIS QUESTION THE DIVISION BENCH OF THIS COURT SPEAKING THROUGH B.K MEHTA J. OBSERVED AS UNDER (HEAD NOTE): WHEN A BUSINESS IS ESTABLISHED AND IS READY TO COM MENCE BUSINESS THEN IT CAN BE SAID OF THAT BUSINESS THAT IT IS SET TIP. THE WORDS READY TO COMMENCE WOULD NOT NECESSARILY MEAN THAT ALL TH E INTEGRATED ACTIVITIES ARE FULLY CARRIED OUT AND/OR WHOLLY COMP LETED. THE REQUIREMENT IS ALSO COMPLIED WITH IN A GIVEN CASE W HERE AN ASSESSEE HAD UNDERTAKEN THE FIRST OF THE KIND OF INTEGRATED ACTIVITIES WHICH THE BUSINESS IS OVERALL COMPRISED OF THE QUESTION WHETH ER A BUSINESS HAS BEEN SET UP OR NOT IS ALWAYS A QUESTION OF FACT WHI CH HAS TO BE DECIDED ON THE FACTS AND IN THE CIRCUMSTANCES OF EACH CASE . 11). THE FOLLOWING OBSERVATIONS OF CHAGFR CJ. IN WESTERN INDIA VEGETABLE PRODUCTS CASE (1954) 26 ITR 151 158(BON )-WERE-QUOTED WITH APPROVAL: THAT IS WHY IT IS IMPORTANT TO CONSIDER WHETHER TH E EXPRESSION USED IN THE INDIAN STATUTE FOR SETTING UP A BUSINESS IS DIF FERENT FROM THE EXPRESSION MR. JUSTICE ROWIATT WAS CONSIDERING VIZ COMMENCING OF THE BUSINESS IT SEEMS TO US THAT THE EXPRESSION SE TTING UP MEANS AS IS DEFINED IN THE OXFORD ENGLISH DICTIONARY TO PLACE ON FOOT OR TO PLACE ON FOOT OR TO ESTABLISH AND IN CONTRADISTINCTIO N TO COMMENCE. THE DISTINCTION IS THIS THAT WHEN A BUSINESS IS ESTABLI SHED AND IS READY TO COMMENCE BUSINESS THEN IT CAN BE SAID OF THAT BUSIN ESS THAT IT IS SET UP. BUT BEFORE IT IS READY TO COMMENCE BUSINESS IT IS NOT SET UP. BUT THERE MAY BE AN INTERREGNUM THERE MAY BE AN INTERV AL BETWEEN A BUSINESS WHICH IS SET UP AND A BUSINESS WHICH IS CO MMENCED AND ALL EXPENSES INCURRED AFTER THE SETTING UP OF THE BUSIN ESS AND BEFORE THE COMMENCEMENT OF THE BUSINESS ALL EXPENSES DURING T HE INTERREGNUM WOULD BE PERMISSIBLE DEDUCTIONS WIDER S. 10(2). I. E. CORRESPONDING TO PROVISION OF SECTION 37 OF I.T. IN VIEW OF THE FACTS AND LEGAL POSITION AS SUBMITT ED HEREINABOVE WE SUBMIT THAT THE COMPANY HAS COMMENCED ITS BUSINESS OF UNDERTAKING CONTRACT ON 24/09/02 I.E. DATE OF SIGNING AGREEMEN T WITH M1S SAHARA INDIA TV NETWORK AND THE INCIDENTAL EXPENSES LIKE P AYMENT MADE TO I DREAM PRODUCTION (P) LTD BEING PROFESSIONAL FEES F OR SYNDICATING THE CONTRACT AND ARRANGING FUND IS ALLOWABLE AS PROPER BUSINESS EXPENDITURE. 1) IN THE COURSE OF ASSESSMENT PROCEEDING ISSUE IS RA ISED ABOUT THE APPLICATION OF RULE 9A & RULE 9B IN RESPECT OF CONT RACT UNDERTAKEN FOR FILM PRODUCTION. IN THIS REGARD WE SUBMIT THAT THE PROVISION OF RUL E 9A IS APPLICABLE TO THE ASSESSEE WHO IS PRODUCING FILM ON HIS OWN. AS FAR AS THE CONTRACT WITH M/S SAHARA INDIA TV NETWORK IS CONCERNED WE A RE ACTING AS AN AGENT TO CO-ORDINATE THE VARIOUS PARTIES TO PRODUCE FILM. WE MAY DRAW ITA 4863/MUM/2007 5 YOUR KIND ATTENTIONS TOWARDS FOLLOWING CLAUSES OF A GREEMENT CLAUSE 1(A) CLAUSE 1(H) 1 (K) AND PARTICULARLY THE TERMI NATION CLAUSE WHICH IS READ AS UNDER TERMINATION A) THIS AGREEMENT SHALL BE TERMINATED UPON THE COMP LETION DELIVERY AND SATISFACTION OF THE PRODUCER OF THE QUALITY A ND DESIRABILITYS OF ALL THE MATERIALS OF THE SAID FILM AND ITS CONSTI TUENTS; INCLUDING ITS PROMOTIONS RELEASE DISTRIBUTION AND ALL EXPLOITAT IONS ETC. B) THE PRODUCER MAY TERMINATE THIS AGREEMENT EARL IER IN THE EVENT OF ANY MATERIAL BREACH OF Y OF THE TERMS AND CONDIT IONS CONTAINED HEREIN BY THE PRODUCTION HOUSE. WITHIN 15 (FIFTEE N) DAYS OF SUCH MATERIAL BREACH SUCH MATERIAL BREACH IS REQUIRED TO BE INTIMATED IN WRITING BY THE PRODUCER TO THE PRODUCTION HOUSE C) IRRESPECTIVE OF SUCH TERMINATION AT ANY STAGE T HE MAIN THEME CONCEPT SCRIPT-SCREENPLAY STORY TITLE SONGS TU NE MUSIC AUDIO VIDEO PERFORMANCES AND CHARACTERS ETC. AND ALL RIGHTS IN THE SAID FILM AND CONSTITUENTS THEREIN SHALL VEST WITH THE PRODUCER ALONE IN PERPETUITY AND THE PRODUCER MAY CONTINUE GETTING THE SAID FILM PRODUCED FURTHER BY ANY OTHER PARTY IN ITS DISCRETI ON IN ANY WAY. IF HOWEVER THE PRODUCER EVEN AFTER TERMINATION AN D DISCONTINUING THE PRODUCTION HOUSE AT ITS OWN COSTS THE PROD UCTION HOUSE SHALL BE ENTITLED TO GET A REASONABLE FEE FO R SUCH SCRIPTS- SCREENPLAYS AND CONSTITUENTS IF USED BY THE PRODU CER. D) NOTWITHSTANDING ANYTHING CONTAINED HEREINABOVE THE PRODUCER MAY TERMINATE THIS AGREEMENT IN ITS DISCRETION IF: I) THE PRODUCTION HOUSE COMMITS A MATERIAL BREACH OF ANY TERM OF THIS AGREEMENT. II). THE PRESCRIBED PRODUCTION QUALITY AND THE COM MITTED SCHEDULE OF PROGRESS ARE NOT MAINTAINED AS PER THE PRODUCER S SPEC4FLCATIONS; AND III). THERE IS ANY REGULATORY/COURT ORDER RESTRAINI NG THE MAKING PROGRESS AND EXPLOITATIONS OF THE SAID FILM OR AN Y OTHER LEGAL RESTRAINT WHICH LEADS TO THE CONCLUSION THAT WS SAHARA INDIA TV NETWORK IS THE PRODUCER AND WE ARE ACTING AS AN AGENT FOR M/S SAH ARA INDIA TV NETWORK 2) WITHOUT PREJUDICE TO SUBMISSION MADE HEREIN ABOV E ASSUMING THE PROVISION OF 9A & 9B IS APPLICABLE WE MAKE ALT ERNATIVE CLAIM AS OF TODAY NO FILM PROJECT COULD BE COMMENCED DUE TO LAC K OF CO-ORDINATION FROM BOTH THE SIDE THE FILM PROJECT STAND ABANDONE D. ITA 4863/MUM/2007 6 IN THAT CASE WHATEVER EXPENSES INCURRED ARE ALLOWAB LE AS PROPER ALLOWABLE EXPENSES AND/OR AS HELD IN THE CASE OF I NCOME TAX OFFICER VS EXCELL PRODUCTION (1992) 44 TTJ 201. IN VIEW OF THE SUBMISSION MADE HEREIN ABOVE WE REQ UEST YOU TO ALLOW THE PAYMENT MADE TO M/S I DREAM PRODUCTION (F) LID AS PROPER DEDUCTION WHILE COMPLYING THE INCOME UNDER THE HEAD BUSINESS INCOME. 3. IN THE LIGHT OF THE ABOVE SUBMISSIONS THE A.O. CON SIDERED THE ALLOWABILITY OF EXPENDITURE INCURRED BY THE ASSESSE E ON ACCOUNT OF CONSULTANCY FEES PAID TO M/S IDREAM PRODUCTIONS PVT . LTD. AS DEDUCTION FROM TWO ANGLES. FIRSTLY WHETHER THE SAID EXPENDITURE COULD BE SAID TO BE INCURRED BY THE ASSESSEE IN CONNECTION WITH THE EXISTING BUS INESS AND EVEN IF IT IS SO WHETHER THE SAID EXPENDITURE COULD BE ALLOWED BEFOR E THE COMPLETION OF RELEVANT CONTRACT AND REALIZATION OF THE CONTRACTUA L CONSIDERATION. IN THIS REGARD HE RECORDED HIS FINDINGS/CONCLUSIONS IN THE ASSESSMENT ORDER AS UNDER:- IN THE CASE OF THE ASSESSEE THE PRINCIPAL BUSINES S ACTIVITY IS TRADING AND INVESTMENT IN SHARES AND SECURITIES. TH E OTHER OBJECTS OF ASSESSEE COMPANY INCLUDE APPLY FOR TEND ER PURCHASE OR OTHERWISE ANY CONTRACT SUB CONTRACT LICENSES A ND CONCESSIONS FOR OR IN RELATION TO THE OBJECTS OR BU SINESS MENTIONED OR ANY OF THEM. ALL ALONG SINCE ITS DAT E OF INCEPTION THE ASSESSEE COMPANY HAS RESTRICTED ITS ACTIVITIES TO THE PRINCIPAL OBJECT OF TRADING AND INVESTMENT IN SECUR ITIES. DURING THE YEAR FOR THE FIRST TIME IT HAS VENTURED INTO A NEW UNCONNECTED LINE OF BUSINESS I.E. FILM PRODUCTION B Y ENTERING INTO FILM PRODUCTION CONTRACTS. THE CONSULTANCY FEE HAS BEEN PAID IN RELATION WITH THESE CONTRACTS AND THUS IT IS BEYOND ANY RATIONAL ARGUMENT TO SUGGEST THAT THE CONSULTANCY FEE WAS PA ID IN THE COURSE OF ITS REGULAR BUSINESS AND THEREFORE ALLOW ABLE U/S 37 OF THE ACT AS BUSINESS EXPENSES. PROVISIONS OF SECTION 37 ARE APPLICABLE FOR EXPENSES INCURRED WHOLLY AND EXCLUSI VELY FOR AN EXISTING BUSINESS. IN THIS CASE THE EXPENDITURE HAS BEEN INCURRED FOR OBTAINING CONTRACTS IN A TOTALLY FRESH AND UNRE LATED FIELD WHOSE STATED ACTIVITIES ARE YET TO BE COMMENCED. TH E CASE LAWS RELIED UPON BY THE ASSESSEE ARE DIFFERENTIABLE ON F ACTS AS IN THIS CASE THE ASSESSEE HAS NOT SET UP ANY BUSINESS BUT O BTAINED CONTRACTS TO EXECUTE A PARTICULAR PROJECT. THE EXPE NDITURE HAS BEEN INCURRED IN RELATION TO AN ACTIVITY PRIOR TO O BTAINING THESE CONTRACTS I.E. IDENTIFICATION INTRODUCTION AND NEG OTIATION WITH ITA 4863/MUM/2007 7 THE CONTRACTEE ON BEHALF OF ASSESSEE. HENCE EVEN I F THE BUSINESS IS HELD AS SET UP (WHICH IS NOT THE CASE AS EXCEPT RECEIPT OF ADVANCE NO POSITIVE ACTIVITY IS REFLECTED EVEN AFTE R 6 MONTHS OF CONTRACTS) THE EXPENDITURE IS TO BE TREATED AS PRE COMMENCEMENT EXPENSES AND CONSIDERING THE NATURE OF BUSINESS I.E. CONTRACTS FOR FILM PRODUCTION THE A LLOWABILITY HAS TO BE DEALT WITHIN THE FRAMEWORKS OF ACCOUNTING FOR CONTRACTS OR SPECIAL PROVISIONS FOR FILM PRODUCTION BUSINESS. HENCE THE EXPENDITURE OF RS 50 LAKHS CANNOT BE HELD TO BE INC URRED IN RELATION TO THE BUSINESS CARRIED OUT DURING THE YEA R AND THEREFORE NOT ALLOWABLE AS REVENUE EXPENDITURE DURI NG THE ASSESSMENT YEAR. WITHOUT PREJUDICE TO THE ABOVE EVEN IF THE ASSESSE E IS CONSIDERED AS CONTRACTOR VIS--VIS FOUR CONTRACTS E NTERED WITH M/S SAHARA INDIA THE EXPENSES INCURRED IN RELATION WITH THESE CONTRACTS WHICH IS A NEW BUSINESS FOR THE ASSESSEE SHOULD BE CAPITALIZED TOWARDS THESE CONTRACTS ONLY AND ALLOWA BLE AGAINST THE CONSIDERATION OF CONTRACTS AS AND WHEN BECOME D UE. AS THE ASSESSEE HAS NOT OFFERED ANY REVENUE ON ACCOUNT OF THESE CONTRACTS DURING THE YEAR THE EXPENSES ARE TO BE C ARRIED FORWARD AND CHARGED TOWARDS WORK IN PROGRESS AS AND WHEN TH E WORK ON PROJECT COMMENCES. 4. SECONDLY THE A.O. ALSO EXAMINED THE ISSUE OF AL LOWABILITY OF THE EXPENDITURE INCURRED ON CONSULTANCY FEES PAID BY TH E ASSESSEE TO M/S IDREAM PRODUCTIONS PVT. LTD. AS PER THE SPECIAL PROVISIONS CONTAINED IN RULE -9A OF THE INCOME TAX RULES 1962 WHICH ACCORDING TO THE A.O. WERE APPLICABLE IN THE CASE OF THE ASSESSEE INVOLVING DEDUCTION CLAIME D IN RESPECT OF EXPENDITURE ON PRODUCTION OF FEATURE FILMS. IN THIS CONTEXT H E REFERRED TO THE SAID PROVISIONS OF RULE 9-A OF THE INCOME TAX RULES 196 2 WHICH READ AS UNDER:- 9A. DEDUCTION IN RESPECT OF EXPENDITURE ON PRODUCTI ON OF FEATURE FILMS. IN COMPUTING THE PROFITS AND GAINS OF THE BUSINESS OF PRODUCTION OF FEATURE FILMS CARRIED ON BY A PERSON (THE PERSON CA RRYING ON SUCH BUSINESS HEREAFTER IN THIS RULE REFERRED TO AS FILM PRODUCER) THE DEDUCTION IN RESPECT OF THE COST OF PRODUCTION OF A FEATURE FILM CERTIFIED FOR RELEASE THE BOARD OF FILM CENSORS IN A PREVIOUS YEAR SHALL BE ALLOWED IN ACCORDANCE WITH THE PROVISIONS OF SUB-RU LE (2) TO SUB-RULE (4). EXPLANATION. - IN THIS RULE - ITA 4863/MUM/2007 8 (I) BOARD OF FILM CENSORS MEANS THE BOARD OF FILM CENSORS CONSTITUTED UNDER THE CINEMATOGRAPH ACT 1952 (37 O F 1952); (II) COST OF PRODUCTION IN RELATION TO A FEATURE FILM MEANS THE EXPENDITURE INCURRED ON THE PRODUCTION OF THE FILM NOT BEING - (A) THE EXPENDITURE INCURRED FOR THE PREPARATION OF THE POSITIVE PRINTS OF THE FILM; AND (B) THE EXPENDITURE INCURRED IN CONNECTION WITH THE ADVERTISEMENT OF THE FILM AFTER IT IS CERTIFIED FOR RELEASE BY THE BOARD OF FILM CENSORS: PROVIDED THAT THE COST OF PRODUCTION OF A FEATURE F ILM SHALL BE REDUCED BY THE SUBSIDY RECEIVED BY THE FILM PRODUCER UNDER ANY SCHEME FRAMED BY THE GOVERNMENT WHERE SUCH AMOUNT OF SUBSIDY HAS NOT BEEN INCLUDED IN COMPUTING THE TOTAL INCOME OF THE ASSES SEE FOR ANY ASSESSMENT YEAR. 2. WHERE A FEATURE FILM IS CERTIFIED FOR RELEASE BY THE BOARD OF FILM CENSORS IN ANY PREVIOUS IN SUCH PREVIOUS YEAR - (A) THE FILM PRODUCER SELLS ALL RIGHTS OF EXHIBITIO N OF THE FILM THE ENTIRE COST OF PRODUCTION OF THE FILMS SHALL BE ALL OWED AS A DEDUCTION IN COMPUTING THE PROFITS AND GAINS OF SUCH PREVIOUS YE AR OR (B) THE FILM PRODUCER- (I) HIMSELF EXHIBITS THE FILM ON A COMMERCIAL BASIS IN ALL OR SOME OF THE AREAS; OR (II) SELLS THE RIGHTS OF EXHIBITION OF THE FILM IN RESPECT OF SOME OF THE AREAS; OR (III) HIMSELF EXHIBITS THE FILM ON A COMMERCIAL BAS IS IN CERTAIN AREAS AND SELLS THE RIGHTS OF EXHIBITION OF THE FIL M IN RESPECT OF ALL OR SOME OF THE REMAINING AREAS AND THE FILM IS REL EASED FOR EXHIBITION ON A COMMERCIAL BASIS AT LEAST NINETY DA YS BEFORE THE END OF SUCH PREVIOUS YEAR THE ENTIRE COST OF PRODU CTION OF THE FILM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING T HE PROFITS AND GAINS OF SUCH PREVIOUS YEAR. (3) WHERE A FEATURE FILM IS CERTIFIED FOR RELEASE B Y THE BOARD OF FILM CENSORS IN ANY PREVIOUS YEAR AND IN SUCH PREVIOUS Y EAR THE FILM PRODUCER - (A) HIMSELF EXHIBITS THE FILM ON A COMMERCIAL BASIS IN ALL OR SOME OF THE AREAS; OR (B) SELLS THE RIGHTS OF EXHIBITION OF THE FILM IN R ESPECT OF SOME OF THE AREAS; OR ITA 4863/MUM/2007 9 (C) HIMSELF EXHIBITS THE FILM ON A COMMERCIAL BASIS IN CERTAIN AREAS AND SELLS THE RIGHTS OF EXHIBITION OF THE FIL M IN RESPECT OF ALL OR SOME OF THE REMAINING AREAS AND THE FILM IS NOT RELEASED FOR EXHIBITION ON A COMMERCIAL BASIS AT LEAST NINETY DA YS BEFORE THE END OF SUCH PREVIOUS YEAR THE COST OF PRODUCTION O F THE FILM IN SO FAR AS IT DOES NOT EXCEED THE AMOUNT REALISED BY TH E FILM PRODUCER BY EXHIBITING THE FILM ON A COMMERCIAL BAS IS OR THE AMOUNT FOR WHICH THE RIGHTS OF EXHIBITION ARE SOLD OR AS THE CASE MAY BE THE AGGREGATE OF THE AMOUNTS REALISED BY TH E FILM PRODUCER BY EXHIBITING THE FILM AND BY THE SALE OF THE RIGHTS OF EXHIBITION SHALL BE ALLOWED AS A DEDUCTION IN COMP UTING THE PROFITS AND GAINS OF SUCH PREVIOUS YEAR; AND THE BA LANCE F ANY SHALL BE CARRIED FORWARD TO THE NEXT FOLLOWING PREV IOUS YEAR AND ALLOWED AS A DEDUCTION IN THAT YEAR. 5. ACCORDING TO THE A.O. RULE 9-A OF THE INCOME TAX R ULES 1962 WAS CLEARLY APPLICABLE IN THE CASE OF THE ASSESSEE AND HE THEREFORE HELD FOR THE FOLLOWING REASONS GIVEN IN THE ASSESSMENT ORDER THA T THE EXPENDITURE INCURRED ON ACCOUNT OF CONSULTANCY FEES PAID TO M/S IDREAM P RODUCTIONS PVT. LTD. WAS ALLOWABLE ONLY IN THE YEAR OF RELEASE OF THE FILMS: - THE MOST PROMINENT CLAUSE WHICH HAS BEEN HIGHLIGHT ED BY THE ASSESSEE IS TERMINATION CLAUSE OF CONTRACTS WHICH P ROVIDES THAT IN THE EVENT OF PREMATURE TERMINATION THE RIGHTS IN THE MA IN THEME CONCEPT SCRIPT STORY MUSIC ETC SHALL VEST WITH THE PRODU CER I.E. M/S SAHARA IN THIS CASE AND THE CONTRACTEE PRODUCTION HOUSE I.E. ASSESSEE SHALL BE ENTITLED TO GET A REASONABLE FEE FOR SUCH SCRIPT S-SCREENPLAYS ETC. THE CLAIM OF THE ASSESSEE IS THAT IN SUM AND SUBSTANCE OF THE CONTRACTS ALL THE RIGHTS IN RELATION TO THE PROPOSED FILM VEST WI TH M/S SAHARA AS PRODUCER AND THE ASSESSEE IS MERELY AN AGENT TO COO RDINATE THE FILM PRODUCTION ACTIVITY. IF ONE GOES BEYOND THE PHRASES OF CONTRACT AND EXAM INES THE OVERALL CIRCUMSTANCES THE TRANSACTION IS NOT THE S AME AS HAS BEEN PRESENTED AND STRESSED BY THE ASSESSEE. AS PER TERM S OF CONTRACT THE ENTIRE FILM WAS TO BE PRODUCED BY THE ASSESSEE AND M/S SAHARA HAD TO PAY A LUMP SUM CONSIDERATION OF RS 7.50 CRORES PER CONTRACT INCLUSIVE OF ALL THE CONCERNED COSTS INVESTMENTS AND EXPENSE S WHETHER DIRECT OR INDIRECT (REFER CLAUSE V(A) OF THE CONTRACT). THIS MEANS THAT THE LIABILITY OF SAHARA TOWARDS THE PRODUCTION COSTS IS LIMITED T O RS 7.50 CRORES WHEREAS ON ENTERING SUCH CONTRACT THE ASSESSEE HAS TAKEN UNTO ITSELF THE UNLIMITED LIABILITY OF THE PRODUCTION EXPENSES. SUCH IS NEVER A CASE IN FILM PRODUCTION BUSINESS AS IT IS THE PRODUCER O F FILM WHO UNDERTAKES THE UNLIMITED RISK OF PRODUCTION EXPENSES AND ENJOY S FRUITS OF VARIOUS RIGHTS IN THE FILM INCLUDING MUSIC EXHIBITION SAT ELLITE VIDEO ETC. SUCH RIGHTS ARE SOLD BY PRODUCER OR EXERCISED BY HIMSELF DEPENDING UPON THE ITA 4863/MUM/2007 10 CIRCUMSTANCES. IN THIS CASE THE LIABILITY OF SO CAL LED PRODUCER TOWARDS PRODUCTION EXPENSES IS LIMITED TO A PREDETERMINED P RICE IN LIEU OF WHICH HE HAS OBTAINED ALL THE POSSIBLE RIGHTS FROM THE AC TUAL PERSON PUTTING IN LABOUR MONEY AND KNOWLEDGE FOR SHAPING THE FILM . THUS THE UNDERWRITTEN COVENANT IN THIS AGREEMENT IS ADVANCE SALE OF ALL RIGHTS VESTED WITH THE ASSESSEE AS PRODUCER OF THE FILM FO R A CONSIDERATION OF RS 7.50 CRORES WHICH INCLUDES ITS PROFIT COMPONENT . EVEN THE DEBIT NOTE RAISED BY M/S IDREAM SUGGESTS THAT THE CONSULT ANCY FEE CHARGED IS FOR IDENTIFICATION AND INTRODUCTION OF PARTY FOR FU ND REQUIREMENT . THE FACTS OF CASE LEAD TO ONLY ONE CONCLUSION THAT M/S SAHARA INDIA IS NONE OTHER THAN FINANCER OF THE PROJECT AND THE AGREEMEN TS HAVE BEEN DRAFTED TO SECURE THE RIGHTS OF FINANCIER IN THE EV ENT OF TERMINATION OF AGREEMENT WITH OR WITHOUT COMPLETION OF PROJECT. AG AINST THE LUMP SUM PAYMENT OF RS 7.50 CRORES PER PROJECT M/S SAHARA HA S SECURED ALL RIGHTS IN THE FILM IN ADVANCE AND IN THE EVENT OF P REMATURE TERMINATION THE RIGHTS ARE TO BE VESTED WITH M/S SAHARA BY PAYI NG THE COMPENSATION TO THE ASSESSEE TERMED AS REASONABLE FEE . THUS LOOKING INTO THE TERMS OF AGREEMENT AS WELL A S SURROUNDING CIRCUMSTANCES IT IS CLEARLY ESTABLISHE D THAT IT IS THE ASSESSEE AND NOT M/S SAHARA INDIA TV NETWORK WHO AR E THE REAL PRODUCERS OF THESE FILMS AND THEREFORE ANY EXPENDITURE INCURRED IN RELATION TO THESE FILMS HAS TO BE ALLOWED IN THE YE AR OF RELEASE AS PER PROVISIONS OF RULE 9A OF THE INCOME TAX RULES. FOR THE REASONS GIVEN ABOVE THE A.O. HELD THAT DED UCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF CONSULTANCY FEES PAID TO M/S IDREAM PRODUCTIONS PVT. LTD. WAS NOT ALLOWABLE IN THE YEAR UNDER CONSIDERAT ION AND ACCORDINGLY A DISALLOWANCE OF RS. 50 LACS MADE BY HIM ON THIS ISS UE IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961 VI DE AN ORDER DTD. 4-1- 2006. 6. AGAINST THE ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND ELABORATE SUBMISSIONS WERE MADE ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) TO MEET ALL THE OBJECTIONS RAISED BY THE A.O. WHILE DISALLOWING THE DEDUCTION CLAIMED ON ACCOUNT OF CONSULTANCY FEES PAID TO M/S IDREAM PROD UCTIONS PVT. LTD. THE ASSESSEE ALSO RELIED ON VARIOUS JUDICIAL PRONOUNCEM ENTS IN SUPPORT OF THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) TO JUSTIFY T HE DEDUCTION CLAIMED ON ACCOUNT OF SUCH CONSULTANCY FEES. AFTER CONSIDERING THE SAID SUBMISSIONS AS ITA 4863/MUM/2007 11 WELL AS THE MATERIAL AVAILABLE ON RECORD THE LD. C IT(A) DEALT WITH THE FIRST OBJECTION OF THE A.O. REGARDING THE CONSULTANCY FEE S NOT BEING THE EXPENDITURE INCURRED IN CONNECTION WITH THE EXISTING BUSINESS A S WELL AS THE SAID EXPENDITURE BEING PRE-OPERATIVE IN NATURE AND RECOR DED HIS FINDINGS/OBSERVATIONS ON THIS ASPECT AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE LD. AR. I FIND CONSIDERABLE MERIT THEREIN. IT I S AN UNDISPUTED FACT THAT THE APPELLANT HAD BEEN ENGAGED IN THE BUSINESS OF TRADING IN INVESTMENT & SECURITIES AND HAS FOR THE FIRST TIME EXECUTED CONTRACTS FOR FILM PRODUCTION AN ACTIVITY DISTINCT FROM THE EXIS TING BUSINESS. FROM THE FACTS OF THE CASE IT IS NOTICED THAT THE APPEL LANT HAS ENTERED INTO AGREEMENT WITH M/S SAHARA INDIA TV NETWORK AND HAS RECEIVED RS.20.00 CRORES DURING THE YEAR FOR THE PRODUCTION OF FILMS THIS ACT ON ACCOUNT OF BOTH THE PARTIES INDICATES THAT THERE HA S BEEN A COMMENCEMENT OF ACTIVITY IN THE BUSINESS OF FILM PR ODUCTION. SINCE M/S IDREAM PRODUCTION WAS REGULARLY ENGAGED IN THE BUSI NESS OF FILM PRODUCTION AND FILM DISTRIBUTION HAVING EXPOSURE I N MEDIA FOR MORE THAN SEVEN YEARS AND IN THE LINE OF FILM PRODUCTION AND DISTRIBUTION OF SEVERAL BLOCK-BUSTER MOVIES LIKE BENDS-LIKE BECKHAM 16TH DECEMBER MONSOON WEDDING AGNI VARSHA JAJANTRAM M AMANTRAM ETC. M/S DREAM ARRANGED FOR FOUR CONTRACTS WORTH RS.30. 00 CRORES FOR THE APPELLANT. M/S IDREAM PRODUCTION HAD UNDERTAKEN FIELD WORK LIKE POWER POINT PRESENTATIONS OF VARIOUS SCRIPTS COMME RCIAL VIABILITY OF THE PROPOSED FILMS AND ALSO IDENTIFIED STORIES WHICH WE RE THE PROPOSED SUBJECT MATTER OF THE FILMS. THEY HAD ALSO UNDERTAK EN PROMOS AND AFTER A SUSTAINED EFFORT ON THEIR PART SAHARA GROUP ENTE RED INTO AN AGREEMENT WITH THE APPELLANT AND PAID RS.20.00 CROR ES TO THE APPELLANT AS AN ADVANCE. THE APPELLANT REITERATED THAT IT WAS DUE TO THE EFFORTS OF M/S LDREAM PRODUCTION PVT LTD AS INTRODUCER THAT T HE SAHARA GROUP ENTERED INTO AN AGREEMENT WITH THE APPELLANT. THE L D. COUNSEL ALSO POINTED OUT THAT A COMMISSION OF RS.50.0O LACS ON T OTAL CONTRACT OF RS.30.00 CRORES WORKS OUT TO 1.66% AS COMMISSION WH ICH IS A REASONABLE COMMISSION PAYMENT MADE TO M/S LDREAM PR ODUCTION. AFTER CONSIDERING THE ARGUMENTS OF THE APPELLANT I FIND THAT THERE IS FORCE IN THE ARGUMENT OF THE APPELLANT THA T WHAT MATTERS IS UNITY OF CONTROL AND COMMON MANAGEMENT AND NOT THE DISTINCT NATURE OF ACTIVITY. I AM NOT IN AGREEMENT WITH THE ACS VI EW HAT EVEN IF THE BUSINESS IS HELD TO BE SET-UP THE SAID EXPENDITUR E IS TO BE TREATED AS PRE-COMMENCEMENT EXPENSE AND CONSIDERING THE NATURE OF BUSINESS I.E. CONTRACT FOR FILM PRODUCTION THE ALLOWABILITY HAS TO BE DEALT WITHIN THE FRAMEWORK OF ACCOUNTING FOR CONTRACTS OR SPECIAL PR OVISIONS FOR FILM PRODUCTION BUSINESS. I AM NOT IN AGREEMENT WITH THE VIEW ADOPTED BY THE ASSESSING OFFICER. THE AC HAS HIMSELF STALED ON PAGE 6 OF THE ASSESSMENT ORDER THAT THE BUSINESS HAS BEEN SET-UP BUT NO RECEIPTS ITA 4863/MUM/2007 12 HAVE BEEN REFLECTED IN THE RETURN OF INCOME EXCEPT THE ADVANCE RECEIVED FROM M/S SAHARA INDIA TV NETWORK. THE FACT THAT BU SINESS WAS SET-UP IS REFLECTED IN THE VERY FIRST OF THE INTEGRATED AC TIVITIES WHICH THE BUSINESS IS OVERALL COMPRISED OF. IN THE CASE BEFOR E ME THE APPELLANT HAD COMMENCED THE BUSINESS OF UNDERTAKING CONTRACT ON 24.09.2002 AND THE INCIDENTAL EXPENSES LIKE PAYMENT MADE TO M/ S IDREAM PRODUCTIONS PVT LTD BEING PROFESSIONAL EXPENSE FOR SYNDICATING THE CONTRACT AND ARRANGING FUNDS SHOULD BE HELD AS ALL OWABLE BUSINESS EXPENDITURE. 7. AS REGARDS THE OTHER OBJECTION OF THE A.O. BASED ON THE APPLICABILITY OF RULE 9-A THE LD. CIT(A) HELD THAT THE SAID RULE WA S NOT APPLICABLE IN THE CASE OF THE ASSESSEE FOR THE FOLLOWING REASONS GIVEN IN PARA 13 TO 14 OF HIS IMPUGNED ORDER:- THE ALTERNATE PLEA OF THE ASSESSING OFFICER THAT PROVISIONS OF RULE 9A IS APPLICABLE TO THE ANT IS NOT CORRECT. RULE 9A IS APPLICABLE TO ANY ASSESSEE WHO IS PRODUCING FILMS ON HIS OWN. THE CON TRACT WITH M/S SAHARA INDIA TV NETWORK CLEARLY SHOWS THAT THE APPE LLANT IS ACTING AN AGENT TO CO-ORDINATE THE VARIOUS PARTIES TO PRODUCE FILMS. M/S SAHARA INDIA TV NETWORK IS A PRODUCER AND THE APPELLANT IS A AGENT FOR M/S SAHARA INDIA TV NETWORK. THE ASSESSING OFFICER STAT ED IN HIS ORDER THAT THE APPELLANT WOULD BE GOVERNED BY THE RULE 9A OF T HE INCOME TAX RULES. THE ASSESSING OFFICER MENTIONED IN HIS ORDER THAT THE APPELLANT WAS PRODUCED OF THE FILM & M/S. SAHARA INDIA TV NET WORK WAS FINANCER OF THE PROJECT & THEREFORE ANY EXPENDITURE INCURRED IN RELATION TO THESE FILMS HAS TO BE ALLOWED IN THE YEAR OF RELEASE AS P ER PROVISIONS OF RULE 9 A OF THE INCOME TAX RULES. THE LD. AR OF THE APPELLANT HAS ARGUED BEFORE ME TH AT THE RULE 9A OF THE INCOME TAX RULES IS APPLICABLE TO FILM PR ODUCERS. THE APPELLANT HAS MERELY UNDERTAKEN THE CONTRACT FOR FI LM PRODUCTION WHICH WAS AKIN TO THE CONTRACT UNDERTAKEN BY CONTAC TOR TO CONSTRUCT A BUILDING FOR THE BUILDER. THE LD. AR TRIED TO EXPLAIN WITH AN ILLUSTRATION OF A CONTR ACTOR AND A BUILDER SUPPOSE THE BUILDER GIVES A CONTRACT TO CO NSTRUCT A BUILDING. THE CONTACTOR SHALL CONSTRUCT THE BUILDING & THE BU ILDER SHALL GIVE LABOUR CHARGES TO THE CONTACTOR FOR THE GIVEN TASK. IN THIS CASE THE RISK OF LOSS ON SALE OF FLATS AND APPLICABILITY OF INCOM E TAX LAWS AS MAY BE APPLICABLE SHALL APPLY TO THE BUILDER & NOT TO THE CONTRACTOR. SIMILARLY IN THE CASE OF THE APPELLANT THE APPELLANT IS MERE LY ENTITLED TO PRODUCTION FEES ONLY LIKE THE LABOUR CHARGES IN TH E CASE OF CONTACTOR- BUILDER. ITA 4863/MUM/2007 13 THE POINT WHICH THE APPELLANT HA TRIED TO EMPHASIS E BEFORE ME WAS THAT THE APPELLANT HAS UNDERTAKEN A CONTRACT TO PROVIDE VARIOUS FILM RELATED SERVICES TO M/S. SAHARA INDIA TV NETWO RK. THE APPELLANT HAS BROUGHT TO MY NOTICE CERTAIN CLAUSES OF THE AGR EEMENT BETWEEN THE APPELLANT & M/S. SAHARA INDIA TV NETWORK & ARGUED T HAT THESE CLEARLY INDICATES THAT THE APPELLANT WAS MERELY AN AGENT TO PROVIDE FILMS PRODUCTION RELATED SERVICES TO M/S. SAHARA INDIA TV NETWORK. THE CLAUSE 1(A) 1(H) 1(K) & TERMINATION CLAUSE AREA V ERY IMPORTANT. THESE CLAUSES BRING OUT THE FACTS THAT THE APPELLANT WAS MERELY AN AGENT TO PROVIDE THE FILMS RELATED SERVICES TO M/S. SAHARA I NDIA TV NETWORK. THESE CLAUSES PROVIDE THAT THE APPELLANT HAS TO FOL LOW VARIOUS INSTRUCTIONS OF M/S SAHARA INDIA TV NETWORK AT EAC H AND EVERY STAGE OF THE FILM PRODUCTION. THE TERMINATION CLAUSE ALSO STATES THAT IN THE EVENT OF PREMATURE TERMINATION ALL THE RIGHTS TO T HE MAIN THEME STORY SCRIPT CONCEPT MUSIC ETC REST WITH THE M/S. SAHAR A & THE APPELLANT WOULD ENTITLE TO A REASONABLE FEES FROM M/S. SAHARA . 8. BASED ON THE ABOVE FINDINGS/OBSERVATIONS RECORDE D BY HIM THE LD. CIT(A) HELD THAT RULE 9-A WAS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AND THE CONSULTANCY FEES OF RS. 50 LACS PAID TO M/S IDR EAM PRODUCTIONS PVT. LTD. WAS A DEDUCTIBLE EXPENDITURE. ACCORDINGLY HE DELE TED THE DISALLOWANCE MADE BY THE A.O. ON THIS ISSUE. AGGRIEVED BY THE ORDER O F THE LD. CIT(A) THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 9. THE LD. D.R. SUBMITTED THAT SPECIFIC REASONS WER E GIVEN BY THE A.O. FOR DISALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE O N CONSULTANCY FEES PAID TO M/S IDREAM PRODUCTIONS PVT. LTD. HE INVITED OUR ATT ENTION TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE REASONS GIVEN BY THE A.O. THEREIN ARE SUFFICIENT TO SHOW THAT THE ASSESS EE IS THE PRODUCER OF THE FILM AND THE DEDUCTION IN QUESTION CLAIMED ON ACCOU NT OF CONSULTANCY FEES PAID TO M/S IDREAM PRODUCTIONS PVT. LTD. IS NOT ALL OWABLE IN THE YEAR UNDER CONSIDERATION AND THE SAME IS ALLOWABLE ONLY IN THE YEAR OF RELEASE OF FILMS AS PER THE SPECIAL PROVISIONS CONTAINED IN RULE 9-A OF THE INCOME TAX RULES 1962. HE CONTENDED THAT M/S SAHARA INDIA TV NETWOR K WAS ONLY THE DISTRIBUTOR OF FILM AND THE ASSESSEE WAS REALLY THE FILM PRODUCER. HE CONTENDED THAT SPECIFIC CLAUSES OF THE AGREEMENT BE TWEEN THE ASSESSEE AND SAHARA INDIA TV NETWORK RELIED OPON BY THE LD. CIT( A) TO HOLD THAT SAHARA ITA 4863/MUM/2007 14 INDIA TV NETWORK WAS THE FILM PRODUCER AND NOT THE ASSESSEE WERE STIPULATED IN THE AGREEMENT JUST TO PROTECT THE INTEREST OF SA HARA INDIA TV NETWORK AS FINANCER AND DISTRIBUTOR AND THE RELIANCE OF LD. CI T(A) TO HOLD THAT THE ASSESSEE IS NOT A FILM PRODUCER WAS CLEARLY MISPLAC ED. HE CONTENDED THAT THE SPECIFIC ADVERSE FINDINGS RECORDED BY THE A.O. ON T HIS ASPECT OF THE MATTER AS WELL AS THE OTHER ASPECT HAVE NOT BEEN APPRECIATED BY THE LD. CIT(A) IN THE RIGHT PERSPECTIVE WHILE DELETING THE DISALLOWANCE M ADE BY THE A.O. ON ACCOUNT OF CONSULTANCY FEES PAID TO M/S IDREAM PRODUCTIONS PVT. LTD. HE URGED THAT THE IMPUGNED ORDER OF THE LD. CIT(A) IS THEREFORE L IABLE TO BE REVERSED ON THIS ISSUE. 10. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR AT TENTION TO THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE T HE LD. CIT(A) AS REPRODUCED BY THE LD. CIT(A) IN HIS IMPUGNED ORDER AND SUBMITTED THAT ALL THE POINTS RAISED BY THE A.O. WHILE DISALLOWING THE ASS ESSEES CLAIM FOR DEDUCTION ON ACCOUNT OF CONSULTANCY FEES PAID TO M/S IDREAM P RODUCTIONS PVT. LTD. WERE DULY AND SATISFACTORILY EXPLAINED BY THE ASSESSEE. AS REGARDS THE OBJECTION OF THE A.O. THAT THE SAID EXPENDITURE WAS NOT INCURRED BY THE ASSESSEE IN CONNECTION WITH THE EXISTING BUSINESS HE SUBMITTED THAT THERE BEING UNITY OF CONTROL AND MANAGEMENT IT WAS A CASE OF EXPANSION OF BUSINESS OF THE ASSESSEE AS HELD BY THE HONBLE SUPREME COURT IN TH E CASE OF B.R. LTD. VS. CIT 113 ITR 647 AND STANDARD REFINERY AND DISTILLER Y LTD. VS. CIT 79 ITR 589. HE CONTENDED THAT NO ARGUMENT HAS BEEN ADVANC ED BY THE LD. D.R. TO DISPUTE THE POSITION THAT THERE WAS UNITY OF CONTRO L AND MANAGEMENT. HE FURTHER SUBMITTED THAT THE FOUR CONTRACTS WORTH RS. 7.50 CRORES EACH WERE ENTERED INTO BY THE ASSESSEE WITH M/S SAHARA INDIA TV NETWORK ON 24-9-2000 I.E. DURING THE YEAR UNDER CONSIDERATION AND THE BU SINESS RELATING TO FILM PRODUCTION THUS WAS ALREADY SET UP BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AS HELD INTER ALIA BY THE HONBLE BOM BAY HIGH COURT IN THE CASE OF CIT VS. RALLIWOLF LTD. 121 ITR 262 (BOM). HE CO NTENDED THAT THE ITA 4863/MUM/2007 15 EXPENDITURE IN QUESTION INCURRED BY THE ASSESSEE ON ACCOUNT OF CONSULTANCY FEES PAID TO M/S IDREAM PRODUCTIONS PVT. LTD. THUS WAS IN CONNECTION WITH THE EXPANDED BUSINESS OF THE ASSESSEE WHICH WAS SET UP IN THE YEAR UNDER CONSIDERATION. AS REGARDS THE APPLICABILITY OF RUL E 9-A HE CONTENDED THAT THE SAME IS APPLICABLE IN THE CASE OF AN ASSESSEE WHO I S IN THE PRODUCTION OF FEATURE FILMS. IN THIS REGARD HE INVITED OUR ATTE NTION TO THE RELEVANT CLAUSES OF THE AGREEMENT BETWEEN THE ASSESSEE AND SAHARA IN DIA TV NETWORK PLACED ON RECORD TO POINT OUT THAT M/S SAHARA INDIA TV NET WORK WAS THE PRODUCER WHEREAS THE ASSESSEE WAS ONLY THE PRODUCTION HOUSE. HE CONTENDED THAT SAHARA INDIA TV NETWORK THUS WAS NEITHER A FINANCER NOR DISTRIBUTOR AS ALLEGED ON BEHALF OF THE REVENUE AND THERE IS NOTHI NG IN THE AGREEMENT EVEN TO INDICATE OR SUGGEST THIS. HE CONTENDED THAT ALL THE OBJECTIONS RAISED BY THE A.O. WHILE MAKING THE DISALLOWANCE OF THE IMPUGNED EXPENDITURE THUS WERE BASELESS AND THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE A.O. ON THIS ISSUE. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. IT IS OBSERVED THAT THRE E OBJECTIONS WERE RAISED BY THE A.O. WHILE DISALLOWING THE CLAIM OF THE ASSESSE E FOR DEDUCTION OF RS. 50 LACS ON ACCOUNT OF CONSULTANCY FEES PAID TO M/S IDR EAM PRODUCTIONS PVT. LTD. AS REGARDS THE FIRST OBJECTION OF THE A.O. THAT THE SAID EXPENDITURE WAS NOT INCURRED BY THE ASSESSEE IN CONNECTION WITH ITS EXI STING BUSINESS IT IS OBSERVED THAT ALTHOUGH THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN INVESTMENT AND SECURITIES AND THE CONTRACTS FOR FILM PRODUCTION WERE EXECUTED BY IT FOR THE FIRST TIME DURING THE YEAR U NDER CONSIDERATION THERE WAS COMPLETE UNITY OF CONTROL AND MANAGEMENT AND TH IS POSITION HAS NOT BEEN DISPUTED EVEN BY THE LD. D.R. AT THE TIME OF H EARING BEFORE US. IN THE CASE OF B.R. LTD. VS. CIT (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE THE HONBLE SUPREME COURT HELD THAT FOR THE PURPOSE OF ASCERTAINING WHETHER TWO LINES OF BUSINESS CONSTITUTE THE SAME BUSINESS THE DECISIVE TEST IS UNITY OF ITA 4863/MUM/2007 16 CONTROL AND MANAGEMENT OF THE TWO LINES OF BUSINESS . IT WAS HELD THAT IF THERE IS COMMON MANAGEMENT AND COMMON CONTROL OF THE BUSI NESS THE NEW LINE OF BUSINESS CONSTITUTES EXPANSION OF THE EXISTING BUSI NESS. 12. AS REGARDS THE STAND OF THE A.O. THAT THE EXPEN DITURE IN QUESTION ON CONSULTANCY FEES WAS PRE-COMMENCEMENT EXPENDITURE IT IS OBSERVED THAT THE FOUR CONTRACTS WITH SAHARA INDIA TV NETWORK WORTH R S. 30 CRORES WERE ENTERED INTO BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION ITSELF I.E. ON 24-9-2002 AND EVEN THE ADVANCE OF RS. 20 CRORES WAS RECEIVED BY THE ASSESSEE FOR THE EXECUTION OF THE SAID CONTRACTS. THE FIRST IMPORTANT STEP OF THE BUSINESS RELATED TO PRODUCTION OF FILM THUS WAS TAKEN BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION AND THE SAME BEING A V ITAL PART OF AN INTEGRAL ACTIVITY OF PRODUCTION OF FILMS WE FULLY AGREE WIT H THE LD. CIT(A) THAT THE BUSINESS RELATING TO PRODUCTION OF FILMS WAS DULY S ET UP DURING THE YEAR UNDER CONSIDERATION. IN THE CASE OF RALLIWOLF LTD. (SUPR A) CITED BY THE LD. COUNSEL FOR THE ASSESSEE THE HONBLE BOMBAY HIGH COURT HAS HEL D THAT THE EXPRESSION SETTING UP MEANS TO PLACE ON FOOT OR TO ESTABL ISH IN CONTRADISTINCTION TO COMMENCE. IT WAS HELD THAT THE DISTINCTION IS THAT WHEN A BUSINESS IS ESTABLISHED AND IS READY TO BE COMMENCED THEN IT C AN BE SAID OF THAT BUSINESS THAT IT IS SET UP. IT WAS HELD THAT ANY E XPENDITURE INCURRED DURING THE INTERVAL BETWEEN THE SETTING UP OF A BUSINESS A ND ITS COMMENCEMENT WOULD BE A PERMISSIBLE DEDUCTION. KEEPING IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RA LLIWOLF LTD. (SUPRA) WE AGREE WITH THE LD. CIT(A) THAT THE BUSINESS RELATIN G TO FILM PRODUCTION WAS SET UP IN THE YEAR UNDER CONSIDERATION AND THE EXPENDIT URE IN QUESTION ON PAYMENT OF CONSULTANCY FEES HAVING INCURRED BY THE ASSESSEE IN CONNECTION WITH THE SAID BUSINESS THE SAME WAS ALLOWABLE AS D EDUCTION EVEN THOUGH THE EXECUTION OF THE CONTRACT WORK FOR FILM PRODUCTION WAS NOT COMMENCED DURING THE YEAR UNDER CONSIDERATION. ITA 4863/MUM/2007 17 13. AS REGARDS THE APPLICABILITY OF RULE 9-A OF THE INCOME TAX RULES 1962 IT IS OBSERVED THAT THE SAID RULE DEALING WITH THE DEDUCTION IN RESPECT OF EXPENDITURE ON PRODUCTION OF FEATURE FILMS IS APPLI CABLE IN COMPUTING THE PROFITS AND GAINS OF BUSINESS OF PRODUCTION OF FEAT URE FILMS CARRIED ON BY A PERSON. THE QUESTION THAT ARISES THUS IS WHETHER TH E ASSESSEE IS IN THE BUSINESS OF PRODUCTION OF FEATURE FILMS AS CONTEMPL ATED IN RULE 9A. IN THIS REGARD IT IS RELEVANT TO REFER TO THE AGREEMENT BE TWEEN THE ASSESSEE AND M/S SAHARA INDIA TV NETWORK TO UNDERSTAND THE EXACT NAT URE OF ACTIVITY OF THE ASSESSEE. ONE OF THE COPY OF SUCH AGREEMENTS EXECU TED ON 24THE SEPTEMBER 2002 IS PLACED ON RECORD BEFORE US AND A PERUSAL OF THE SAME SHOWS THAT M/S SAHARA INDIA TV NETWORK WAS REFERRED TO AS PRODUCE R IN THE SAID AGREEMENT WHILE THE ASSESSEE WAS REFERRED TO AS PRODUCTION H OUSE. CERTAIN PORTION OF THE SAID AGREEMENT AS GIVEN IN THE PREAMBLE AS WELL AS IN THE TERMS AND CONDITIONS IS RELEVANT TO UNDERSTAND THE NATURE OF ACTIVITY OF ASSESSEE COMPANY AS WELL AS M/S SAHARA INDIA TV NETWORK AND THE SAME BEING RELEVANT IN THE PRESENT CONTEXT IS REPRODUCED HEREU NDER:- - WHEREAS. THE PRODUCER IS IN THE BUSINESS OF PR ODUCING VARIOUS TYPES OF AUDIO-VISUAL PROGRAMMES INCLUDING FEATURE FILMS ETC. EITHER ON ITS OWN OR THROUGH COMMISSIONING THE SAME TO INDIVIDUAL CREATIVE PARTIES/PRODUCERS ACQUIRING PERPETUAL OWNERSHIP OF COPYRIGHTS THEREOF FOR ALL EXPLOITATION WHETHER COMMERCIAL OR OTHERWISE I NCLUDING EXHIBITION TRANSMISSION BROADCAST TELECAST COPYING RE-PRODU CTION AND DISTRIBUTION ETC. IN INDIA AND OVERSEAS ACROSS THE GLOBAL TERRIT ORY THROUGH ALL MEANS MEDIA MECHANISM FORMAT AND TECHNOLOGY ETC. WHETH ER IN EXISTENCE OR TO BE DEVELOPED/PROPOUNDED IN FUTURE (WHEN DEVELOPED/P ROPOUNDED). - AND WHEREAS THE PRODUCTION HOUSE IS IN THE BU SINESS OF PRODUCING VARIOUS TYPES OF AUDIO-VISUAL PROGRAMMES INCLUDING FEATURE FILMS AND ASSIGNING PERPETUAL COPYRIGHTS THEREIN TO THE CONTRACTING PARTIES AND POSSESSES THE NECESSARY RESOURCES AND EXPERTISE TO PROPERLY PRODUCE THE SAME ON AUDIO-VISUAL/ CINEMATOGRAPHIC FILM MEDI UM TO FAITHFULLY MATCH SHAPE AND EMERGE THEREON TO PRE-DECIDED THEME LITE RARY STORY-LINE CONVERTED TO A SCRIPT-SCREENPLAY-TREATMENT ETC. IN CONSONANCE TO PRE- DETERMINED SPECIFICATIONS. - II PRESENTATIONS AND DECLARATIONS BY THE PRODUCTION HOUSE: ITA 4863/MUM/2007 18 1. THE PRODUCTION HOUSE REPRESENTS AND WARRANTS TO THE PRODUCER: A) THAT IT/SHE/HE IS PRODUCING AND/OR PROPOSES TO PROD UCE THE SAID FILM SOLELY AND EXCLUSIVELY FOR AND AT THE INSTANC E OF THE PRODUCER STRICTLY IN ACCORDANCE WITH THE CONCEPT THEME SYNOPSIS SCREENPLAY-SCRIPT STORY LEGENDRY MATERI AL CAST CREW AUDIO-VISUAL TREATMENT SONGS PRE-PRODUCTION PROD UCTION AND POST- PRODUCTION-SCHEDULE PRODUCTION VALUES DESIGNS DE LIVERY DATES AND PRODUCTION-CREDITS ETC.; AS DULY APPROVED BY THE P RODUCER ANY ALTERATION IN THE APPROVED DETAILS THEREFORE HAS TO BE WITH PRIOR WRITTEN CONSENT OF THE PRODUCER ONLY. B) - THAT IT/SHE/HE OWNS THE EXCLUSIVE UNENCUMBERED UNRESTRICTED AND EFFECTIVE RIGHTS OF ALL COPYRIGHT IN PERPETUITY AND IN THE GLOBAL TERRITORY OF THE SAID FILM AND ALL ITS CONSTITUENT ELEMENTS AND HAS THE REQUIRED LAWFUL AUTHORITY TO USE THE MA TERIAL OWNED BY OTHERS AS PART OF THE SAID FILM (SUBJECT TO HOW EVER THE APPROVAL OF THE PRODUCER) AND PERPETUALLY AND GLOBALLY GRA NT IT TO ANY OTHER PARTY AND THAT NEITHER PRIOR TO SIGNING THIS AGREEMENT IT/SHE/HE HAS GRANTED CHANGED MORTGAGED TRANSFER RED PLEDGED EXPLOITED AND/OR ASSIGNED ETC. THE SAID RIGHTS OF THE SAID FILM OR PARTS THEREOF TO ANY OTHER PERSON. PARTY COMPANY O R ORGANIZATION WHATSOEVER NOR WOULD GRANT CHARGE MORTGAGE TRAN SFER PLEDGE ASSIGN USE AND EXPLOIT ETC. THE SAME IN ANYWAY EVE R EXCEPT THIS FIRST WHOLESOME CONCLUSIVE AND IRREVOCABLE ASSIGN MENT TO THE PRODUCER. H) - THAT THE PRODUCER SHALL BE ENTITLED TO HAVE ITS NOMINEE/S PRESENT DURING ANY STAGE OF PROGRESS BE IT PRE-PRO DUCTION MAIN- PRODUCTION OR POST-PRODUCTION PROCESS ETC. OF THE SAID FILM FOR THE CONSULTATIONS AND ADVICE AS MAY BE CONSIDERED NECE SSARY BY THE PRODUCER FROM TIME TO TIME. THE PRODUCER ALSO RE SERVES THE RIGHT TO EFFECTIVELY ADVISE BE IT CREATIVE COMMERC IAL AND OTHERWISE TO THE PRODUCTION HOUSE IN WRITING ON ALL PRE-PRODUC TION MAIN- PRODUCTION AND POST-PRODUCTION MATTERS ETC. OF THE SAID FILM AND CONSTITUENTS THEREIN IN THE COURSE OF THIS AGREEME NT AND THE SAME SHALL BE BINDING ON THE PRODUCTION HOUSE FOR REQ UIRED MODIFICATIONS INCORPORATIONS INSERTIONS AND COMPL IANCES WHATSOEVER. J) - THAT THE PRODUCER SHALL HAVE THE EXCLUSIVE RIGH TS TO THE SAID FILM FOR DUBBING CONVERSION ADAPTATION AND RE-PRODUCTION ETC. IN ALL OTHER FORMATS MEDIA REGIONAL AND FOREIGN L ANGUAGES IN PERPETUITY AND IN THE GLOBAL TERRITORY AND IF DESIR ED BY THE PRODUCER THE PRODUCTION HOUSE UNDERTAKES TO EX ECUTE SUCH JOBS THE REASONABLE ACTUAL COST OF WHICH SHAL L BE BORNE BY THE PRODUCER. ITA 4863/MUM/2007 19 M) - THAT THE PRODUCER SHALL PERPETUALLY AND IN THE GLOBAL TERRITORY BE ENTITLED TO USE EXHIBIT MARKET SELL DISTRIBUTE RE- PRODUCE ASSIGN AND EXPLOIT ETC. THE SAID FILM AN D PARTS THEREOF IN ANY WAY BY ANY MEANS IN WHICHEVER WAY TO BE DECIDE D EXCLUSIVELY BY THE PRODUCER BEING THE PERPETUAL AND GLOBAL COPYRIGHT HOLDER OF THE SAID FILM AND ALL ITS CON STITUENTS IN WHICH THE THE PRODUCTION HOUSE SHALL HAVE NO RIGH TS INTERESTS AND/OR CLAIMS ETC. WHATSOEVER EXCEPT THE GROSS CON SIDERATION EXPRESSLY PROVIDED HEREIN. 14. IT IS MANIFEST FROM THE RELEVANT PORTION OF THE AGREEMENT BETWEEN THE ASSESSEE COMPANY AND M/S SAHARA INDIA TV NETWORK TH AT THE ROLE OF THE ASSESSEE COMPANY AS PRODUCTION HOUSE WAS LIMITED TO PRODUCE THE FILMS AT THE INSTANCE OF THE PRODUCER SAHARA INDIA TV NETWOR K STRICTLY IN ACCORDANCE WITH THE CONCEPT THEME SCRIPT PRODUCTION VALUE A ND PRODUCTION SCHEDULE ETC. APPROVED BY THE PRODUCER. EVEN ANY ALTERATION IN THE APPROVED DETAILS WAS TO BE DONE WITH THE PRIOR WRITTEN CONSENT OF TH E PRODUCER. M/S SAHARA INDIA TV NETWORK WAS TO OWN THE EXCLUSIVE UNENCUMB ERED UNRESTRICTED AND EFFECTIVE RIGHTS OF ALL COPY RIGHTS IN PERPETUITY A ND IN THE GLOBAL TERRITORY OF THE FILM TO BE PRODUCED BY THE ASSESSEE. THE ACTIVITY O F PRODUCTION OF FILM WAS TO BE MONITORED AND SUPERVISED BY M/S SAHARA INDIA TV NETWORK AS PRODUCER AND THE INSTRUCTIONS AND ADVICE GIVEN BY M/S SAHARA INDIA TV NETWORK TO THE ASSESSEE BE IT COMMERCIAL AND OTHERWISE WAS BINDI NG ON THE ASSESSEE AS THE PRODUCTION HOUSE. M/S SAHARA INDIA TV NETWORK AS TH E PRODUCER WAS ENTITLED TO USE EXHIBIT MARKET SELL DISTRIBUTE RE-PROD UCE ASSIGN AND EXPLOIT ETC. THE FILMS AND PARTS THEREOF AS MAY BE DECIDED BY IT BEING PERPETUAL AND GLOBAL TERRITORY HOLDERS OF THE FILMS AND THE ASSESSEE PRO DUCTION HOUSE WAS NOT ENTITLED TO ANY RIGHTS INTERESTS AND CLAIMS WHATSO EVER EXCEPT THE GROSS CONSIDERATION EXPRESSLY PROVIDED IN THE AGREEMENT. IN OUR OPINION ALL THESE TERMS AND CONDITIONS OF THE AGREEMENT ARE SUFFICIEN T TO SHOW THAT M/S SAHARA INDIA TV NETWORK WAS THE PRODUCER OF THE FILM AS EN VISAGED IN RULE 9A AND NOT THE ASSESSEE AND THE SAID RULE THEREFORE WAS NO T APPLICABLE IN COMPUTING THE BUSINESS INCOME OF THE ASSESSEE. ITA 4863/MUM/2007 20 15. IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE CONSIDERED OPINION THAT THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF ASS ESSEES CLAIM FOR DEDUCTION FOR CONSULTANCY FEES PAID TO M/S IDREAM P RODUCTIONS PVT. LTD. WAS NOT SUSTAINABLE AND THE LD. CIT(A) WAS FULLY JUSTIF IED IN DELETING THE SAME. IN THAT VIEW OF THE MATTER WE UPHOLD THE IMPUGNED ORD ER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THIS APPEAL FILED BY THE REV ENUE. 16. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED. 8 9 $% 3 !8 3 :; ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JULY 2013 # 7 3 56. ! <#)9 5-7-2013 6 3 SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) * '#$ JUDICIAL MEMBER ! '#$ / ACCOUNTANT MEMBER MUMBAI ; <#) DATED 5-7-2013. %.*).'./ RK SR. PS # 7 3 1*=> ? >. # 7 3 1*=> ? >. # 7 3 1*=> ? >. # 7 3 1*=> ? >./ COPY OF THE ORDER FORWARDED TO : 1. /0 / THE APPELLANT 2. 12/0 / THE RESPONDENT. 3. @() / THE CIT(A)IV MUMBAI. 4. @ / CIT CENTRAL - II MUMBAI 5. >%C 1**) / DR ITAT MUMBAI H BENCH 6. &- D / GUARD FILE. # 7)' # 7)' # 7)' # 7)' / BY ORDER '2> 1* //TRUE COPY// E E E E/ // /': ': ': ': ( DY./ASSTT. REGISTRAR) / ITAT MUMBAI