2015 (11) TMI 577 - AT - Income Tax

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 to delete the addition 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. Amount received from Photon Factory and from AVM Production - assessee submitted that these amounts were already treated as income of the assessee during the assessment years 2007-08 and 2008-09 and therefore, if the same is treated as income for the relevant assessment year, it would amount 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 - Held that - It cannot be doubted that the family cannot accumulate jewellery worth ₹ 39,90,000 over a period of time being either purchased from own declared source of income or received as gifts during marriage functions, etc. Shri R. Sivakumar has also admitted during the course of search that he possessed 400 sovereign grams of gold jewellery. It is also pertinent to note that the learned Assessing Officer had made the addition without examining the veracity of the claim of the appellant 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 part of the Revenue to make an addition without verifying the claim of the assessee, the family s financial status and drawings made by the assessee and his family members over the earlier years. Accordingly we hereby delete the addition made - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition of Rs. 2.5 crores received from UTV Motion Pictures (Mauritius) Ltd.
2. Addition of Rs. 92,25,750 received from Photon Factory and Rs. 1,11,50,000 received from AVM Production.
3. Enhancement of taxable income by Rs. 1.5 crores received from Red Giant.
4. Addition of Rs. 4,31,900 being the value of cement received from Bharathi Cements.
5. Addition of Rs. 34,30,000 towards the value of gold jewellery.

Detailed Analysis:

Assessment Year 2009-10:

Issue 1: Addition of Rs. 2.5 crores received from UTV Motion Pictures (Mauritius) Ltd.

The Assessing Officer (AO) treated the Rs. 2.5 crores received by the assessee as income due to the cash system of accounting prevalent in the film industry. The Commissioner of Income-tax (Appeals) [CIT(A)] endorsed this view, citing a written agreement where the amount was termed as an advance and not returned to UTV Motion Pictures. The assessee argued that the amount was an advance for future performance and had not crystallized as income. The Tribunal found that the amount of Rs. 2.5 crores was indeed an advance and would crystallize as income only upon the fulfilment of contract conditions. Hence, the Tribunal directed the AO to delete the addition of Rs. 2.5 crores, as the income had not crystallized during the relevant assessment year.

Issue 2: Addition of Rs. 92,25,750 received from Photon Factory and Rs. 1,11,50,000 received from AVM Production

The assessee claimed that these amounts were already declared as income in earlier assessment years (2007-08 and 2008-09). The Tribunal remitted the matter back to the AO for verification to avoid double taxation. If the assessee's claim is found true, the AO is directed to delete the additions.

Assessment Year 2010-11:

Issue 3: Enhancement of taxable income by Rs. 1.5 crores received from Red Giant

The CIT(A) enhanced the taxable income by Rs. 1.5 crores, which the assessee claimed as an advance to be offered in the subsequent assessment year (2011-12). The Tribunal remitted the matter back to the AO to examine the agreement with Red Giant and pass an appropriate order in light of the Tribunal's decision regarding the Rs. 2.5 crores advance from UTV Motion Pictures.

Issue 4: Addition of Rs. 4,31,900 being the value of cement received from Bharathi Cements

The AO added the value of cement received without payment to the assessee's income. The assessee claimed the value was only Rs. 1,68,000. The Tribunal remitted the matter back to the AO to verify the correct value and provide the assessee an opportunity to justify the claim.

Issue 5: Addition of Rs. 34,30,000 towards the value of gold jewellery

The AO added Rs. 39,90,000 under section 69 of the Act, which the CIT(A) reduced to Rs. 34,30,000. The assessee argued that the jewellery belonged to his father, an eminent artist, acquired over many years. The Tribunal noted the family's financial status and historical earnings and found it inappropriate to add Rs. 39,90,000 without verifying the claims. Hence, the Tribunal deleted the addition of Rs. 34,30,000.

Conclusion:
The appeals for the assessment years 2009-10 and 2010-11 were partly allowed for statistical purposes, with several issues remitted back to the AO for verification and appropriate action.