2021 (3) TMI 317 - AT - Income Tax

Accrual of income - Addition on failure to declare full income from production of feature film Shoe Bite - HELD THAT - CIT(A) called for remand report and thereafter concluded that as per the contract, the income accrued on the completion on a definite land mark in each stage of production and that the entire receipt does not accrue a signing of the contract. Therefore, he held that income relating to those activities which have either not been completed by the assessee or which have not been initiated at all, will not accrue. Comment of the AO that the assessee has claimed all the expenses, while the entire revenue was not offered to tax, is factually incorrect. On facts, he records that the assessee has not claimed expenses relating to dubbing, post production and production of first censor copy. Thus, he held that even going by the matching principle, the income recognised by the assessee during the year is correct. No infirmity in this factual finding of the ld. CIT(A). The income to the extent contract work is done has been recognised by the assessee. Thus, we uphold the order of the ld. CIT(A) on this issue and dismiss this ground of the Revenue. Bogus sundry creditors - CIT-A deleted the addition - HELD THAT - CIT(A) has recorded the fact that Shabnam Parvez Khan has issued a confirmation letter - a finding of fact that the assessee has furnished copies of bills, as well as ledger accounts which were sent to the AO and that the AO has not commented adversely. Thus, on facts, he held that Shabnam Parvez Khan performed work of a casting coordinator and that proper bills have been raised on the assessee company. He held that this is a genuine transaction and deleted the addition. We find no infirmity in this factual finding of the ld. CIT(A). Hence, we do not interfere in this order. Thus, we dismiss this ground of the Revenue.

Summary

Issues Involved:
1. Delay in filing the appeal by the Revenue.
2. Addition of income from production of feature film.
3. Deletion of addition on account of bogus sundry creditors.

Analysis:
1. The judgment addresses a delay in filing the appeal by the Revenue. The Tribunal considered the petition for condonation of the delay, concluding that the Revenue had sufficient cause for the delay. Consequently, the Tribunal condoned the delay and admitted the appeal.

2. Regarding the addition of income from the production of a feature film, the Tribunal examined the agreement between the assessee and UTV Motion Pictures for the film "Shoe Bite." The Tribunal noted the stage-wise payments outlined in the agreement. A dispute arose during the production, leading to a halt in the project. The Tribunal analyzed the income recognition by the assessee and the AO's contention regarding unrealized income. The CIT(A) reviewed the contract terms and concluded that income accrual was tied to completed stages of production. The Tribunal upheld the CIT(A)'s decision, emphasizing the correct recognition of income by the assessee.

3. The judgment also delves into the deletion of the addition related to bogus sundry creditors. The CIT(A) verified the transactions with Shabnam Parvez Khan, noting the issuance of a confirmation letter and supporting documents. The Tribunal agreed with the CIT(A)'s factual findings, affirming the genuineness of the transaction and the deletion of the addition. Consequently, the Tribunal dismissed the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, addressing issues of delay in filing, income addition from film production, and deletion of the addition on account of bogus sundry creditors. The judgment provides detailed analysis and reasoning for each issue, ultimately upholding the decisions made by the CIT(A) in favor of the assessee.