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TMI Blog2010 (10) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in deleting the addition of Rs. 11,70,000 made by the Assessing Officer on account of legal expenses and professional charges without appreciating the fact that the criminal offence was committed by assessee in his personal capacity and not in his professional capacity as an actor. Hence, the same being personal in nature cannot be allowed under section 37(1) of the Act." 3. Gr. No. 1a After hearing both the parties we find that assessee is a film actor and during the year assessee had claimed deduction under section.80RR at the rate of 30 per cent on professional remuneration of Rs. 1,26,39,773 for doing shows abroad. The Assessing Officer asked the assessee to submit the copies of the agreement, passport and other details of the visit undertaken to perform the site show. A letter dated 4. Before CIT (Appeals) it was mainly submitted that copy of the agreement were furnished before the Assessing Officer vide letter dated 11-3-2006, it was further submitted that reliance placed before Assessing Officer in the case of Harsha Bhogle (86 ITD 714) is distinguishable, and reliance was also placed on the board circular No. 22 dated 17-7-1969, No. 31 dated 25-10-1969, No. 675 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and Salman Khan showing place of residence of remitter and date of performance of the stage show along with Xerox copy of the passport, which was evidence enough that Shri Salman Khan had performed. The Assessing Officer's contention that there was no formal agreement with the remitters and the copy of the passport/visa were not submitted, falls flat in the face of overwhelming evidence to the contrary, which support the claim of the appellant in this regard that he was an artist performing stage shows, thereby complying with the provisions of section 80 RR. Also vide circular No. 22 dated 17-7-1969 issued by CBDT, the appellant is an artist. The above said circular No. 22 dated 17-7-1969 is reproduced hereunder:- to "48. The Finance Act, 1969, has inserted a new section 80RR in the Income-tax Act with effect from 1st April, 1970 under which a resident individual being an author, playwright, artist, musician or actor who derives income in the exercise of his profession from foreign sources and receives such income in India or brings it into India in foreign exchange, will be entitled to deduct 25 per cent of income so received or brought, in computing the total income. This p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee dated25-4-2003 the payments were to be received during the show. He also invited our attention to the letter written by Shri Vijay Taneja on10-6-2003 that payments would be made during the show or if the entire amount is not cleared then same would be paid within 3 days from the completion of the show. He submitted that, assessee has changed his stand later on and claimed that payments had been received in advance which is not correct. In any case deduction under section.80RR would not be allowed merely on the basis of advance because at the time of advance it is not sure whether assessee would do any shows or not. Therefore, even if assessee is following the cash basis of accounting, then advance amount is to be treated as receipt because of the method of accounting but deduction under section 80RR cannot be allowed unless and until shows are performed. Further, he also pointed out that no agreement were filed before Assessing Officer and in this regard quoted the following observations from assessment order:- "It can also be observed that assessee has submitted a copy of letter purportedly an agreement with Shri Vijay Taneja only from whom a remittance of Rs. 66,01,740,10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form 10H submitted do not mention the name of the remitter for Rs. 21,50,100." 9. The above reply clearly shows that assessee has not shown the receipt as liability in the balance sheet and therefore, same have to be treated as advance from the performance of the shows and accordingly, deduction under section 80RR is to be allowed. The learned CIT(Appeal) has clearly observed that assessee has filed all the relevant details. He also reiterated the reliance on various circulars which were relied before CIT(Appeal). He, strongly supported the order of CIT(Appeal). 10. In the rejoinder, the learned DR submitted that ground No. 1a would covere the issue generally which talks of deduction under section 80RR. 11. First of all let us deal with the issue of adjournment. An adjournment application dated29-9-2010 was filed which reads as under : "Re: Salman Khan Asst. Years : 2003-04 & 2004-05 ITA Nos. 2836 & 2837/M/08 ........................................ The above mentioned appeals are fixed for hearing before E Bench on 30-09-2010. Since the papers required for filing the appeals are under compilation, we request you to kindly grant and adjournment for a month and oblige" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia reads as under:- "This is to confirm that I have agreed to perform as an "Artiste" in the above-mentioned shows to be held in USA/Canada and UK, on the following terms and conditions: (i) You agree to pay me a remuneration of USD Twenty eight thousand (USD 28,000) per show, for fifteen (15) shows payable during the tenure of the shows. (ii) Air Tickets: One (1) First class, One (1) Business Class and One (1) Economy tickets to be provided and paid by you. (iii) You will provide me at your own expense a suite with room service in a five star hotel and twin sharing rooms and allowance or meals for my staff. (iv) You will provide me with a chauffer driven luxury car, the expenses for which will be borne by you from Airport to Hotel and Venue and back to Airport. (v) It shall be your responsibility to arrange and obtain and provide to me at your cost all visas required for my entry in USA/Canada and UK as also work permits and other necessary permission for enabling me to perform and participate in the said shows in the said countries and the venue where the said show is to be performed. I agree to provide all information required by you to obtain the visas and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself was reached on25-4-2003 and payment is to be received during the performance of the shows the question of receiving the payment before the date of this letter that is during financial year1-4-2002 to31-3-2003 would not arise. It is further interesting to note that Shri Vijay Taneja has also written letter on 10-6-2003 which we have reproduced above and in that letter in 2nd para it is clearly stated that payments will be made either during the tenure of the show or within 3 days from the completion of the shows which means till that date there was no talk of advance payment. Still later on assessee has preferred to make the claim by stating that assessee had received payments in advance. We therefore, find that Assessing Officer has clearly noted that assessee has filed a letter from Shri Vijay Taneja and has not submitted any such agreements. Further in the Form-10H Annexed with the assessment order in the column of place of residence in respect of all items the particular filled are "not available". 18. This clearly shows that assessee has not furnished proper certificate. Despite of these glaring inconsistencies the learned CIT(Appeal) has observed that Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also submitted that learned CIT(Appeal) has wrongly relied on the decision of the CIT v. Birla Cotton Spinning & Wv. Mills in that case certain enquires and investigations were being conducted by investigation wing against the company in respect of incidence of taxation of income that means the law charges were paid by defendant in respect of issues of business allegations and therefore it can be said that company itself was being defended and thus the decision is totally distinguishable. Similarly, in case of CIT v. Dhanrajgirji Raja Narasingirji the expenditure was incurred for the purpose of business and therefore that ratio cannot be compiled. 22. On the other hand learned counsel of the assessee strongly supported the order of first appellate authority and also relied on the decision of CIT v. Birla Cotton Spinning & Wv. Mills (supra) as well as Dhanrajgirji Raja Narasingirji (supra). He further submitted that certain criminal complaints were lodged against the assessee and assessee has to defend himself, otherwise assessee was required to attend criminal proceedings personally which would cause the business loss because assessee is an actor and if he is away from the prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selling agency or the managing agency, the assessee was entitled to resume both the agencies. In 1943, the selling agency and managing agency were assigned to two private companies. At the instance of G. the assessee was removed from the office as chairman in 1946. The selling agency was surrendered by the private company to G in 1947, but it did not revert to the assessee as agreed. Thereupon, the assessee instituted a civil suit seeking reinstatement as chairman and also to establish his right to the selling agency. Pending that suit the assessee lodged a criminal complaint against G alleging misappropriation of the company's funds and other fraudulent acts. Pursuant to that complaint, Government instituted a criminal case against G, in which after obtaining the permission of the court and with the consent of the Government, the assessee employed his won lawyers to prosecute that criminal case. The prosecution ended in G's conviction. Pending the civil and criminal cases the assessee and G arrived at a settlement whereby G gave up the managing agency and also affirmed the assessee's right to the selling agency. The question was whether the amounts spent by the assessee for the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise of his profession as an actor from foreign sources. b. On the facts and in the circumstances of the case and in law, the CIT(A) failed to take into account the decision of ITAT, Mumbai in Harsha Bhogle 86 Income-tax Digest 714, while allowing deduction under section.80RR of the Income-tax Act, 1961. c. On the facts and in the circumstances of the case and in law, the CIT(A) erred in deleting the addition of Rs. 31,05,000 made by the Assessing Officer on account of legal expenses and professional charges without appreciating the fact that the criminal offence was committed by assessee in the personal capacity and not in his professional capacity as an actor. Hence, the same being personal in nature cannot be allowed under section 37(1) of the Act." 28. Both the parties made identical arguments as were made in case of ITA 2836/M/2008 and submitted that since issues are identical, the same view may be taken in this case also. 29. After considering the rival submission carefully we find that in this appeal also issues are identical, which we have adjudicated in above noted para while adjudicating ITA/2836/M/2008. Following these orders the issues raised in Gr. No. 1a & 1b are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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