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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 ..... Act – Appeal is partly allowed - ITA NOS. 2836 & 2837/MUM./2008 - - - Dated:- 13-10-2010 - D. MANMOHAN, VICE-PRESIDENT J, AND T.R. SOOD, ACCOUNTANT MEMBER J, Hemantlal for the Appellant. Prakash K. Jotwani for the Respondent. ORDER Per T.R. Sood Accountant Member : I.T.A. No. 2836/Mum./2008 1. This appeal filed by the revenue is directed against the order dated18/02/2008 of Commissioner of Income-tax (Appeals) - IV, Mumbai. 2. In this appeal the revenue has raised the following grounds:- 1.a. On the facts and circumstances of the case and in law, the CIT ( A ) erred in law in allowing deduction under section 89RR without appreciating the fact that the income derived by the assessee was not in exercise 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. 11,70,000 mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further noted that name of the remitter from the 3. His income includes income from the exercise of the aforesaid profession from a foreign government or from a person not resident in India. Dubai 4. Such income may be directly received in India or it may be received outside India. is not mentioned in the Form-10H and the assessee was confronted with these quires. In response to the queries, it was stated by the assessee that the sum of Rs. 1,02,05,098 was towards the show held from 5. The taxpayer furnishes a certificate in Form No. 10H alongwith his return of income, certifying that the deduction has been correctly claimed in accordance with the provisions of the section. 21st May, 2003 The appellant is a well known him artist and has received income from stage shows abroad, which is not doubted by the Assessing Officer. All the relevant details in this regard too have been furnished by the appellant to the Assessing Officer, which clearly evidence that the appellant has complied with the aforesaid conditions laid down in section 80RR of the Act. The Assessing Officer was given a copy of the agreement between Vijay Taneja, the show organisers and Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther explained that assessee was following cash system of accounting and since payments have been received in advance that were being shown as receipts and claim for deduction under section 80RR was made accordingly. However, A.O observed that no where the letters written by the assessee or Shri Vijay Taneja show that payments to be made in advance, payments were required to be made on either during the performance of the show or soon thereafter. He also observed that assessee had not filed all the agreements in respect of the shows. It was also observed that place of residence of the remitters was also not incorporated in Form-10H. Assessing Officer further observed that exemption provision under section 80RR needs to be construed strictly and for which he relied on the decision of CIT v. Purshottam Das 247 ITR 516. He also made observations to the fact that assessee being an actor cannot be called strictly stage artist. In this background the deduction under section.80RR was not allowed. 5. Before us the learned DR carried us through the assessment order and pointed out that, shows were stated to have been held from21st May, 2003 to6th July, 2003. He argued that as per lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracted which is as under :- The assessee was asked to substantiate its claim vide letter dated 20-3-2006 to which it has replied vide letter dated 22-3-2006 as under : As regards deduction under section 80RR, I would like to inform you that I have received advance of Rs. 1,02,05,098 towards the show held from 21st May, 2003 to 6th July, 2003 in which I have performed as an artist. Agreements have already been submitted to you vide my letter dated 11-3-2006. Since I am following cash basis of accounting, this has to be shown as an income in the year in which I have received. Had I not followed cash basis of accounting the said advance of Rs. 1,02,05,098 would have been shown as advance received in the liabilities side of Balance sheet as on 31-3-2003 and not the income from other sources. Since, I am following cash basis of accounting and performed as an artist next year, deduction under section 80RR should be allowed . 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 has been received. The assessee has not submitted any such agreements regarding balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n.80RR has been challenged. In any case rule 11 of Appellate Tribunal Rules 1963 reads as under:- 11. The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the tribunal under this rule: Provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground . 15. The above rule clearly shows that Tribunal has power to consider the matters which arise out of the orders of the lower authorities and is not strictly required to confine only to the grounds of appeal as long the other party is given sufficient opportunity of being heard. Since, learned counsel of the assessee was given full opportunity and therefore this objection is rejected. 16. We find that in respect of the shows in response to the request for filling of the agreement the following 2 letters have been furnished before the Assessing Officer:- 1. First letter dt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of any matters arising under this agreement . 2. Second letter dated. 10-6-2003 from Shri Vijay Taneja to Shri Salman Khan and it reads as under :- This has reference to the above-mentioned shows that were to take place in USA Canada and UK from May, 21st 2003 to July 6th 2003. As our mutual talk and you seeing the circumstances and the end results of the shows due to the declining economic conditions in US/Canada and UK, our scheduled planning of 15 shows has not been possible. Therefore now only 9 shows will take place instead of 15. However, your remuneration per show i.e. USD Twenty eight thousand will remain the same. These payments will be paid either by me or by the local promoters on my behalf by way of Cashiers cheque/drafts or wire transfer into your bank account. However if the entire amount is not cleared during the tenure of the shows then the balance will be paid within three days of the completion of the shows. All other terms and conditions with regards to the air tickets/ground transportation /accommodation etc. will remain the same. 17. Firstly it is interesting to note that assessee had agreed to perform in the show on 25-4-2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of which sum of Rs. 1,20,000 paid to M/s. S.G. Kabra and Co., all other expenses have been paid to lawyers, defending the assessee in various criminal proceedings pending in the courts. This was treated as personal expenses and accordingly sum of Rs. 11,70,000 was disallowed. Before CIT (Appeal) it was mainly submitted that assessee was shooting for a film HUM SAATH SAATH HAI where he was implicated in some criminal proceedings, expenses were incurred for exemption from the personal appearance in the court and also to defend the assessee to prove his innocence. Therefore, the expenditure was incurred to defend assessee which has arisen out of professional activity and accordingly, same should be allowed. Reliance was placed on the decision of Hon ble Supreme Court in the following cases : CIT v. Birla Cotton Spinning Wv. Mills ( 82 ITR 166 ) CIT v. Dharajgiri Raja Narasingirji ( 91 ITR 544 ) The learned CIT(Appeal) agreed with the submission. The learned CIT(Appeal) observed that these expenditure cannot be treated as personal expenses and therefore allowed the same. 21. Before us learned DR submitted that it was alleged that in Rajasthan that assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e evasive reply when confronted with the question that whether criminal proceedings arise out of any incident during the shooting of film. The criminal proceedings are always filed against individual. This has got nothing to do with assessee s profession. Therefore, we are of the humble view that the expenditure is purely of the personal nature. 24. The decision relied by counsel of the assessee are clearly distinguishable because in case of CIT v. Birla Cotton Spinning Wv. Mills the investigation proceedings were being conducted by the Investigation commission against the affairs of the company and thus the assessee s company was trying to defend itself out of the business issues. Similarly, in case of CIT v. Dhanrajgirji Raja Narasingirji the following facts were involved:- The assessee was the managing agent of a public company promoted by him in 1935 and was also the chairman of its board of directors. In 1937, the company got into financial difficulties and a tripartite agreement between the assessee, the company and one G, who agreed to bring the necessary finance, was entered into pursuant to which the assessee gave upto the managing agency in favour of G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business transactions and business issues and therefore the purpose was for clearly business and thus these both decisions are clearly distinguishable. As far as the decision in case of Ajay Singh Deol v. JCIT ( supra ) is concerned the expenditure was incurred for the purpose of treatments of the wife of one of the employee Shri Ravat who fell seriously ill. Therefore, just to encourage moral of the employees this kind of expenditure are generally incurred by the employers which is a normal practice with all good employers and therefore these facts are also quite distinguishable. In the case before us the fact remains that some personal complaints have been lodged against the assessee which has nothing to do with professional activities and therefore expenditure incurred in defending against theses allegation is definitely of personal nature and such expenditure cannot be allowed against the income from business and profession. Therefore, we set aside the order of learned CIT(Appeal) in this respect and restore the order of Assessing Officer 26. In the result revenues appeal is partly allowed for statistical purpose. I.T.A. No. 2837/Mum./2008 27. In this appeal the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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