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TMI Blog2012 (10) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... of amount written off by the assessee in the books – alleged that assessee is unable to substantiate as to how this amount is deductible in computing the income – Held that:- Although certain deductions were claimed, the evidence regarding admissibility was not furnished either before the AO or the ld. CIT(Appeals) - it is not necessary to restore the matter to the file of the AO - amount is not deductible in absence of any supporting evidence - IT Appeal No. 210 (Delhi) of 2011 - - - Dated:- 16-3-2012 - A.D. JAIN, K.G. BANSAL, JJ. Sanjay Sood for the Appellant. Raj Tandon for the Respondent. ORDER K.G. Bansal, Accountant Member The assessee has taken up five grounds in this appeal. Ground no. 4 is that the learned AO erred in not correctly computing the brought forward loss and unabsorbed depreciation. This ground has not been pressed by the ld . counsel as the computation can be corrected by the AO u/s 154 of the Income-tax Act, 1961. Ground no. 5 is residuary in nature. No fresh ground has been raised in pursuance to this ground. Therefore, both these grounds are treated as dismissed. 2. Ground nos. 1 and 2 are in respect of addition of Rs. 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the balance-sheet. Thus, it is not a case of creation of any artificial asset with a view to window dress its balance-sheet. One of the possibilities is that the assessee failed to properly account for items of work-in-progress knowingly or unknowingly, but, in order to remove the mistake the accounts of this year recognized additional stock of Rs. 3,19,95,890/- by initially showing it as work-in-progress and then transferring the same to the balance-sheet as an asset in the form of media library. The ld. CIT(Appeals) considered the details of work-in-progress furnished in schedule-7 of the accounts in this year. The details are as under:- S. No. A.Y. 2006-07 A.Y. 2007-08 ( i ) Unamortized cost - 10312650.20 ( ii ) Production work in progress - 1075000.00 ( iii ) Production of film on Amrita Shergil 3458549.29 2655079.20 ( iv ) Production of pilots - 17090732.00 ( v ) Production of children films - 3280822.00 ( vi ) Production of Jataka - 10897635.00 ( vii ) Film un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated and the amount of Rs. 3,19,95,890/- is the estimated values of these items. These items have not been sold. There is no transaction with any third party in respect of these items. What has been done is that the value of non-usable scrap has been estimated and introduced in the books as an asset under the head 'media library'. A corresponding capital reserve has been created. Since no transaction has taken place with any third party, there is no question of earning any profit in this year. Further, fictitious reserve in respect of scrap has been created only to window dress the balance-sheet so that higher loans could be taken from the banks. It is argued that a person cannot make profit from himself. Therefore, when the scrap of the value of nil is enhanced to some figure, say, Rs. 3,19,95,890/- in this case, no income accrues or arises to the assessee. It is also a matter of fact that no income has been received by the assessee in respect of this scrap. Accordingly, it is agitated that this amount is not taxable in the assessment of this year. 2.6 In reply, the ld. CIT, DR referred to page no. 25 of the paper book in which method of valuation of closing stock has been des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han the value placed now on them. The question is-whether, this amount is liable to be taxed in this year as income? 2.8 It is an accepted position of law that the re-valuation of assets in the books of the assessee does not lead to generation of income as no transaction has been taken up with an outside party. In other words, a person cannot make profit from himself by merely making some entries in the books of account. The case of the assessee is that the value of these items had been taken as nil as there was no buyer for these items. However, with a view to show improved balance-sheet for taking higher loan from the banks these assets have been shown in the balance-sheet now. Nonetheless, no item could be sold in this year also. We have considered this submission also. We find that the assessee has not incurred any expenditure which has not been recorded in the books of account. The ld. CIT(Appeals) has given a clear finding that all expenses regarding production of films etc. have been duly accounted for in the books. Therefore, it cannot be said that these assets have come out of any unaccounted income. In this light, it becomes clear that the assessee was in possession o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtains to three persons as under:- ( i ) Applause Entertainment (P) Ltd. - Rs. 3,84,008/- being bad debt written off. ( ii ) VSNL-Rs. 5,00,000/- being licensing fee for channel. ( iii ) Mrs. Krishna Tiwari- Rs. 1,29,910/- being advance to staff who has left the company. 3.3 The assessee was required to furnish evidence regarding writing off the amount in the case of Applause Entertainment (P) Ltd., payment of fee to VSNL and dates and other details of payments made to Smt. Krishna Tiwari. Such details were not filed. Therefore, the claim has been disallowed. 3.4 Before us, the ld. counsel has referred to page no. 55 of the paper book, which furnishes the details of amounts written off in respect of 21 parties aggregating to Rs. 11,96,173/-. It is submitted that the matter may be restored to the file of the AO for verification of the writing off of the amount so that the matter may be decided de-novo. On the other hand, the ld. CIT, DR referred to the findings of the AO and the ld. CIT(Appeals) and submitted that no detail had been filed in respect of claims made by the assessee. Therefore, it is argued that there is no necessity to set aside the matter to the file ..... X X X X Extracts X X X X X X X X Extracts X X X X
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