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TMI Blog2015 (1) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... e for which recovery proceedings are taken by the parties against the assessee, which proves beyond all doubts that the money was borrowed by the assessee. Subsequent payments by cheques on settlement also show that there remains no reason for making the impugned addition. We, accordingly, set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition of 3.70 crores. - Decided in favour of assessee. Adhoc disallowance of 20% of motor car expenses, interest on car loan and depreciation - Held that:- Considering that in A.Y. 2004-05 adhoc disallowance was accepted by both parties. We do not find any reason to interfere with the findings of the Ld. CIT(A). Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... been offered for taxation during the year itself. The AO further observed that the assessee is deferring revenue recognition by dividing the whole consideration over the period of the agreement. Drawing support from AS-9 issued by ICAI, the AO concluded by holding as under: A key criterion for determining when to recognize revenue from transaction involving the sale of goods is that the seller has transferred the property in the goods to the buyer for a consideration. The transfer of property in goods. in most cases, results in or coincides with the transfer of significant risks and rewards of ownership to the buyer. When the uncertainty relating to collectability arises subsequent to the time of sale or the rendering of the service, it is more appropriate to make a separate provision to reflect the uncertainty rather than to adjust the amount of revenue originally recorded. In the case of retail sales offering a guarantee of "money back if not completely satisfied" it may be appropriate to recognize the sale but to make a suitable provision for returns based on previous experience." Thus, AS 9 also stipulates recognizing revenue and recording a sale and if need be make a suit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant that it has offered ₹ 1 Crore in respect of rights of Naya Daur during the year under appeal is also not considered to be correct Appropriation of receipts as the appellant has received adv of ₹ 5.5 Crore during the year. I find that the appellant has transferred home video rights and satellite rights for a total consideration of ₹ 11.50 cores for the period of five years, therefore, it would be appropriate to apportioned the whole consideration of ₹ 11 .50 Crore in 5 years for the term of the contract of exploitation of rights in respect of various films and video rights. Accordingly, the apportionment for the AY under consideration would be at ₹ 2.30 Crore i.e. [11.50/5=2.30]. Therefore the AO is directed to tax the receipt of ₹ 2.30 Crore during the year as against the receipts of ₹ 1 Crore shown by the appellant and ₹ 10.50 Crore assessed by him. This view also supported by the decision of Honble jurisdiction High Court in the case of Prakash Picture 260 ITR 456(Bom) wherein the honorable High Court has held that the assessee had exploited the rights of he film for the period of 10 years therefore, writing of the entire cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Tribunal Mumbai Bench in the case of M/s. Yash Raj Films Pvt. Ltd., in ITA No. 6350/M/2010. The Ld. Counsel further drew our attention to exhibit 22, 23 & 24 of the Paper Book and claimed that this is how the income has been offered for tax, as and when the assessee received the right on the same, therefore, if the same income is taxed in the first year, it will amount to double taxation of the same income. 8. Per contra, the Ld. Departmental Representative strongly supported the assessment order. The Ld. DR further relied upon the decision of the Tribunal in the case of Star India (P) Ltd. 103 ITD 73. The Ld. DR further relied upon the decision of the Tribunal Mumbai Bench in the case of DDIT (International Taxation) Vs Toronto Dominion Bank Ltd., 26 taxmann. Com 125(Mum). 9. We have given a very thoughtful consideration to the rival submission. We have also perused the orders of the authorities below. The issue before us is whether accrual of income has taken place or not. Whether accrual of income has taken place or not has to be judged on the principles of the real income. 9.1. In CIT Vs Birla Gwalior Pvt. Ltd. 89 ITR 266, the Hon'ble Supreme Court had an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income in subsequent years as exhibited on page 22 to 24 of the paper book. These facts are so clear and it is difficult to hold or even to contend that there was accrual in the very first year. We, therefore, set aside the findings of the Ld. CIT(A) on this issue and direct the AO to delete the addition of ₹ 10.50 crores on account of revenue recognition. Ground No. 1 & 2 of assessee's appeal are allowed and the appeal filed by the Revenue is dismissed. 12. The next grievance relates to the addition u/s. 68 of the Act amounting to ₹ 3.70 crores. 13. While scrutinizing the return of income, the AO observed that in the balance sheet, the assessee has unsecured loans. The assessee was asked to file loan confirmation and fulfill the criterion to justify the loans u/s. 68 of the Act. The assessee filed a detailed reply. On perusing the same, the AO observed that the assessee has filed only the statements which are ledger accounts and do not bear any sign, name, PAN of the lender. The AO further observed that the assessee has not filed any loan confirmations. The AO proceeded by making an addition of ₹ 10.73 crorers u/s. 68 of the Act. 14. The assessee carried th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the relevant documentary evidences brought on record before us. Initially, the addition was made in respect of 7 parties totaling to ₹ 10.73 crores. The Ld. CIT(A) has restricted the addition to ₹ 3.70 crores in respect of 3 parties for want of confirmation of loan. The suit for recovery filed by these parties before the Hon'ble High Court of Bombay speaks for itself. The loan was given by these persons to the assessee for which recovery proceedings are taken by the parties against the assessee, which proves beyond all doubts that the money was borrowed by the assessee. Subsequent payments by cheques on settlement also show that there remains no reason for making the impugned addition. We, accordingly, set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition of ₹ 3.70 crores. Ground No. 3 & 4 are accordingly allowed. 18. The last grievance of the assessee is that the Ld. CIT(A) was not justified in confirming the disallowance of ₹ 4,63,110/-. 19. The AO while completing the assessment made an adhoc disallowance of 20% of motor car expenses, interest on car loan and depreciation. 20. The Ld. CIT(A) found that in A.Y. 2004-05 h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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