IN INCOME TAX APPELLATE TRIBUNAL D, BENCH MUMBAI BEFORE SHRI M.BALAGANESH, AM & SHRI RAM LAL NEGI, JM ITA No.1519/Mum/2018 ( Assessment Year 2011-12 ) ACIT 16(1) V s . M / s. Maharashtra Film Room No.439, Stage & Cultural Aayakar Bhavan Development Corporation M.K.Marg Ltd., Mu m bai 400 020 Fil m City, Gen A. K. V. Marg Goregaon (E) M u mbai 400 065 PAN/GIR No. AAACM7646K (Appellant) (Respondent) ITA No.1739/Mum/2018 (Assessment Year 2011-12 ) M / s. Maharashtra Film V s . ACIT 16(1) Stage & Cultural Room No.439, Development Aayakar Bhavan Corporation Ltd., M.K.Marg Fil m City, Gen A.K.V. Mu m bai 400 020 Marg Goregaon (E) M u mbai 400 065 PAN/GIR No. AAACM7646K (Appellant) (Respondent) Revenue by Shri J. Saravanan Assessee by Shri Pravin Jain Date of Hearing 28/08/2019 Date of Pronouncement 18/09/2019 / O R D E R 2 ITA Nos.1519/Mum/2018 & 1739/Mum/2018 M/s. Maharashtra Film Stage & Cultural Development Corporation Ltd., PER BENCH: These cross appeals in ITA Nos.1519 / M u m / 2 0 1 8 & 1739 / M u m / 2 0 18 for A.Y.2011-12 arise out of order by ld. Com missioner of Income Tax (Appeals) -7, Mumbai in appeal No.CIT(A)-7 / IT-34 / 3 3 1 / 2 0 16-17 dated 19 / 1 2 / 2 0 17 (ld. CIT(A) in short) against order of assessment passed u /s .143(3) of Income Tax Act, 1961 (hereinafter referred to as Act) dated 13 / 0 3 / 2 0 14 by ld. Joint Commissioner of Income Tax 11(1), Mumbai (hereinafter referred to as ld. AO). 2. No w let us take up revenue appeal in ITA No.1519 / M u m / 2 0 18. 2. Both parties before us mutually agreed that this revenue appeal is to be dismissed as not maintainable in vie w of recent Circular issued by CBDT dated 08/ 0 8 / 2 0 1 9 w herein revenue has been directed to withdra w appeal preferred by it before Tribunal if tax effect on disputed issues is less than or equal to Rs.50,00,000 / -. It is well settled that this Circular is binding on revenue authorities. 3. Respectfully follow ing said Circular, appeal filed by revenue is dismissed as not maintainable. 4. Incase, if revenue is able to provide evidence that case falls under any of exceptions provided in circular issued by CBDT, then revenue may prefer miscellaneous 3 ITA Nos.1519/Mum/2018 & 1739/Mum/2018 M/s. Maharashtra Film Stage & Cultural Development Corporation Ltd., application for recalling of this order, if they so desire, in which circumstance this order shall be recalled by this Tribunal. 5. In result, appeal filed by revenue is dismissed as not maintainable. ITA No.1739/Mum/2018 6. first issue to be decided in this appeal is as to whether ld. CIT(A) w as justified in confirming addition of Rs.14,61,000 / - on account of cessation of liability in facts and circumstances of case. second issue involved herein is also on ccount of action of ld. CIT(A) confir ming addition of Rs.4,91,000 / - on account of cessation of liability. Since identical issue is involved in both grounds, they are taken up together and disposed off herein. 7. We have heard rival submis sions. We find that assessee is fully owned State Government entity and is engaged in business of providing infrastructural facilities for shooting and post shooting purposes. assessee filed its return of income for A.Y.2011 -12 on 13 / 0 9 / 2 0 1 1 declaring total income at Rs.21,96,31,424 / - . We find that assessee has shown outstanding advances from debtors amounting to Rs.228,32,231 / - and financial assistance for Marathi Cinema amounting to Rs.59,41,374 / - under main head Current Liabilities d Provisions totalling to Rs.46.04 Crores. aforesaid su m of advances from debtors included sum of Rs.14,61,000 / - which w ere carried for w ard for number of years. ld. AO sought to 4 ITA Nos.1519/Mum/2018 & 1739/Mum/2018 M/s. Maharashtra Film Stage & Cultural Development Corporation Ltd., add sum u /s .41(1) of Act by treating that said liabilities had ceased to exist. ld. AO had draw n to this conclusion based on Note No.14(B)(2) to notes of accounts of assessee wherein it has been mentioned that these debtors to tune of Rs.14.61 lakhs represent advances received from those parties for w hich balance confirmations are not available from said parties and they are carried for ward for number of years without any transactions. said note also mentioned that in opinion of management, said advances received from debtors are payable to them and hence, same w ere not written back as income by assessee. 7.1. Similarly, as per note No.20 of notes of accounts, it was mentioned that financial assistance to Marathi Cinem reflected under current liabilities and provisions incl udes unidentifiable and unreconciled balance of Rs.4,91,000 / -. Based on this note, ld. AO concluded that said liability had also ceased to exist and hence, deserves to be added as income in terms of Section 41(1) of Act. 7.2. We find that ld. CIT(A) had upheld action of ld. AO on both additions. We find that admittedly addition has been made by ld. AO by invoking provisions of Section 41(1) of Act on ground that aforesaid liabilities to tune of Rs.14,61,000 / - and Rs.4,91,000 / - had ceased to exist. But crucial point to be noted is that at time of creation of these liabilities, assessee had not claimed any deduction or benefit in earlier years. These amounts w ere merely advances received from customers and financial 5 ITA Nos.1519/Mum/2018 & 1739/Mum/2018 M/s. Maharashtra Film Stage & Cultural Development Corporation Ltd., assistance received for Marathi Cinema and hence there could not be any claim of deduction by assessee in earlier years. Once, there was no claim of deduction made in earlier years by assessee are granted by th e revenue to assessee, provisions of Section 41(1) cannot be made applicable at all. In respect of Rs.4,91,000 / -, we find that financial assistance had been received from Maharashtra Government for taking up Marathi film which had to be adjuste d as and when film is taken. Hence, assessee thought it fit not to write back same and had classified same as amounts payable. We find from balance sheet of assessee as on 31 / 0 3 / 2 0 1 4 which was placed on record by ld. AR before us these amounts were continued to be shown as liabilities. This fact goes to prove that assessee had not written back these liabilities as not payable to those parties. Hence, provisions of Section 41(1) of Act cannot be applied at all in insta nt case. reliance placed by ld. AR on decision of Ahmedabad Tribunal in case of P.I.C. (Gujarat) Ltd. reported in 48 SOT 132 and Kolkata Tribunal in case of Jashojit Mu kherjee in ITA No.403 / K ol / 2 0 1 7 dated 04 / 0 5 / 2 018 clearly supports case of assessee. Accordingly, grounds raised by assessee are allo wed. 8. In result, appeal of revenue is dismissed as not maintainable and appeal of assessee is allowed. Order pronounced in open court on this 18/09/2019 6 ITA Nos.1519/Mum/2018 & 1739/Mum/2018 M/s. Maharashtra Film Stage & Cultural Development Corporation Ltd., Sd/- Sd/- (RAM LAL NEGI) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 18/09/2019 KARUNA, sr.ps Copy of Order forwarded to 1. Appellant 2. Respondent. 3. CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. True Copy BY ORDER, (Asstt. Registrar) ITAT, Mumbai ACIT 16(1), Mumbai v. Maharashtra Film Stage & Cultural Development Corporation Ltd