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2014 (9) TMI 437 - HC - Income TaxEntitlement for depreciation on cinematographic films @ 100% - Reliance placed upon Rule 9B of the Income Tax Rules, 1962 - AO observed that the assessee did not purchase any cinematographic films for consumption but what was purchased were broadcasting/exhibition rights, satellite rights etc. and, therefore, in terms of Section 32 of the Income Tax Act, 1961, depreciation should be allowed @ 25% instead of 100% depreciation as claimed. – Held that:- CIT(A) had specifically noted and recorded that the films were sold - films had been sold to different Doordarshan Kendras as also to National Film Development Authority, which are independent third parties and not closely related to the respondent assessee - These were also sales to other parties - There is no finding in the assessment order that the purchase and sale had not taken place and, therefore, Rule 9B(2)(a) relied upon by the assessee was not applicable - what was purchased and sold by the assessee were the ‘distribution rights’ - The right would include and consist of acquisition and transfer of rights to exhibit, broadcast and satellite rights - These rights are integral and form and represent rights of a film distributor - Even otherwise, if Rule 9B would not be applicable, purchase and sale of the film would result in a business transaction i.e. sale consideration received less purchase price paid – Decided against revenue.
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