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2022 (12) TMI 1115 - ITAT MUMBAINature of expenses - expenses pertain to a film which may not be released - legal fees paid to the retainer advocates firm for taking care of litigation - whether expenditures were incurred for exclusively for the purpose of its routine business? - disallowance for the short reason that these? - HELD THAT:- The approach is clearly erroneous because as long as it is not in dispute that the expenses are incurred wholly and exclusively for the purpose of business, as indeed is the position in this case, there is no occasion for disallowance of such expense. Whether the film is released or not, or whether it turns out to be a dud project, as in this case, is wholly irrelevant. We, therefore, uphold the plea of the assessee and direct the Assessing Officer to delete this disallowance - The assessee gets the relief accordingly. Disallowing service charges paid to the agent involved in the contract for the film ‘Sher’ with film producing company - CIT(A) failed to appreciate that having failed to release the film ‘Sher’, the appellant has abandoned the said film permanently and thus the expenditure incurred in relation thereof is business loss/revenue expenditure - HELD THAT:- We find that, as subsequent developments turned out, there is no dispute that the film “Sher‟ was finally abandoned and it was never released. The entire expenditure incurred on the said project, including these expenses, constitute business loss and are allowable as such. We, therefore, uphold the plea of the assessee, and, accordingly, direct the Assessing Officer to delete the impugned disallowance - The assessee gets the relief accordingly. Interest expenditure paid in respect of funds borrowed in the normal course of business - HELD THAT:- Only reason for impugned disallowance was that film was not released during the year, and as such interest was capitalized. However, once the film was eventually an abandoned project and was never released for public exhibition, the very basis of disallowance ceases to hold good in law. The entire project has turned out to be a dud project, and has come to an unsuccessful end. In this situation, and bearing in mind the fact that interest expenses having been incurred wholly and exclusively for the purpose of business is not in doubt anway, we deem it fit and proper to delete this disallowance as well. The assessee gets the relief accordingly.
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