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2014 (8) TMI 839 - AT - Income TaxNature of receipt – Entertainment tax – Revenue or capital receipt - Incentive given to assessee for assisting him in carrying out the business operations – Held that:- The State Government proceeded to exempt entertainment tax for a period of 5 years payable by a "new" cinema hall constructed, subject to the condition that commercial exhibition of films in such cinema hall was required to be started by 31.03.2000 - In the scheme of the Act of 1957, where entertainment tax is determined and recoverable from the proprietor of the entertainment and is levied with reference to the number of admissions to the entertainment, when the State Government had exempted such proprietor of new cinema hall from payment of entertainment tax on the given condition, the object was clearly to promote the construction of new cinema halls - following the decision in [ITA No. 1984, 2299, 2300/AHD/2009 order dated 09.09.2011] - Merely because the amount was not directly meant for repaying the amount taken for construction of the cinema hall, its purpose could not be considered to be other than that of promoting construction of new cinema hall - the source of funds for construction of cinema hall is irrelevant; and it would also not matter if the grant would be available after the business has been set up - the assistance cannot be said to be an operational subsidy so as to be taken as a revenue receipt - the remission had been granted by way of incentive of capital receipts in the construction of cinema building - the subsidy in respect of Multiplex located at Jaipur to be capital in nature. Applicability of Explanation 10 to sec. 43(1) – Held that:- E. Tax subsidy was not given to meet the cost of any specific asset - the department itself proposed that there was no obligation on assessee to utilize it for any specific purpose will not be hit by Explanation 10 to Sec. 43(1) - entertainment subsidy being for the promotion of cinema/ multiplex industry, only because the methodology adopted is to cap it to capital cost of assets will not mean to reduce the cost of asset directly or indirectly in terms of Explanation 10 to Sec. 43(1) - the subsidy received by the Assessee cannot be received from the written down value for the purpose of computing depreciation - the alternate contention of the Revenue of reducing the amount of subsidy from the block of assets cannot be accepted – Decided against Revenue. Expenses in respect of abandoned project disallowed – Held that:- Following the decision in CIT vs. Priya Village Roadshows Ltd. [2009 (8) TMI 765 - Delhi High Court] – the assessee was also involved in the business of running cinemas - Revenue could not bring any material to distinguish the facts with that of earlier years nor has brought any binding decision in its support - the expenses is held to be allowable – Decided in favour of Assessee. Claim of deduction u/s. 80IB – Held that:- As decided in assessee’s own case it has been held that the capacity of cinema theatre should be atleast 900 seats and cinema theatre should not have less than 100 seats - Commercial shops should not be less than 3000 sq. ft, however, the minimum built-up area of each shop should not be less than 250 sq.ft. A multiplex is required to be centrally air-conditioned - The cinema theatre should use seat-batch not less than 20 inches - the lay out plan was in-conformity with the prescribed IT Rules – the matter is remitted back to the AO for fresh adjudication – Decided in favour of revenue.
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