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2003 (12) TMI 9 - HC - Income TaxExpenditure in obtaining a right for reproduction of film songs for a specific period – allowability - revenue expenditure or capital expenditure - whether Tribunal was right in law in holding that the expenditure in obtaining a right for reproduction of film songs for a specific period is royalty and allowable as revenue expenditure and not a capital expenditure, which attracts the provisions of section 35A - The royalties paid by the assessee, were therefore, required to be regarded as falling within the field of revenue expenditure. Moreover, the sale of film songs is dependent on their popularity which in most cases is of short duration. The realisation from the future sale of cassettes which was a funding activity also was unascertainable at the time of the agreement. Thus, our answer to the question referred has, therefore to be and is in favour of the assessee and against the Revenue.
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