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2016 (6) TMI 426 - AT - Income TaxDisallowance for cost of production of TV serials and programmes incurred by the assessee - AO allowing depreciation only @ 25% thereon by treating the same as capital expenditure - Held that - Similar issue had arisen in the case of the sister concern Prism TV Private Ltd. Hyderabad vs. DCIT Circle16(3) Hyderabad wherein held that the assessee gets revenue from production and broadcasting serials on the lines of feature films the rights of broadcasting such serials are also treated as stock in trade till the time they are aired and the expenses are debited to the Profit & Loss account. The assessee treats the films and the serials at par and applied the provisions of Rule 9A and 9B of the Income Tax Rules as are applicable in case of films on serials as well. On the other hand the contention of the Revenue is that the film and serial broadcasting rights acquired by assessee are perpetual in nature. After first telecast the assessee does not discard the films but carefully store the same in digital library for airing the same again. Therefore the assessee gets enduring benefit from the rights acquired in films and serials and they do not expire on the date of first telecast as contemplated by the assessee. The rights are intangible assets within the meaning of Explanation (iii) to Section 32 and do not fall within the purview of Section 37(1). The assessee is entitled to claim depreciation on same - Decided in favour of assessee Valuation of film software library - rate of depreciation allowable therein - Held that - This issue has been dealt with by this Tribunal (to which both of us are signatories) in the case of M/s. UEPL 2016 (3) TMI 820 - ITAT HYDERABAD for the A.Y. 2007-08 and after considering the issue at length we have held that the film software library is in the nature of an intangible asset and the depreciation thereon is allowable at the rate allowable on an intangible asset. However as regards the valuation of the asset this Tribunal has pointed out that certain circumstances leading to the valuation of the asset have not been considered by the authorities below and hence has set aside the same for re-valuation. Respectfully following the same we deem it fit and proper to remand this issue also to the file of the A.O. with similar directions and direct the A.O. to allow depreciation as is allowable on an intangible asset.
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