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2017 (2) TMI 986 - AT - Income TaxTreatment of Dubbing Costs - allowable revenue expenditure - whether or not the dubbing cost incurred on translating the foreign language entertainment programmes into Indian languages for making them ready for use/broadcast on the assessee’s T.V. Channel ‘Hungama’ should have formed part and parcel of the licence fee for use of the foreign language entertainment programme and amortised along with the cost of such licences? - Held that:- The facts of the case on hand as per details on record are that the assessee was in the business of running a television channel ‘Hungama’ – an entertainment channel for children for broadcasting entertainment programmes; which it procured by payment of licence fees to various channels and production houses. The cost of such licence fees was amortised by the assessee over the period of the licence. It is seen that the dubbing cost was incurred for translating the foreign language entertainment programmes into Indian languages; without incurring of which, such foreign language programmes could not have been broadcast on the assessee’s channels since the viewers, mostly children, could not have understood or appreciated them. In this factual matrix of the case, we are of the considered view that without the incurring of dubbing costs, the asset, i.e. the licence could not be utilised for earning revenue. In our view, all expenditure incurred for setting up the asset, for making it ready for use, would amount to and be in the nature of capital expenditure and therefore the dubbing cost incurred by the assessee should form part and parcel of the cost of acquisition of such rights as part of licence, i.e. the foreign language entertainment programme and should be amortised alongwith the cost of the licence. We hold and direct accordingly and consequently reverse the order of the learned CIT(A) and restore the order/finding of the AO on this issue. Revenue’s grounds of appeal are accordingly allowed.
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