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2017 (4) TMI 1091 - AT - Income TaxAllowance of film production expenses under Rule-9A of the Income Tax Act - Held that:- The material available on record which reveals that the film 'Traffic Signal' was released vide 'Central Board of Film Certification (CBFC)' certificate No. CIL2/93/2006 dated 31/12/2006. Further, a perusal of the chart showing deduction as per Rule 9A for AY 2007-2008 reveals that the assessee has deferred claim of ₹ 170.75 Lacs against this movie, which has been claimed in impugned AY and thus did not claim this expenditure in earlier AY. Therefore, the same was allowable to the assessee as per Rule 9A as rightly concluded by Ld. CIT(A) and therefore, we see, no reason to interfere with the same. The appeal of the revenue stand dismissed. Disallowance of claim u/s 35D - Held that:- The assessee got converted into public company and issued share capital. It incurred expenditure of the nature covered by Section 35D as fortified by the judicial pronouncements of Hon'ble High Courts Madhya Pradesh & Rajasthan relied upon by the assessee. Due TDS was deducted on brokerage amount. The assessee earned substantial revenue from production of films and hence, an 'industrial undertaking' as per decisions of jurisdictional Hon'ble Bombay High Court cited by the assessee. Hence, we are inclined to conclude that the assessee is eligible for impugned expenditure u/s 35D. This ground of assessee's appeal stands allowed. Additions u/s 41(1) qua write-back of certain creditors - Held that:- Let us hypothetically assume that the assessee took over certain fictitious liabilities meaning thereby that actual liabilities stood at lower value. In that case, the value of 'net assets' i.e. 'Value of Assets taken over Less value of liabilities taken over' would have been at higher value and consequently, the value of goodwill, which was nothing but 'total consideration less net assets' would have been at lesser value thereby resulting into less depreciation claim for the assessee. Even in that situation, as per the above cited apex court judgment, depreciation is neither a loss, nor an expenditure, nor a trading liability, referred to in s. 41(1). Hence, the same further supports the stand of the assessee. Even otherwise, we are of the considered opinion that neither clause (a) nor clause (b) of Section 41(1) applies to the assessee on the facts and circumstances of the case. Hence, from any angle, we are inclined to delete the impugned addition and allow this ground of assessee's appeal.
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