Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2019 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (3) TMI 1271 - HC - Income TaxAllowable expense u/s 37(1) - Advertising and Publicity expenses - Deduction in respect of expenditure on production of feature films - whether expenses were not part of cost of production as per Rule 9A of Income Tax Rules, 1962 and provisions of Section 37(1)? - HELD THAT:- The cost of print and the cost of publicity and advertisement (which was incurred after the production and certification of the film by the Censor Board) are under consideration. These costs, we fail to see how can satisfy the description “expenditure in respect of cost of production of feature film”. We may recall term “cost or production” defined for the purpose of this rule specifically excludes the expenditure for positive print and cost of advertisement incurred after certification by the Board of Film Censors. What would therefore, be governed by the formula provided under Rule 9A is the cost of production minus these costs. The legislature never intended that those costs which are in the nature of business expenditure but are not governed by Rule 9A due to the definition of cost of production are not to be granted as business expenditure. In other words, if the cost is cost of production of the feature film, it would be governed by Rule 9A. If it is not it would be governed by the provisions of the Act. The Commissioner was, therefore, wholly wrong in holding that the expenditures in question were covered under Rule 9A of the Rules and therefore, not allowable. The Tribunal was correct in coming to the conclusion that such expenditure did not fall within the purview of Rule 9A and therefore, the assessee's claim of deduction was governed by Section 37 of the Act. Any expenditure in connection with the preparation of the positive prints for the purpose of exhibition would really be a post production expenditure and item of expenditure in relation to the business of production and exhibition of films and therefore, would qualify for deduction as expenditure laid out wholly and exclusively for the purpose of business. See CIT Vs. Prasad Productions P. Ltd. [1989 (1) TMI 38 - MADRAS HIGH COURT]. - decided in favour of assessee.
|