TMI Blog2011 (4) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... or the same year he has also disclosed distributorship receipts in respect of the film "Mughal-E-Azam (Colour)" to the extent of Rs. 18,49,375 - Therefore, the claim of loss on account of write off of the cost of production of the TV serial "Raja Bhartuhari" cannot be defeated even on the ground that the assessee has stopped carrying on the business of production/distribution of films - Decided in favour of assessee. - IT APPEAL NO. 624 (MUM.) OF 2010 - - - Dated:- 15-4-2011 - R.V. EASWAR, RAJENDRA SINGH, JJ. A.K. Mayak for the Appellant. Dinesh R Shah for the respondent. ORDER R.V. Easwar, President. This is an appeal by the revenue. The assessment year is 2006-07. The respondent-assessee is an individual. He is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other TV channels accepting the same for telecasting, the assessee, on grounds of commercial expediency, considered it proper to write off the aggregate cost of production of Rs. 31,98,892 as a loss incidental to the business and accordingly wrote off the amount in the accounts for the year ended 31-3-2006. The assessee, on this basis, claimed that the loss was allowable in the assessment. 3. The Assessing Officer did not accept the assessee's explanation. According to him Rule 9A of the Income-tax Rules was applicable, under which the cost of production was required to be amortized in the year in which the production of the serial was completed. The amortized amount, according to the Assessing Officer, can be set off only against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to distinguish the judgment of the Madras High Court (supra) on the ground that in the said case, the assessee had abandoned the project midway whereas in the case before us the assessee did not abandon the project but completed the same, though there were no takers for the tele-serial. On the basis of these submissions he contended that the disallowance of the loss should be restored. 6. On the other hand, the learned representative for the assessee submitted that Rule 9A of the Income-tax Rules was not applicable to the present case because the assessee herein was unable to commercially exploit the TV serial produced by him and was not in receipt of any monies on that account against which the cost of production could be amortized and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Doordarshan time slot fees 2005-2006 Rs. 10,000.00 Rs. 31,98,892.00 Having completed the serial by incurring the aforesaid expenditure, the assessee was unable to exploit the tele-serial because neither Doordarshan nor the other TV channels would accept the same for telecasting. A perusal of the details of the year-wise incurring of the cost of production shows that the major items of expenditure had been incurred by the financial year 1998-99 and thereafter the serial went into limbo since no TV channel, including Doordarshan, was prepared to accept it for telecasting. Thus atleast for a period of six years the assessee could not exploit the serial and a period of six years is a reasonably long period so as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rule is not applicable for any reason, it does not follow that the assessee's claim cannot be entertained at all since the Rule cannot override the Act and under the Act a loss incidental to the business is allowable on general principles under section 28 of the Act. If any authority is needed, reference may be made to the judgments of the Supreme Court in the case of Badridas Daga v. CIT [1958] 34 ITR 10 and Ramchandar Shivnarayan v. CIT [1978] 111 ITR 263. The judgment of the Madras High Court (supra) also supports the assessee's claim notwithstanding the fact that in that case the project was abandoned midway and was not completed. 8. At our instance the assessee has filed its Profit and Loss Account and Balance Sheet for several ..... X X X X Extracts X X X X X X X X Extracts X X X X
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