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TMI Blog2012 (4) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... r market value which ever is less on the basis of accepted principle of accountancy and hence enhancing the value of stock at Rs. 20,75,425/- is without any basis and liable to be deleted. 2.2 Without prejudice to above, the enter cost of feature film amounting to Rs. 46,00,425/- may be allowed as the business loss of the relevant year. 2.3 Without prejudice to above, the learned CIT(A) failed to give consequential direction to allow write off of entire cost of production in A.Y. 2006-07 as per Rule 9A(4), hence necessary direction may be given to A.O. to allow the same in the A.Y. 2006-07. 2.4 Without prejudice to above the learned CIT(A) failed to give consequential direction to increase the opening stock of subsequent year by Rs. 25,25,000/-, hence necessary direction may be give to increase the opening stock of the A.Y. 2007-08. Ground nos 1 & 2.1. 3. The assessee is an individual and in the business of production of TV Serials/film. During the course of assessment proceedings, the Assessing Officer noted from the P&L account that the assessee has valued the closing stock at Rs. 25,25,000/- against the opening stock of Rs. 46,00,425/-. The assessee has thus booked a paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence was not filed before the Assessing Officer as the same was not specifically called for by the Assessing Officer. He has further submitted that since the additional evidence goes to the root of the issue of valuation of closing stock; therefore, in view of Rule 46A(4), the CIT(A) ought to have allowed the additional evidence. He has relied upon the decision of the Hon'ble jurisdictional High Court in the case of Smt. Prabhavati Shah v. CIT [1998] 231 ITR 1/100 Taxman 404 (Bom.). The ld AR has further submitted that the assessee produced the film/TV serial for Prasar Bharati since the TV serial was not shown last so many years; therefore, the value was shown at Rs. 25,25,000/-, which was based on commercial decision taken on the basis of trade enquiries with Boobna Entertainment Pvt Ltd which is in this line of business. He has relied upon the decision of the Hon'ble Supreme Court in the case of CIT v. British Paints India Ltd. [1991] 188 ITR 44/54 Taxman 499 and submitted that the Hon'ble Supreme Court has held that the assessee is entitled to value the closing stock either at cost or market price whichever is less. He has referred the letter dated 20th March 2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to produce by the [Assessing Officer] ; or (c) where the appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any ground of appeal ; or (d) where the [Assessing Officer] has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. 6.1 The assessee's case does not fall in any of the exemption as enumerated in the sub-rule (1) of Rule 46(A). The assessee has explained before us that because the Assessing Officer has not specifically called for the evidence, therefore the assessee did not file the same before the Assessing Officer. It is pertinent to note that the Assessing Officer has raised a specific query whereby the assessee was asked to explain such valuation and subsequent loss. The assessee filed its reply vide letter dated 7.10.2009. Therefore, the assessee was given sufficient opportunities to explain and substantiate its claim of revaluation of closing stock. Further, the assessee is seeking the additional evidence being letter dated 20.3.2007 whereas the reply to the query of the Assessing Officer was filed on 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o permit the appellant to raise a fresh point. This power has not been even touched by rule 46A. Previously, the appellant had no right to adduce additional evidence. The Appellate Assistant Commissioner could permit the production of additional evidence if he thought it was necessary to enable him to dispose of the appeal, or if he thought it fit to make further inquiry ; but under sub-rule (1) of rule 46A the appellant had a right to produce additional evidence in the circumstances mentioned in its various clauses. We are unable to agree with the submission that rule 46A or its sub clauses is ultra vires section 250 or 251 of the Act. The rule does not affect the power of the Appellate Assistant Commissioner conferred upon him by that rule. It in addition gives a right to the appellant in the matter of production of additional evidence." 7. As regards the value of the closing stock, the assessee has claimed valuation on the basis of market value of the film and relied upon the letter dated 20.3.1007. The deduction in respect of cost of production of feature film is allowed as per Rule 9A of the I T Rules; therefore, if the assessee is not entitled for deduction of the cost of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the decisions of the Hon'ble Supreme Court in the case of Kedarnath Jute Mfg. Co Ltd. v. CIT [1971] 82 ITR 363, CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315/102 Taxman 94 (SC) as well as the decision of the Tribunal in the case of ITO v. V.K. Sood, in IT Appeal No. 1463/Bom/1990 for AY 86-87 vide order dated 30.10.1995. 9.2 On the other hand, the ld DR has submitted that the loss claimed by the assessee is not permissible under Rule 9A of the I T Act. Moreover, the issue of allowing the business loss for any other year is not a subject matter for the present proceedings. Therefore, no such direction can be given in the proceedings for the asst year under consideration. He has relied upon the orders of the lower authorities. 10. We have considered the rival contention as well as the relevant material on record. At the threshold, we make it clear that the assessee's case is not for the claim of abandoned project or covered under Rule 9(4). Therefore, the case relied upon by the assessee are not applicable in the facts of the present case. Further, the alternative plea of the assessee is pertaining to the issue of allowing the business loss in the assessment year other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount realized by exhibiting the film, or the amount for which the rights of exhibition have been sold or, as the case may be, the aggregate of such amounts, is credited in the books of account maintained by him in respect of the year in which the deduction is admissible; (b) in a case where the film producer has transferred the rights of exhibition of the feature film on a minimum guarantee basis, the minimum amount guaranteed and the amount, if any, received or due in excess of the guaranteed amount or where the film producer follows cash system of accounting, the amount received towards the minimum guarantee and the amount, if any, received in excess of the guaranteed amount, are credited in the books of account maintained by him in respect of the year in which the deduction is admissible." 12.1 sub rule (5) begins with non obstinate clause which means sub rule (5) has overriding effect and the other sub rules under rule 9A are subjected to sub rule (5). It is manifest from sub rule (5), no deduction can be allowed under Rule 9A unless the conditions as stipulated under sub rule (5) are satisfied. Therefore, when the assessee has neither himself exhibits feature film on commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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