9911796707
TMI Blog2012 (9) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and in the circumstances of the case, the ld. CIT(A) has erred in deleting addition of Rs.33,75,000/- to the income of the assessee. 2. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in not appreciating the fact that the royalty of Rs. 45 lacs debited to P&L account was treated as capital expenditure and depreciation of 25% was rightly allowed by the AO." 3. Briefly stated the facts of the case are that the assessee company is engaged in the business of Punjabi Films distribution and it filed a return declaring income of Rs.7,98,300 on 28.11.2003 and the same was processed u/s 143(1) of the I.T.Act, 1961 (hereinafter referred to as 'the Act'). The assessing officer finalized the assessment at income of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/- and deducted depreciation @25% thereon and finally added Rs.33,75,000 to the income of the assessee. The aggrieved assessee invoked the ld. Commissioner of Income Tax(A) who directed the Assessing Officer to allow Rs.45,00,000 payment of royalty as revenue in nature and to withdraw the depreciation of Rs.11,25,000/-. The operative para of impugned order is being reproduced as under:- "7. The assessee vide agreement dated 2.9.2002 entered with M/s Super Cassettes Industries Ltd. purchased distribution rights of the Punjabi film 'Jee Aayan Nu' for three years produced by M/s Super Cassettes Industries Ltd. for a consideration of Rs.75,00,000/-. The assessee has written off Rs.45,00,000/- being 60% of the consideration during the F.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, this appeal by the Revenue against above impugned order of Commissioner of Income Tax(A). 7. We have heard and carefully considered the rival arguments of both the parties in the light of impugned order and other material placed before us on record. Ld. DR submitted that as per statement of assessee, the one time payment of royalty was not to be exploited only in the year of payment but it was to be exploited in other forthcoming three years. Therefore, the same expenditure was capital in nature. He further submitted that the Assessing Officer rightly held that on this payment being capital in nature, depreciation @25% is allowable and his action was just and proper in the facts and circumstances of the case. He concluded with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused and considered the orders of the authorities below and also perused the Paper Book filed by the assessee. 10. We observe a detailed chart of income and expenses from film "Jee Aayan Nu" available at page 22 of Paper Book filed by the assessee, which reveals that the assessee paid Rs.34,34,406 for film development and Rs.75,00,000/- as expenditure for payment of royalty and both these expenses have been segregated in four years. As per Auditors' Report and final accounts of the assessee (Paper Book page nos. 5 to 13), we observe that the assessee claimed Rs.20,60,706 as film developing charges and Rs.45,00,000 as royalty expenses i.e. 60% of actual expenditure in the assessment year under consideration and remaining 40% expenditure le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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