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TMI Blog2013 (12) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment was completed at a loss of Rs. 33,60,47,400/- including the disallowance out of provision made for advertisement and marketing cost Rs. 24,75,876/- and out of provision made for royalty payment Rs. 3,49,86,000/- vide assessment order dtd. 5-1-2006 passed u/s 143(3) of the Income Tax Act, 1961 (the Act). On appeal, the ld. CIT(A) while partly allowing the appeal, however, deleted the disallowances of provision made for advertisement and marketing cost in toto and partly deleted the disallowance for the provision made for royalty. 3. Being aggrieved by the order of the ld. CIT(A) the Revenue is in appeal before us. 4. Grounds No. 1(i) and 1(ii) are against the relief allowed by the ld. CIT(A) out of disallowance of provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3,49,86,000/- and added the same to the total income of the assessee. On appeal, the ld. CIT(A) in view of the order dtd. 19-11-2002 of the Copy Right Board fixing the different rates of royalty for different hours of the day i.e. Rs. 1,200/- per hour for prime time of the day, Rs. 700/- per hour for standard time of the day and Rs. 300/- for night time of the day, worked out average rate fixed at Rs. 660/- per needle hours, directed the A.O. to allow the provision for payment of royalty to PPL @ Rs. 660/- per needle hour with a direction to verify the amount of opening balance which is not required to be considered for the purpose of disallowance since same was not the provision made during the year. 6. At the time of hearing the ld. D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gazette of India that FM channels which broadcast the PPL controlled sound recording would have to pay to PPL, a license fee of Rs, 1,500/- per hour of recorded music. In the facts and circumstances, in view of the Notification in the Gazette of India, the appellant was under obligation to pay royalty @ 1,500 per hour to PPL. Therefore, the amount @ 1,500 per hour payable by the appellant was appellant's legitimate business expenditure. However, the appellant litigated the rate of royalty payable to PPL before the Bombay High Court. The Bombay High Court by an interim order fixed the rate of royalty @ 500 per hour. Since the order of Hon'ble High Court was interim order, therefore, the appellant correctly made the provision of royalty payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the appellant in entirety since the appellant itself agitated/litigated the rate of royalty before the higher authorities i.e. Copy right Board and High Court/Supreme Court. In view of the fact that the order of Supreme Court again remitted the issue back to the Copy right Board, the only order in existence which decides the rate of royalty payable by appellant to PPL was Copy right Board order dtd. 19.11.2002. The Copy right Board decided the rate of royalty payable by appellant to PPL at the average rate of Rs.660/- per needle hour. Therefore, the appellant was allowable the expenditure for payment of royalty to the PPL @ Rs.660 per needle hour and not @ Rs. 1,500 per hour. Therefore, the excess provision made at the rate of Rs. 840 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the ld. CIT(A) does not call for any interference. The grounds taken by the Revenue are, therefore, rejected. 10. Ground No. 2 is against the deletion of disallowance out of provision made for advertisement and marketing cost Rs. 24,75,876/-. 11. Brief facts of the above issue are that on verification of the details furnished by the assessee, the A.O. observed that the assessee has made provision for advertisement and marketing cost at Rs. 24,75,876/-, the details of which have been give vide letter dtd. 7-7-2005. According to the A.O., the provision made for advertisement and marketing cost are not pertaining to the current year and, hence, not allowable and accordingly he disallowed the same and added to the total income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - being provision for advertisement and marketing cost. However, during the course of assessment proceeding the assessee has filed the details of the same vide letter dtd. 7-7-2005. The A.O. without examining the same has made the disallowance merely on the ground that it is a provision of expenses. On appeal, the ld. CIT(A) while observing that even as per Accounting Principle the provision for expenses are also allowable if the goods/services have been received but the bills for the same may not have been received, deleted the disallowance made by the A.O. However, there is no material on record to show that in the instant case the goods/services have been received by the assessee during the year under consideration and there is no positi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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