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2015 (12) TMI 376 - ITAT MUMBAI

2015 (12) TMI 376 - ITAT MUMBAI - TMI - Disallowance of excess cost claimed - CIT(A) held that the assessee is not required to follow the method of valuation prescribed u/r 9B of I.T. Rule, 1962 thus deleted the addition - Held that:- Cost to be allowed during the year depends upon the closing stock of the previous year, purchases during the year and the valuation of the closing stock would be dictated by sub Rule 2 & 3. From the assessment order, it appears that the Assessing Officer has miscon .....

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ng stock may lead to allowing higher losses in the instant assessment year. The method followed by the assessee is endorsed and the addition made by the Assessing Officer was rightly deleted by the CIT(A) in the assessment year i.e 2007- 08. This factual legal finding needs no interference from our side. We uphold the same. - Decided against revenue - I.T.A. No.1288 & 1289/Mum/2012 - Dated:- 30-9-2015 - SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI RAMIT KOCHAR, AM For The Appellant by Shri Rajesh Ra .....

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s correct in holding that the assessee is not required to follow the method of valuation prescribed u/r 9B of I.T. Rule, 1962 and thereby deleting the addition made as a result of disallowance of excess cost claimed of ₹ 27,52,935/-. The appellant prays that the order of the CIT(A) on the grounds be set aside and that of the Assessing Officer is restored. 3. Brief facts of the case are that the Assessing Officer observed that the assessee is following conservative method of accounting for .....

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in respect of cost of acquisition of a feature film for computing the profits and gains of the business of distribution of feature films. Referring to sub Rule 4 & 5 of Rule 9B, the Assessing Officer disallowed the excess cost of ₹ 27,52,935/-. The matter carried before the first appellate authority in appeal and after considering the submissions made on behalf of the assessee, the CIT(A) granted relief to the assessee. Aggrieved, the Revenue is in appeal before us. 4. The ld. D.R. co .....

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rted the order of CIT(A). 5. Having considered the rival submissions and perusing the material on record, we find that the assessee is engaged in sale of T.V. serial, editing and film software development. The stand of the assessee has been that it is buying satellite/TV telecasting rights of the movie and that the purchase of movies is not for theatre release and thus Rule 9B of the Income Tax Rules, 1962 is not applicable. It is not in dispute that the assesee has been valuing the closing stoc .....

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rule 2 to Rule 9B, if the film is released at least 90 days before the end of previous year, entire cost of acquisition is to be allowed in that year. In terms of sub rule 3 to Rule 9B if the film purchased is not released least 90 days before the end of previous year but amount realized on sale of rights during previous year, is less than cost price, the amount realized would be allowed as reduction and the balance cost of acquisition is to be carried forward to next year. In terms of sub rule .....

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