TMI Blog2016 (5) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of Multiplexes as capital receipt, not eligible to tax confirmed. Disallowance of expenditure on prints treating it as capital expenditure - CIT(A) directed to treat the print cost as revenue expenditure - Held that:- We have given a thoughtful consideration to the orders of the authorities below. Rule 9B of the Income Tax rules clearly and specifically provides that cost of prints cannot be included in the cost of acquisition of the exhibition rights in the film. Therefore, what can be carried forward are the cost of acquisition and not the cost of prints. In our considered opinion, the cost of prints has to be allowed in the year in which the expenditure is incurred. It is irrelevant as to what treatment the assessee has given in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of ESOP. The A.O further observed that during the course of the assessment proceedings, the assessee had claimed that deduction was allowable as it was a charge to Profit and Loss account in respect of such remuneration to employees. The assessee furnished a complete computation of the claim which is incorporated in the assessment order by the A.O. at para 7 from page 4 to page 8 of the assessment order. After considering the claim and the computation made by the assessee, the A.O was of the opinion that the assessee has not incurred any expenditure. The A.O further observed that no payment is made by the assessee either in this year or any earlier year or any later year. The assessee has merely allotted shares to the employees. Allot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ESOP could be debited in Profit and Loss account of the assessee. Respectfully following the aforementioned decisions, we direct the A.O to allow the claim of deduction on account of remuneration to ESOP. Ground No. 1 is accordingly allowed. ITA No. 523/Ahd/2012 Revenue s appeal for A.Y. 2008-09 9. The first grievance of the revenue relates to the treatment of entertainment tax exemption in respect of multiplexes as capital receipt. 10. By scrutinizing the revised return of income, the A.O found that the assessee has claimed exemption of entertainment tax which was reflected in the box office revenues in respect of its multiplexes at Pune, Vadodara, Elgin Road, Salt Lake, Nariman Point, Indore, Darjeeling and Swabhumi and Lucknow. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d fact that in earlier assessment years, the issue has been decided in favour of the assessee and against the revenue. The Hon ble High Court of Gujarat in Tax Appeal No. 110 of 2015 had the occasion to consider the following question of law:- whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the decision of the CIT(A) directing the A.O. to treat the entertainment tax exemption in respect of Multiplexes as capital receipt, not eligible to tax, without appreciating that the subsidy received by the assessee was after the completion of the cinema house and commencement of operation and used entirely for the business operation, and therefore, revenue in nature? 15. While a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enduring benefit and, therefore, has considered as capital expenditure. The A.O accordingly disallowed the claim of ₹ 69,30,298/-. 19. Assessee carried the matter before the ld. CIT(A) and vehemently submitted that the expenditure incurred on print cost is a revenue expenditure and has to be allowed accordingly. It was explained that such expenditure do not constitute any enduring benefit, further only limited rights are granted to the assessee. No ownership rights have been bestowed upon the assessee and, therefore, the claim has to be allowed u/s. 37(1) of the Act. After considering the facts and the submissions, the ld. CIT(A) was convinced that in respect of actual positive prints of the films exhibited under the distribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. CIT(A). Ground no. 2 is accordingly dismissed. 22. In the result, the appeal filed by the revenue is dismissed. ITA No. 2302/Ahd/2012 Assessee s appeal for A.Y. 2009-10 23. The first grievance of the assessee relates to the claim of deduction on account of ESOP. 24. An identical issue has been considered and decided by us in ITA No. 374/Ahd/2012 qua ground no. 1 of that appeal. For our detailed discussion therein, the appeal filed by the assessee is allowed. 25. Since we have allowed the first ground of appeal, the second ground of appeal becomes otiose. 26. In the result, the appeal filed by the assessee is allowed. ITA No. 2552/Ahd/2012 Revenue s appeal for A.Y. 2009-10 27. The only grievance of the revenue rela ..... X X X X Extracts X X X X X X X X Extracts X X X X
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