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2016 (1) TMI 1122 - ITAT MUMBAI

2016 (1) TMI 1122 - ITAT MUMBAI - TMI - Write off expenditure incurred as advance paid for the purchase of a film script for the production of a feature film - allowable revenue expenditure - Held that:- Written off expenditure incurred by assessee as advance paid for purchase of a film script for production of an abandoned film is allowable as revenue expenditure and also that Rule 9A of the IT Rules, 1962 has no applicability in the matter.See M/s Venus Records and Tapes Pvt. Ltd [2015 (10) TM .....

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p> 2.1 The assessee, engaged in the import, duplication, distribution of foreign cinematographs and video films, activities for purchase and distribution of Indian films and business activities of trading in capacitors and investment in shares and securities, filed its return of income for Asst. Year 2009-10 on 29/09/2009 declaring total loss of ₹ 32,55,43,367/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (in short the Act ) and the case was subsequently taken up for s .....

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appeal vide the impugned order dt. 12/03/2014, on the sole issue of write off of advance of ₹ 1,82,49,920/- for purchase of a film script, following the decision of the co-ordinate bench of this Tribunal in the case of Mukta Arts Pvt. Ltd in ITA No. 7955/Bom/1992 dt. 02/05/2001 and the decision of the Hon ble Madras High Court in the case of B. Nagi Reddy (199 ITR 451)(Mad) holding that the expenditure incurred by the assessee in this regard was revenue expenditure and also in view of Rul .....

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The Ld. DR for revenue was heard in support of the grounds raised (supra) and placed strong where on the decision of the Assessing Officer (AO) on this issue. 3.2 Per Contra, the Ld. AR for the assessee supported the order of the Ld. CIT(A) and prayed for the decision therein to be upheld. Before us, the Ld. AR submitted that the issue in question, i.e. whether the expenditure incurred on advance paid /cost incurred for purchase of film script of an abandoned film written .....

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before us is whether, in the facts and circumstances of the case and in the light of judicial pronouncements in this regard, the write off of expenditure of ₹ 1,89,49,920/- incurred on account of advance for purchase of a film script for production of an abandoned film was allowable as revenue expenditure. 3.3.2 We find that a similar issue was before the Hon ble High Court of Bombay in the case of M/s Venus Records and Tapes Pvt. Ltd. in ITA No. 310/2013 dt. 28/01/2015, where .....

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2011). 3.3.3 The Ld. AR has also placed before the Bench a copy of CBDT Circular No. 16/2015 dy. 06/10/2015 ( F No. 279/Misc./140/2015- ITJ, wherein, consequent to the decision of the Hon ble Bombay High Court in Venus Records and Tapes P. Ltd.(supra), it has been clarified that Rule 9A of the IT Rule, 1962 is not applicable in the case of abandoned feature films. The same is extracted hereunder:- Circular No. 16/2015 F.No.279/Misc/140/2015-ITJ Govern .....

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> 2. In the case of abandoned films, however, since certificate of Board of Film Censors is not received, in some cases no deduction was allowed by applying Rule 9A of the Rules or by treating the expenditure as capital expenditure. 3. The matter has been examined in light of judicial decisions on this subject. The order of the Hon. Bombay High Court dated 28. 1.15 in ITA 310 of 2013 in the case of Venus Records and Tapes Pvt. Ltd. on this issue has been accepted and .....

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