TMI Blog2016 (2) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... ing investment. Therefore, this Tribunal is of the considered opinion that there cannot be any disallowance under Section 14A of the Act read with Rule 8D of the Income-tax Rules, 1962. - Decided in favour of assessee - ITA Nos.1340 & 1341/Mds/2015, ITA Nos. 1577, 1578 & 1579/Mds/2015 - - - Dated:- 19-2-2016 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER Assessee by : Sh. N. Devanathan, Advocate Sh. K. Ramkrishnan, CA Revenue by : Ms. Jayanthi Krishnan, CIT O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: The assessee and the Revenue have filed appeals against the common order of the Commissioner of Income Tax (Appeals)- 14, Chennai, dated 27.03.2015 pertaining to assessment years 2010-11 and 2011-12. The Revenue has also filed appeal for the assessment year 2005-06. Since common issue arises for consideration in these appeals, we heard all these appeals together and disposing of the same by this common order. 2. First, Let s take Revenue s appeals. The only issue arises for consideration is with regard to treatment of expenditure on the cost of television serial rights and feature film rights. The assessee cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see over such films/serials continue. The assessee itself treats the rights in the films/serials as intangible rights in the books of account for the purpose of Companies Act. Once the asset was shown as capital asset in the books of account for the purpose of Companies Act, it is obvious that the assessee is treating the rights on the films/serials as capital asset. Therefore, according to the Ld. D.R., the right on the films and serials has to be treated as capital in nature. 5. Referring to the order of this Tribunal for the earlier assessment years, which was referred by the CIT(Appeals), the Ld. D.R. submitted that no doubt, this Tribunal allowed the claim of the assessee as revenue expenditure in the earlier assessment years. However, an appeal was already filed in the High Court against the order of this Tribunal and the same is pending. The Ld. D.R. further submitted that the assessee s right over the films/serials is perpetual in nature. The assessee has conveniently chosen to claim the entire expenditure in the first year of the telecast itself and thereby creating a disparity between the income and expenditure which is against the concept of mercantile system of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure or capital expenditure? This Tribunal in the assessee's own case for the earlier assessment years examined this issue elaborately and found that the expenditure of similar nature has to be allowed as revenue expenditure. The CIT(Appeals), in fact, followed the order of this Tribunal. The only contention of the Ld. D.R. is that an appeal was already filed before High Court against the order of this Tribunal and the matter is pending adjudication before the higher forum. It is not the case of the Revenue that the High Court stayed the operation of the order of this Tribunal. Merely because an appeal is said to be pending before the High Court, this Tribunal is of the considered opinion that this Tribunal cannot take a different view. When the CIT(Appeals) followed the order of this Tribunal, we do not have any reason to interfere with the orders of the lower authority. Merely because an appeal is said to be pending before the High Court, in the absence of any change of material facts during the years under consideration, this Tribunal do not find any reason to interfere with the orders of the lower authority. Accordingly, the orders of the CIT(Appeals) are confirmed. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he procedure prescribed in Rule 8D(ii) of the Income-tax Rules, 1962. Placing her reliance on the judgment of Kerala High Court in CIT v. Smt. Leena Ramachandran (2011) 339 ITR 296, the Ld. D.R. submitted that any expenditure incurred for earning income which was not taxable under the Act cannot be allowed while computing the taxable income. Referring to Section 10(33) of the Act, the Ld. D.R. pointed out that dividend income was exempt from taxation. The dividend earned by the assessee on the shares acquired by it with borrowed funds did not constitute part of the total income. Therefore, the assessee has to necessarily disallow the expenditure incurred for earning the income which does not form part of total income. 11. The Ld. Departmental Representative has also placed her reliance on the decision of Mumbai Bench of the Tribunal in Lloyds Steel Industries Ltd. v. ACIT (2008) 20 SOT 40 and submitted that acquiring controlling interest in subsidiary companies is not part of the business of the assessee. Therefore, the interest income earned by the assessee cannot be allowed as business expenditure. 12. We have considered the rival submissions on either side and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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