TMI Blog2007 (1) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... lant lessor as well as the lessee to the effect that films rights were sold? 4. Whether the Appellate Tribunal is right in holding that the lease deed does not provide clear intention does not mean that rights are not fully sold? 5. Whether the Appellate Tribunal is right in holding that in respect of the films rights of Malayalam films the claim of cost of acquisition would come only under 9B(4) of the Income-tax Rules as against the claim of the appellant that it will come under 9A(6) of the Income-tax Rules when the appellant is the producer? 6. Whether the valuation of closing stock by the Revenue is correct in law when the appellant has option to value the stock at market or cost whichever is lower? 7. Whether the Income-tax Appellate Tribunal was right in holding that valuing the acquisition stock of film at Rs. 33,46,480 when the film has flopped and has no market value?" The facts, in brief, are as follows: The relevant assessment year with which we are concerned is 1997-98. The assessee filed his return of income on October 31, 1997, admitting an income of Rs. 1,05,87,690. The assessee filed a revised return on December 8, 1997, declaring total income of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97, as against the total cost of acquisition of lease rights of Rs. 50,50,000 paid by the assessee by virtue of the agreement dated January 11, 1997, between the assessee and M/s. Madras Talkies, the producers of the film. The assessee claimed the entire cost of acquisition of lease rights of film as deduction under rule 9B(2)(a) of the Income-tax Rules, 1962 (hereinafter referred to as "the Rules"), which reads as under: "9B. Deduction in respect of expenditure on acquisition of distribution rights of feature films.-(l) . . . . (2) Where a feature film is acquired by the film distributor in any previous year and in such previous year, (a) the film distributor sells all rights of exhibition of the film, the entire cost of acquisition of the film shall be allowed as a deduction in computing the profits and gains of such previous year." The Assessing Officer rejected the claim of deduction by the assessee under rule 9B(2)(a) of the rules on the ground that rule 9B(2) (a) of the rules is not applicable, as the assessee released the film for exhibition in certain theatres and sold the rights in respect of other areas to M/s. S. M. Movies as per agreement dated March 24, 1997, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he film producer by a mode not covered by the provisions of this rule; or (b) having regard to the facts and circumstances of any case, it is not practicable to apply the provisions of this rule to such case, deduction in respect of the cost of production of the film may be allowed by the Assessing Officer in such other manner as he may deem suitable." The Assessing Officer rejected the claim of the assessee in respect of deduction of cost of acquisition of the said two Malayalam movies under rule 9A(6) and held that the assessee would be entitled to deduction of cost of acquisition as per rule 9B(4) of the Rules which reads thus: "9B. Deduction in respect of expenditure on acquisition of distribution rights of feature films.-. . . . (4) Where during the previous year in which a feature film is acquired by the film distributor, he does not himself exhibit the film on a commercial basis or does not sell the rights of exhibition of the film, no deduction shall be allowed in respect of the cost of acquisition of the film in computing the profits and gains of such previous year; and the entire cost of acquisition shall be carried forward to the next following previous year and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) the expenditure incurred by him in connection with the advertisement of the film. Rule 9B(2) which we have already extracted provides for deduction of the entire cost of acquisition of the film when a feature film is acquired by the film distributor in any previous year and in such previous year, he sells all rights of exhibition of the film. Accordingly, under rule 9B(2), while computing the profits and gains, the film distributor is entitled to the deduction of entire cost of acquisition of feature film which he acquired in any previous year, if the film distributor sells all the rights of exhibition in such previous year. However, rule 9B(3)(c) provides that where the film distributor acquires a feature film in any previous year and in such previous year, if he himself exhibits the film on a commercial basis in certain areas and sells the rights of exhibition of the film in respect of all or some of the remaining areas, and the film is not released for exhibition on a commercial basis at least ninety days before the end of such previous year, the cost of acquisition of the film in so far as it does not exceed the amount realised by the film distributor by exhibiting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that the claim of the assessee that he is entitled to deduction under rule 9A(6) is not acceptable as rule 9A deals with deduction in respect of expenditure on production of feature film. On the other hand, rule 9B alone deals with the deduction in respect of distributors. Concededly, the assessee is not a producer, but only a distributor. Therefore, the assessee is not entitled to deduction under rule 9A(6). We therefore hold that the Assessing Officer has rightly rejected the claim of the assessee and allowed the deduction under rule 9B(4) of the Rules. Hence, the fifth question is answered against the assessee. With regard to the seventh question, viz., "Whether the Income-tax Appellate Tribunal was right in holding that valuing the acquisition stock of film at Rs. 33,46,480 when the film has flopped and has no market value?" We find that no such issue was raised before the Appellate Tribunal. It is settled law that a point not raised before or considered by the Tribunal cannot be considered by the High Court (vide: CIT v. Vellore Electric Corporation Ltd. [1999] 235 ITR 289 (Mad)). However, the assessee is at liberty to agitate the said issue in the manner kn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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