TMI Blog2019 (5) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... ilability of interest free funds with the assessee were much higher than interest free refundable rent deposit of ₹ 9 crores advanced by the assessee and in the absence of any cogent material inextricably linking interest bearing borrowings with the interest free refundable rent deposit granted by the assessee, the presumption will apply that the assessee has released the interest free refundable rent deposit out of interest free funds available with it. The decision of Hon‟ble Bombay High Court in the case of Reliance Utilities and Power Limited [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] is relevant. - Decided in favour of assessee Expenditure incurred towards audio rights - nature of expenditure - revenue or capital - HELD THAT:- No distinguishing facts are brought on record by both the rival parties in the year under consideration before the Bench vis-a-vis facts as were there in preceding years. Further, no judgment of Superior Court is brought on record by both the rival parties holding against the assessee. Thus, we have no reason to take a different stand than what was taken by tribunal consistently over preceding years in assessee‟s own case. Respectfully, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) in ITA No. 6194/Mum/2017 for AY 2011-12, read as under:- 1) On the facts and circumstances of the case and in law the Ld CIT Appeals-4, Mumbai erred in i) Sustaining the additions of ₹ 20,00,000/- for advances given during the course of business on the ground that acquiring lien on the overseas Territory of films was not the business of the Appellant Company, ignoring the fact that the business of the Appellant Company is also of productions and distribution of cinematographic films. ii) Upholding the addition of ₹ 1,08,00,000/- from interest paid on loan on the ground that the Interest Free Rent Deposit have been given from the business receipts/transactions, ignoring the fact that the Interest Free Rent Deposit are from the free reserves and surplus of the Appellant Company. iii) Your Petitioner craves your leave to add, alter or amend the grounds of Appeal, if any, at the time of hearing . 4. The brief facts of the case are that the assessee is engaged in the business of manufacturing and sale of Audio Cassettes CD‟s, Production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3648.00/- 5273.63/- iii) Total Interest free Fund 4913.29/- 7004.22/- iv) Interest free Refundable Deposit 200.00 700.00 The assessee also relied upon the presumption available wherein if interest free funds available are more than interest free refundable rent deposit, then it will be presumed that the assessee has made deposit of interest free rent deposit out of interest free funds available with it. 5.3 The AO rejected the contentions of the assessee company by holding that these commercial premises were taken on leave and license basis from the wives of the Director of the company. It was also observed by the AO that these payments of interest free refundable rent deposit were given out of business receipts as is evident from the bank statement of IDBI Bank from 01.01.2008 to 31.03.2008 which as per AO made it clear that interest free refundable rent deposits were not given out of free reserves. It was observed by the AO that assessee is paying interest on the term lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year 2002-2003 for acquisition of Audio Rights of music feature film of Production No. 7. Assessee Company had various meetings and discussions with the above said party to recover an amount of ₹ 65,00,000/-. Finally on March 2004 assessee company had reached an understanding to create an lien Overseas Territory of the Feature Film DIL CHURAKE CHAL DIYE' produced by M/s. Karishma International and assigned to M/s RAMNORD RESEARCH LABORATORIES PVT LTD. In terms of the said letter of understanding dated 22nd March, 2004 it had been mutually agreed that the assessee company had lien on the OVERSEAS TERRITORY of the above said Feature Film to the extent of the amount of ₹ 65,00,000/- Zerox copy of the Letter of Arrangement between assessee company and M/s Karishma International dated 22-3-2004 is enclosed herewith for your kind perusal and record. Assessee company could recover an amount of ₹ 45,00,000/- from the Overseas rights of Film 'SHADI KARKE PHAS GAYA YAAR from Redsun Exports Put Ltd on behalf of M/s Karishma International. Zerox copy of the letter dated 31st July is enclosed herewith. Thereafter, assessee company rigorously follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount as business loss. In view of the above facts and considering the fact that the advance paid to the said party is towards securing raw material for the manufacture of its product the same have become irrevocable and accordingly the said amount have been written off in the books of accounts by debiting in profit and loss. It is submitted that the advance towards acquisition Audio Rights is for bona fide purpose of the Assessee business, as such the same be allowed as business loss. 6.2. The AO rejected the contentions of the assessee by holding that the said amount which is given to create an lien on overseas territory of the feature film Dil Churake Chal Diye produced by M/s. Krishma International and assigned to M/s. Ramnord Research Laboratories P. Ltd., is capital in nature and cannot be allowed as deduction as revenue expenses vide assessment order dated 31.12.2013 passed by the AO u/s 143(3) of the 1961 Act. 7. Aggrieved by assessment order dated 31.12.2013 passed by the AO u/s 143(3) of the 1961 Act, the assessee filed first appeal before Ld. CIT(A). The Ld. Counsel for the assessee reiterated the submissions before learned CIT(A) as were m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n nature. The argument that interest free deposit has been given from interest free fund, is of no avail because no such truth is there as such deposit of ₹ 9 crores has been given from business transactions. It can be seen from the Balance Sheet of F.Y.2007-08 that shareholder's fund including Reserves Surplus of ₹ 7004.22 lakhs have been utilized for Inventory of ₹ 2331.83 lakhs, Sundry Debtors of ₹ 101.81 and Cash Bank Balance of ₹ 3535.43. Further, the Gross Block of Assets as on 31.03.2008 is of ₹ 1755.73 lakhs. Thus, it is very evident that Share capital and Reserves Surplus of ₹ 7004.22 lakhs has been utilized. Thus, for giving advance of ₹ 9 crores, the funds might have been utilized from Secured Loans or from business transactions. Therefore, the contention of the Appellant that such deposit of ₹ 9 crores has been made from Interest free Surplus fund is factually incorrect. 7.3. As regards business expediency of such Rent Deposit, the Appellant has not explained anything as to how there is business expediency for making such deposit with the wives of Directors for taking premises of Durga Chambers on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 1(SC), Madhav Prasad Jatia vs. CIT 118 ITR 200(SC). It can be seen from the set of facts that in spite of giving good rent of ₹ 4,50,000/- per month to the wives of the Directors, such huge amount of ₹ 9 crores has been given for no business purposes. Thus, fund has been given to the wives of the Directors without charging of interest hence, corresponding interest expenditure is disallowable. For this proposals reliance is placed in the following case laws :- Highways Construction Co. Pvt Ltd. vs. ClT(Gau) 199ITR 702 CIT vs. India Silk House (Mad.) 152 of the Income-tax Rule, 1962 79 Marolia Sons Vs. CIT(All) 129 of the Income-tax Rule, 1962 475 Tirupati Trading Co. Vs. CIT(Cal.) 242 ITR 13 CIT Vs. Sujanni Textiles (P) Ltd.(Mad-) 225 ITR 560 CIT Vs. P. Ganu Rao and Sons (Mad.) 185 ITR 324 Thus, in the light of above, factual references and judicial proposals, the disallowance of interest expenditure of ₹ 1,08,00,000/- made u/s.36(1)(iii) is sustained. 7.2. Similarly, the assessee also contended before learned CIT(A) that an amount of ₹ 20,00,000/- paid on account of advance tow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant Company only could recover an amount of ₹ 45,00,000/- from the OVERSEAS RIGHTS OF THE FILM SHADI KARKE PHAS GAYA YAAR from Redsun Exports Pvt. Ltd., on behalf of M/s. Karishma International. Copy of the letter dated 31st July 2004 is placed on records at the time of assessment proceedings. Thereafter, Appellant company rigorously followed with M/s. Karishma International for the recovery of balance amount of ₹ 20,00,000/- but the said party expressed their inability to make further payments as they suffered heavy losses in their various film productions. In fact the said production house had discontinued the business activities of film production, therefore, the advances become irrecoverable and hence, the appellant company had no other alternative but to claim the said advances as revenue expenditure u/s.37(1) of the I T Act and accordingly has debited the said amount of ₹ 20,00,000/- to the Profit and Loss account under the head BAD DEBTS . It is humbly submitted that the business loss is directly connected with the business operation and incidental to the carrying on the business of the appellant company, hence the same be allowed as business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ma International has discontinued the business activities of Film Production hence, according to the Assessee, such an amount of ₹ 20 lakhs becomes Bad debt hence, allowable expenditure. This contention of the Appellant is not tenable because under the Income-tax Act, the allowable Bad debt should be one which has already been included in the Income in earlier year. Sec.36(vii) r.w.s.36(2) is very specific over such issue. Since the Assessee has never shown an amount of ₹ 65 lakhs or ₹ 20 lakhs as Income from earlier year, no such advance could be allowable as Bad debt. The contention that it should be allowed u/s.37 can also not be accepted because of the facts of the case. It can be seen from the admission of the Appellant that it had given ₹ 65 lakhs to one M/s. Karishma International for Audio Rights of a Film to be produced. However, the production of film did not materialize, and as mentioned by the Appellant, M/s. Karishma International had discontinued its production business hence, advance was outstanding right from F.Y.2002-03. Subsequently, the Appellant has negotiated for having lien on overseas territory of the Feature Film namely; Dil Churake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 65,00,000/- to M/s. Karishma International to acquire audio rights for the new film to be produced by Karishma International but the said M/s Karishma International could not produce the film due to losses and closure of business. It was submitted that the assessee in order to secure its business interests got M/s. Karishma International to create lien on the overseas rights of another film‟ Dil Churake Chal Diye‟ which was later renamed as Shaadi Kar Ke Phas Gaya Yaar‟. It was submitted that M/s. Redsun Exports P. Ltd. was under liability to pay to the assessee to the tune of ₹ 65,00,000/- under this agreement on and behalf of M/s Karishma International and it was submitted that ultimately an amount of ₹ 45,00,000/- could be recovered from M/s Karishma International through Redsum Exports Private Limited, while rest of the amount of ₹ 20,00,000/- was written off as Business Loss by the assessee in its books of accounts. Our attention was also drawn to page no. 75 of the paper book filed by the assessee with the tribunal wherein letter from M/s. Karishma International to M/s. Ramnord Research Laboratories P. Ltd., dated 22.03.2004 is placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prayed by learned counsel for the assessee that the said loss of ₹ 20 lacs be allowed as deduction from business income either as business loss or bad debts. It was submitted that learned CIT(A) did not allowed the same as bad debt on the ground that the assessee did not showed the said amount as income in earlier years. It was submitted that learned CIT(A) treated this advance written off as capital loss. It was submitted that the said amount was paid by assessee in ordinary course of its business and the other party could not fulfil its business commitment and hence it should be allowed as business loss. The assessee relied on the decision of Hon‟ble Bombay High Court in the case of Harshad J. Choksi v. CIT reported in (2012) 349 ITR 250 (Bom). 8.2 On the second issue, it was submitted by learned counsel for the assessee that Leave License agreement for taking commercial premises bearing number 501-601, Durga Chambers, 278/E, Linking Road, Khar West, Mumbai 400052 on leave and licence basis was entered into by the assessee with wives of Directors of the assessee company against which interest free refundable rent deposit of ₹ 9,00,00,000/- was given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate that the interest free funds available with the assessee were higher than interest free refundable rent deposit of ₹ 900 lacs. The Reliance was placed by learned counsel for the assessee on the decision of Hon‟ble Bombay High Court in the case of Reliance Utilities and Power Limited(supra) and contentions were made that presumption will apply that the assessee made the payments out of own interest free funds available with it. It is submitted that similar additions were made in AY 2012-13 and 2013-14 wherein the assessee has filed an appeal before the tribunal which is tagged with this appeal of the assessee for AY 2011-12 and it is claimed that similar contentions as were made for this year shall apply to those two years which are also before the tribunal. It was submitted that audited Balance Sheet, profit and Loss and net worth figures for those years are also filed in paper book which is referred to above by learned counsel for the assessee in his arguments before the tribunal. 9. The Ld. DR on the other hand submitted that additions of ₹ 20,00,000/- was made on the grounds that this loss was a capital loss and cannot be allowed as revenue loss o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of the 1961 Act. The contentions of the Revenue in rejecting the claim of the assessee is that this payment towards acquiring audio rights of the proposed feature film got changed to overseas rights of the feature film Dil Churake Chal Diye‟, which is capital in nature and loss thereof is capital loss which cannot be allowed as revenue loss while computing income of the assessee. It was held by learned CIT(A) that the business of the assessee is not to deal in the overseas rights of the feature film and non recoverability of money is loss of capital and cannot be allowed as revenue loss as it is a capital loss.It is also averred by Revenue that the said amount of ₹ 65 lacs which was advanced by the assessee or an amount of ₹ 20 lacs which ultimately could not be recovered by the assessee, was not included by the assessee as its income while computing income chargeable to tax in earlier years or even during the impugned assessment year, thus such advance of money cannot be allowed even as bad debt under the provisions of the 1961 Act. 10.2 The tribunal is the last fact finding authority and is obligated to appreciate complete facts on record before ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between assessee and M/s Karsihma International over a period of time in relation to feature film Dil Churake Chal Diye‟. Perusal of the ledger account of M/s Karishma International in the books of assessee will reveal that first payment of ₹ 30 lacs was made by the assessee to M/s Karishma International on 09th June 1999 itself i.e. the date of original agreement dated 09.06.1999. b) There arose some disputes and differences between assessee and M/s Karishma International while implementing original agreement dated 09.06.1999 relating to film Dil Churake Chal Diye The complaint was also filed by the assessee with M/s Film Combine against said M/s Karishma International. The disputes and differences between the assessee and M/s Karishma International stood resolved vide this agreement of arrangement dated 02.03.2004. c) There were three more parties found mentioned in the said agreement of arrangement dated 02.03.2004 who were having disputes and differences with M/s Karishma International namely Mrs. Renu K Taurani, Mrs. Varsha R. Taurani and Dasmesh International Limited, whose disputes and differences with M/s Karishma International also stood re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greed by the assessee to pay ₹ 70 lacs to Mega Bollywood Private Limited. Now, under this settlement agreement dated 02.03.2004, it is agreed between the assessee and M/s Karishma International that the assessee will pay ₹ 45 lacs each to Mrs. Renu K. Taurani and to Mrs. Varsha K. Taurani, aggregating to ₹ 90 lacs, out of the aforesaid advance of ₹ 100 lacs agreed by assessee to be paid to M/s Karishma International as refundable advance vide this agreement of arrangement dated 02.03.2004, at the time of effecting of delivery to assessee by Karishma International of Master Tapes/Original Recording Tracks(Dats.) containing all songs, dialogues and musical works of the said picture Dil Churake Chal Diye‟. The said M/s Karishma International agreed to deliver to assessee aforesaid master tapes/original recording tracks etc on signing of this agreement of arrangement dated 02.03.2004. The said M/s Karishma International agreed and assured assessee vide this agreement of arrangement dated 02.03.2004 to release the film Dil Churake Chal Diye‟ in the month of July 2004. The authorities below had not seen whether the assessee had paid this additional a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 90 lacs were paid to Mrs Renu K Taurani and Mrs Varsha R Taurani, wives of Directors to settle their inter-se disputes and differences with M/s Karishma International. Whether the said advances were released keeping in view commercial expediency or was a gratuitous payment has not been verified by the authorities below. The said advance was secured by refund cheques of ₹ 100 lacs issued by M/s Karishma International in favour of the assessee and whether these cheques stood cleared from bank also has not been verified by the authorities below. The balance of ₹ 10 lacs advance out of fresh advance of ₹ 100 lacs granted by assessee to M/s Karsihma International was adjusted against ₹ 75 lacs now recoverable owing to excess advance keeping in view reduced consideration of ₹ 55 lacs for acquisition of audio rights of the feature film Dil Churake Chal Diye‟, vide agreement of arrangement dated 02.03.2004, instead of original agreed consideration of ₹ 280 lacs vide original agreement dated 09.06.1999. This left the balance recoverable of ₹ 65 lacs by assessee from M/s Karishma International. The assessee vide entry in its books of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference or was this additional advance of ₹ 100 lacs was gratuitous payment by the assessee to said M/s Karishma International to protect the interest of wives of the Director of the assessee company. It is also important to understand the fate/clearance of cheques of ₹ 100 lacs ( 10 cheque of ₹ 10 lacs each) given by said Karishma International to the assessee as refund of this additional advance of ₹ 100 lacs. k) The agreement of arrangement dated 02.03.2004 also provides that M/s Karishma International acknowledged that it is liable to pay to assessee ₹ 65 lacs as well fresh additional advance received ₹ 100 lacs received by it from assessee, wherein M/s Karishma International agreed that it will pay ₹ 65,00,000/- to the assessee before effecting delivery of any prints of the said picture for any of the territories of the world including the Overseas territories. M/s Karishma International agreed that it will not release, distribute, exhibit or exploit the said picture Dil Chuarke Chal Diye‟ in any of the territories of the world directly or indirectly until this amount of ₹ 65 lacs is first paid to the assessee. M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... territory unless firstly the assessee was paid ₹ 65 lacs. This letter dated 22.03.2004 written by Karishma International to M/s Ramnord Research Laboratories Private Limited is placed in paper book at page 75. The said laboratory vide letter dated 08.04.2004 written to the assessee acknowledged that it will not deliver negatives of the said feature film Dil Churake Chal Diye‟ for overseas territory unless the assessee is paid ₹ 65 lacs.The said letter is placed in paper book at page 76. o) On page 77 of the paper book is a letter written by Redsun Exports Private Limited to M/s Karishma International with copy to the assessee acknowledging that ₹ 65 lacs shall be paid on behalf and on account of M/s Karishma International to the assessee, which is in accordance with the understanding vide inter-se agreement Karishma International had with Redsun Exports Private Limited, dated 20.08.1999 for overseas circuit. p) Then there was further change in understanding between M/s Karishma International with assessee, vide fresh agreement of arrangement dated 18.03.2005, which is placed at page 78 of paper book. In this revised agreement of arrangemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereby lifting lien which was earlier recorded in favour of the assessee by the said laboratory. The photocopy of aforesaid cheque of ₹ 45 lacs is also placed in paper book at page 82. 10.6 Thus, what transpires from the analysis of the above documents which are placed on record before us is that the facts were not properly explained by the assessee before the authorities below nor were these facts properly appreciated by the authorities below. Keeping in view our aforesaid detailed analysis of the material on record, it is now required to look into, as follows: a) The original agreement between assessee and M/s Karishma International dated 09.06.1999 is required to be placed on record by the assessee. b) The commercial expediency and prudence in further advancing ₹ 100 lacs by the assessee to said M/s Karishma International vide agreement of arrangement dated 02.03.2004 needs to be explained, more so when the amount already advanced was ₹ 130 lacs which was in excess of reduced consideration of ₹ 55 lacs for acquiring audio rights of feature film Dil Churake Chal Diye‟ and the said additional advance of ₹ 100 lacs is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the file of the AO for f denovo assessment. The assessee is directed to give complete explanations as to this write off of ₹ 20 lacs keeping in view entire factual matrix of the case and as culled out by us in this order in preceding para s. The AO is directed to give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law in set aside proceedings. The AO is directed to admit all evidences/explanations submitted by the assessee in set aside proceedings before the AO its defence which shall be then adjudicated by the AO on merits in accordance with law. We have also noted that the tribunal vide orders dated 06.08.2018 in assessee‟s own case in ITA no. 1894/Mum/2017 for AY 2010-11 has held that expenditure incurred for purchase of audio video rights is revenue in nature. This ground of appeal being ground no. 1 filed by the assessee in memo of appeal with tribunal is allowed for statistical purposes. We order accordingly. 11. Coming to the second issue, we have observed that the assessee has taken on leave licence basis commercial premises bearing numbers 501-601, Durga Chamber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on leave and license basis commercial premises bearing numbers 501-601, Durga Chambers, 278/E, Linking Road, Khar West, Mumbai 400052 defies commercial expediency and the same is unconscionably high keeping in view interest free refundable rent deposit granted by licensee of the similar commercial premises in vicinity in favour of licensors of the premises. No such comparables are brought on record by the authorities below to prove that these interest free refundable rent deposits were unconscionably high defying commercial expediency and only bald statement is made that the said rent deposits are excessive and in the absence of cogent incriminating material, the interest free refundable rent free deposit of ₹ 9.0 crores cannot be held to be excessive or exorbitant. The assessee has placed all leave and license agreements on record in paper book filed with tribunal at page 23-42. 11.2. We have gone through audited financial statements of the assessee for financial year 2003-04 and also from financial year 2007-08 to financial year 2012-13, which are all placed in paper book filed with the tribunal at page 6-18. The perusal of these financial statements clearly sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, perusal of audited financial statements for all these years clearly reveals as detailed above that the availability of interest free funds with the assessee were much higher than interest free refundable rent deposit of ₹ 9 crores advanced by the assessee and in the absence of any cogent material inextricably linking interest bearing borrowings with the interest free refundable rent deposit granted by the assessee, the presumption will apply that the assessee has released the interest free refundable rent deposit out of interest free funds available with it. The decision of Hon‟ble Bombay High Court in the case of Reliance Utilities and Power Limited(supra) is relevant. We hold this ground number 2 raised by assessee in its appeal for AY 2011- 12 in favour of the assessee and order deletion of additions as were made by the AO which stood later affirmed by learned CIT(A). We order accordingly. 12. In the result, appeal filed by the assessee in ITA no. 6194/Mum/2017 for AY 2011-12 is partly allowed as indicated above. 13. Since the issue involved in appeal(s) in ITA no. 6195 to 6196/Mum/2017 for AY 2012-13 and 2013-14 respective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be considered as capital expenditure. Assessee is doing business of manufacturing and sale of Audio cassettes and CD's. They Manufacture blank as well pre-recorded cassettes of motion pictures and musical software's (non-Filmy songs/or basic programs) under the trade name and logo of TIPS. To manufacture and market pre-recorded cassettes of films assessee company has to purchase the MASTER PLATE i.e. original sound track of Films songs also commonly Known as Audio Rights, which of course is acquired in perpetuity from different film producers and also of its own productions for making several copies of Audio cassettes of various films. It is only after acquiring the audio rights of various films the Music and songs of the pictures whose audio rights are acquired are transmitted by reproducing such music and songs in audio cassettes which are also manufacture and/or purchased from the outside on job work basis. In other words assessee's is to produce and market the audio cassettes under its logo TIPS' for which they have to purchase audio rights of various films from different producers and from its own productions of motion pict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y manufactures with the help of this master plate and provides the cassettes prior to the release of the film No doubt this master plate is retained by the company, but its use and reuse would entirely depend upon the marketability of the cassettes manufactures by it, further as soon as the series of the cassettes relating to a film are manufactured and marketed the master plates becomes useless, through in rare case they do get reused for manufacturing cassettes of additional copies. The life of the master plate is very short, through the assessee retains the copy rights of the same in perpetuity. We further submit that the master plate is a formula or raw material from which copies are made since the master plate is only a raw material the cost of the purchase of the raw material is an allowable deduction in evaluating the gross profit derived in the manufacture and sale of the copies, Further more, the frequency with which films are made which results in new types of music it has considerably reduced the life of the sound track for it is outdated very fast. The master plate of one could not substituted for another and for every new music recording a totally dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make exact copies of that plate only. From this point of view it clearly indicates that for every producers from whom the copies are made from the plate the plate is different. In other words, the final product produced by the assessee is very different from one to another. For every series of items of music, sound etc that is being made the basic material is different and is ever uniform, as such it would be wrong to that the expenditure is in nature of capital. Audio rights expenses as explained above have been treated as capital expenses and has been disallowed we submit that appeal in the very case of appellant for the year 1990-91 to 2008-09 before the ITAT, bench-E-Mumbai has been decided in the favour of the assessee. The various facts including the CIT(A) VIII orders for assessment year 1995-96 as well as various decisions cited on this disputed matter has been discussed and reviewed an honourable bench has come to the conclusion. That expenditure on Audio rights is of revenue nature and is allowed u/s. 37(1) of the I. T.Act. In view of the facts and considering the nature of expenses of the assessee all the expenses incurred by purchase of audio right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat similar addition was also made in earlier years which has been decided by the Hon'ble ITAT in the favour of the Assessee. Respectfully following the decision of Hon'ble ITAT in ITA No.7222/Mum/2012 dated 14.12.2014, the addition so made of ₹ 3,50,000/-(Net amount of ₹ 2,62,500/-) is deleted. 16. The Revenue being aggrieved by the decision of learned CIT(A) has filed an appeal before the tribunal and both the parties have fairly agreed that the issue is covered by series of decision in assessee‟s own case for earlier years wherein tribunal has decided this issue consistently in favour of assessee by holding that expenditure incurred for acquiring audio rights is revenue in nature and is an allowable business expenses. The orders of ITAT for earlier years in assessee‟s own case are placed in paper book filed with tribunal. Our attention was drawn to following orders of the tribunal in assessee‟s own case for earlier years which are all placed in paper book, wherein expenditure incurred for acquiring audio rights was held by tribunal to be revenue expenses: S.No. AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue in nature, by holding as under;- 4. We have heard both the parties and perused the materials available on record. The issue of expenditure incurred for purchase of audio and video rights of feature films for production of cassettes and CDs has been considered by the Tribunal in assessee s own case for earlier years and after considering relevant facts held that expenditure incurred for purchase of master plates is revenue in nature. The relevant portion of the order is extracted below:- 4. After considering the relevant findings of the Assessing Officer and the learned Commissioner (Appeals) and also the earlier year's order of the Tribunal, we find that this issue has been decided in favour of the assessee right upto the assessment year 2008-09. In the latest decision of the Tribunal in ITA no.6925/Mum./2011 for the assessment year 2008-09, order dated 29th January 2013, the Tribunal, after relying upon the earlier year orders has observed and held as under:- 4, We have the benefit of the decision of the Tribunal in TTA No. 599/Mum/09 wherein the Tribunal at para-5, page-2 has held as under:- As regards ground No. 1, the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y deleted addition made by the AO. We do not find any error in the order of the Ld.CIT(A) and hence, we are inclined to uphold the findings of Ld.CIT(A) and dismiss the appeal filed by the revenue. 17.4 Even before us, no distinguishing facts are brought on record by both the rival parties in the year under consideration before the Bench vis-a-vis facts as were there in preceding years. Further, no judgment of Superior Court is brought on record by both the rival parties holding against the assessee. Thus, we have no reason to take a different stand than what was taken by tribunal consistently over preceding years in assessee‟s own case. Respectfully, following the decision of tribunal in ITA No. 1894/Mum/2017 for AY 2010-11, we hold that the expenditure incurred by the assessee in acquiring audio rights are revenue expenses and learned CIT(A) appeal has rightly deleted the additions as were made by the AO. We are inclined to uphold the findings of learned CIT(A) and dismiss the appeal filed by Revenue. We order accordingly. 18. In the result, the appeal filed by revenue in ITA no.6291/Mum/2017 for AY 2012-13 is dismissed. 19. In the result appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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