2010 (2) TMI 1206 - AT - Income Tax

Summary

Issues involved: Appeal against CIT(A) orders for assessment years 2006-07 and 2004-05 regarding expenditure on abandoned film treated as revenue instead of stock in trade.

Issue 1: Expenditure on abandoned film

The AO disallowed the expenditure claimed by the assessee for abandoned film production, citing the department's appeal against ITAT orders. The CIT(A) deleted the disallowance, referencing consistent decisions by ITAT in similar cases. The CIT(A) noted that the AO did not provide any other basis for disallowance apart from the department's appeal in one case. The Tribunal had previously held that films for film producers should be treated as stock-in-trade. The CIT(A) concluded that the disallowance was not sustainable merely because of the department's appeal, and thus, it deserved to be deleted.

Decision:
The ITAT Mumbai, comprising A.L. Gehlot, A.M., and Smt. P. Madhavi Devi, upheld the CIT(A)'s decision to delete the disallowance of expenditure on abandoned film production for both assessment years 2006-07 and 2004-05. The Tribunal found no fault in the CIT(A)'s order, as it was based on the precedents set by ITAT in similar cases. Therefore, the appeals filed by the Revenue were dismissed for both assessment years.