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Issues involved: Appeal against the order of Ld. CIT(A)-3, Mumbai for the assessment year 2005-06 regarding the treatment of cost of abandoned film as revenue expenditure.
Summary: The appeal was filed by the revenue challenging the decision of Ld. CIT(A)-3, Mumbai regarding the treatment of the cost of abandoned film as revenue expenditure for the assessment year 2005-06. The grounds of appeal included the contention that the cost of abandoned film should be considered as capital expenditure. The Assessing Officer (AO) disallowed the expenditure, adding it back to the assessed income, citing a pending appeal before the Hon'ble High Court. However, Ld. CIT(A) allowed the claim of the assessee, following various Tribunal decisions and the decision of the Hon'ble Supreme Court in CIT vs. Ralson Industries Ltd. The department, aggrieved by this decision, raised grounds of appeal against Ld. CIT(A)'s order. It was argued by the appellant that the Tribunal's decision in a similar case had been upheld by the Hon'ble Jurisdictional High Court, providing precedence for allowing the cost of abandoned films as revenue expenditure. On the other hand, the Departmental Representative (D.R) relied on the AO's order. After considering the submissions and the relevant legal precedents, the Tribunal noted the decisions of the Hon'ble High Court in similar cases, where the appeals by the revenue were dismissed. As Ld. CIT(A) had correctly followed the Tribunal decisions and the decisions of the Hon'ble Jurisdictional High Court, the department's appeal was dismissed, upholding the allowance of the cost of abandoned film as revenue expenditure. Therefore, the appeal filed by the department was dismissed, affirming the decision of Ld. CIT(A) in favor of the assessee.
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