9911796707
|
Home
Issues: Interpretation of the term 'paid' in Explanation to sub-rule (1) of rule 9B of the Income-tax Rules for deduction of amortisation of film distribution rights.
In this case, the appellant, a firm with two partners, claimed a deduction of Rs. 14,96,000 for amortisation in respect of a film. The Assessing Officer disallowed the balance amount of the claimed deduction, stating that only the amount actually paid during the year could be considered as the cost of acquisition for the purpose of deduction. The issue before the Appellate Tribunal was the interpretation of the term 'paid' in the Explanation to sub-rule (1) of rule 9B of the Income-tax Rules, which determines the deduction of amortisation of film distribution rights. The Appellate Tribunal analyzed the agreement between the appellant and the film distributor, where the appellant was liable to pay a consolidated consideration of Rs. 14,96,000 for acquiring the distribution rights of the film. The agreement specified the manner in which the consideration was to be paid in installments over a period. The Tribunal noted that the liability for the full consideration amount arose upon the execution of the agreement, even though the payment was deferred to future dates. Referring to the definition of 'paid' in section 43(2) of the Income-tax Act, the Tribunal held that the liability for the expenses had been actually incurred by the appellant. Citing a precedent from the Madras High Court, the Tribunal emphasized that 'paid' should be understood as 'incurred' rather than only in a physical sense. Consequently, the Tribunal allowed the appellant's claim for the full cost of acquisition incurred under the agreement, setting aside the order of the CIT(A) and allowing the appeal. In conclusion, the Appellate Tribunal held that the term 'paid' in the Explanation to sub-rule (1) of rule 9B of the Income-tax Rules should be interpreted in line with the definition in section 43(2) of the Income-tax Act. The Tribunal ruled in favor of the appellant, allowing the deduction of the full cost of acquisition incurred under the agreement for film distribution rights, emphasizing that the liability for the expenses was actually incurred by the appellant, even though the payment was deferred to future dates.
|
