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TMI Blog2013 (12) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... , AM,JJ. For the Petitioner : Shri M. L. Perumal For the Respondent : Shri Sanjiv M. Shah ORDER Per Sanjay Arora, A. M.: This is an Appeal by the Revenue and Cross Objection by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-3, Mumbai ('CIT(A)' for short) dated 26.07.2012, partly allowing the assessee's appeal contesting its assessment u/s.143(3) of the Income Tax Act, 1961 ('the Act' hereinafter) for the assessment year (A.Y.) 2005-06 vide order dated 20.12.2011. Arguments 2. At the very outset, the learned AR would contend that the issue under reference is squarely covered by the decision by the hon'ble jurisdictional High Court in the assessee's own case (in ITXA No.1199/2010 dated 14.03.2011), adducing a copy of the same. The hon'ble High Court has approved the set aside by the Tribunal of the revision order u/s. 263 on the same set of facts, following the decision by the hon'ble court in the case of CIT vs. Mukta Arts Pvt. Ltd. (in ITA No.584/2001 dated 25/08/2008). Copy of the said order was also placed by him on record. Further, per its Cross Objection (CO), the assessee seeks deduction u/s.80IB on the enhanced income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise of the subsidy granted to the Marathi film producers, the basis of the said decision and the principal reason for the hon'ble court in not accepting the Revenue's reliance on the decision in case of Meenakshi Achi (V.S.S.V.) vs. CIT [1966] 60 ITR 253 (SC), was of it considering a feature film to be a capital asset in the hands of a film producer. The grant or the subsidy, in the opinion of the hon'ble court, was for assisting film producers of the Marathi films in acquiring a capital asset and to meet a part of the capital outlay. The said decision by the apex court, wherein the grant was principally for maintaining rubber plantation, i.e., revenue expenditure, and therefore taxable, was thus distinguishable on facts (refer pages 780,782). The hon'ble court in fact relied upon and applied the judgment in the case of CIT vs. Chitra Kalpa [1989] 177 ITR 540 (AP) holding that the subsidy granted by the State Government to the producers of feature films in the State is only toward inducement for the production of a capital asset and, therefore, not a revenue receipt, for it to be taxable (page 781). In fact, the hon'ble court sought justification and expressed surprise at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on concession, therefore, cannot be considered as laying down any binding principle or proposition of law. In view thereof, we are unable to consider the issue as a covered matter despite the concession by the ld. DR; it being incumbent on us to consider the decision by the hon'ble jurisdictional High Court holding, in fact, otherwise. We are, in view of the foregoing, unable to regard the issue under reference as a covered matter despite the concession by the ld. DR; it being trite that it is the correct legal position that is relevant, and not the view that the parties may take of their rights in the matter (refer: CIT v. C. Parakh Co. (India) Ltd. [1956] 29 ITR 661 (SC); Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC)). 3.3 We may next consider the legal position in the matter. Whether an expenditure and, accordingly, cost of a feature film produced by a film producer is a revenue expenditure or capital expenditure, is a matter of fact and not of law. The principles guiding the same are well settled. Succinctly put, where an expenditure gives rise to a benefit or advantage of an enduring nature, the same can be said to be in the capital field. At this stag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done for its subsequent processing or sale, the cost of which is recoverable or is to be recouped within a short period of time, i.e., about of a year and, in any case, within a year of its release. We state so as any advantage cannot conceivably be regarded as long term or as on capital account which is expected to subsist for that length of time. We are, therefore, clearly unable to see as to why when a film is for any reason unable to be completed or otherwise released by a film producer, and is therefore abandoned by him, producing films as a business, could the same be regarded as any differently, i.e., other than as a stock-in-trade of the said business, which has lost its value in the course of carrying on the business or as an infructuous expenditure (on revenue account) incurred for the purpose and in the course of the business. The same, or equivalently the cost of production of the incomplete project, is, accordingly deductible as a business expenditure on its abandonment. The only condition to which this would be subject and, without doubt, is that the abandonment is not temporary, i.e., for the time being, as where a project is shelved for the time being on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncomprehensible and contradictory, and its reliance on the decision in case of Sadicha Chitra (supra) misplaced. Finally, there is no indication of the shelving of the film project under question as being temporary and not final, so that we find no reason as to why its cost be not allowed as a business expenditure or as loss on its abandonment during the relevant year. The assessee's CO, raising an alternate contention, shall in view of said decision become infructuous. Conclusion 4. We may capsule our findings and decision. We have firstly examined the available decision by the hon'ble jurisdictional High Court (i.e., in Sadicha Chitra (supra)), having been in fact relied upon by the Revenue, to find it to be relevant, so that the matter could not be regarded as covered, as contended before us, without of course showing as to how the said decision stands met or otherwise distinguishing it. The later decisions by the hon'ble court being based on concession, without examining the issue on merits and de hors the considered decision by the said court in the case of Sadicha Chitra (supra) could not, therefore, be regarded as establishing a binding precedent. Per the same (i.e., S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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