9911796707
TMI Blog2015 (2) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... vention to the provisions of the Income-tax Act and Incometax Rules. 2. The appellant prays that the order of CIT(Appeals) on the above grounds be set aside and that of the Assessing Officer restored." 2. The assessee is in the business of purchasing video rights and other rights of feature films and selling and distribution of the same. It filed its return of income at a loss of Rs. 1,51,35,150/-. During the course of assessment proceedings the AO noticed that assessee has been debiting entire amount of purchase in the year in which it has some revenue. The AO identified such cases and these have been described in table reproduced in the assessment order at page-5, which read as under: A.Y Rights sold Realization from sale of rights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In a way the assessee had sold his total Satellite Rights in respect of said 107 films, and therefore assessee was right in valuing the cost of said Satellite Right of 107 films amounting to Rs. 3,40,26,079/- from stock. C) Regarding Serial No.2 of above statement, the assessee states that after selling the said Satellite Rights of film "Split Wide Open" for sum of Rs. 15,00,000/-, the assessee did not have any Satellite Rights available for future exploitation of said film "Split Wide Open" so in a way the assessee had sold his total Satellite rights in respect of the said film "Splitwide Open" and therefore assessee was right in valuing the cost of said Satellite Rights of the said films at NIL thus writing off his cost of said Satelli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the case of the assessee as video rights have become operative at least six months later from the date of theatre release . However, AO has rejected the aforementioned contention and added the aforementioned amount to the income of the assessee and by giving benefit of set off of carried forward losses of earlier years to the income, the income of the assessee has been assessed at nil. 4. An appeal was filed before Ld. CIT(A), before whom it was submitted that addition has wrongly been made by the AO. From the details submitted by the assessee it was seen by Ld. CIT(A) that the assessee had disclosed inventory as on 31/3/2004 at a sum of Rs. 6,44,94,247/-. As per audit report the unexploited film copy rights are valued at lower of cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 957 Section 2(a)(f) the definition of cimematorgraphy film would therefore include film distributor holding copyrights of video. vi) Rule 9B never mentions the world theatre and therefore it cannot be said that it is applicable for theater distribution rights only. In view of the submissions Appellant submitted that the disallowance made by AO was not applicable." 4.1 On these submissions Ld. CIT(A) asked the assessee to establish its practice of closing valuation of closing stock. However, except for a general narration as being on market value by a management the specific closing stock valuation were not provided . The assessee submitted the cost, period and copies of some agreements. From the details Ld. CIT(A) has summarized the posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 31-3-05. The details of Muthu Maharaj and Dil Hi dil Mein were not seen. Agreement for sale of these films were for period w.e.f. 28-11-03 for 3 years i.e. 28-11- 06 except Lahu Ke Do Rang which was till 31-3-05. 4.2 On the aforementioned facts Ld. CIT(A) has observed that AO has not made any attempt to establish the facts of the case and has not verified assessee's submission. It is further observed by Ld. CIT(A) that the conclusion of AO is without any base. In the facts of the case, the amortization in respect of 107 films is allowable as also in the films split wide open. However, in respect of satellite rights of six films, amortization in respect of "Lahu Ke Do Rang" and "Agni Chakra" are fully allowable. In respect of "Roza" and J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted by Ld. AR that assessee did not file any appeal against the sustained disallowance. Ld. CIT(A) after verification of facts has given his finding and it has been demonstrated that no excess expenditure has been claimed by the assessee in respect of items on which addition has been deleted Thus, it was submitted by Ld. AR that order passed by Ld. CIT(A) should be upheld. 7. We have heard both the parties and their contentions have carefully been considered. The addition was made by the AO in respect of three categories which have been described in the reply submitted by the assessee before AO which is has also been reproduced in the above part of this order. The addition was in respect of three categories: 1. Satellite rights of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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