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TMI Blog2015 (8) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... master plate is nothing more than raw material. From the factual matrix of the case on hand, we find that the master plate of a movie is only a new material from which copies are produced on cassettes for that movie only and being material to the evaluation of the gross profit derived from the manufacture and sale of copies / cassettes, would, in our considered view, be construed as Revenue expenditure. - Decided in favour of assessee. - I.T.A. No.718/Bang/2014 - - - Dated:- 20-2-2015 - Shri Rajpal Yadav And Shri Jason P. Boaz JJ. For the Appellant : Dr. K. Shankar Prasad, JCIT (D.R) For the Respondent By : None. ORDER Per Shri Jason P. Boaz : This appeal by Revenue is directed against the order of the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Aggrieved by the order of assessment for Assessment Year 2006-07 dt.13.12.2011, the assessee preferred an appeal before the CIT (Appeals) - I, Bangalore. The learned CIT(A) disposed off the assessee's appeal vide order dt.30.1.2014 allowing the assessee's appeal, by holding that the expenditure of ₹ 51,59,100 incurred for purchase of audio rights is revenue in nature. 3. Aggrieved by the order of the CIT (Appeals) - I, Bangalore for Assessment Year 2006-07 dt.30.1.2014, the Revenue is in appeal before this Tribunal raising the following grounds :- 1. The order of the learned CIT (Appeals) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case the learned CIT (Appeals) erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Arvind Mills Ltd. V CIT 97 ITR 422 (SC). The learned Departmental Representative was heard in support of the grounds raised and has placed reliance on the finding of the Assessing Officer in the order of assessment and prayed for the same to be upheld. 5.2.1 We have heard the learned Departmental Representative and perused and carefully considered the material on record; including the judicial pronouncements cited and relied upon by both Revenue and the learned CIT(A) in the impugned order. From an appreciation of the material on record, it is seen that in the course of assessment proceedings, the Assessing Officer observed that the assessee had claimed expenditure of ₹ 51,59,100 for purchase of audio rights in his profit an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld songs continue to be in currency following mixing and re-mixing in the process of recreation of songs. In this view of the matter, the Assessing Officer disallowed the assessee's claim and treated the amount of ₹ 51,59,100 expended to purchase audio rights as capital expenditure. 5.2.3 On appeal, the learned CIT(A) considered this issue in detail at paras 3.3 to 3.6 of the impugned order. At para 3.7 of the impugned order the learned CIT(A) held that the assessee being a manufacturer of music, the raw material for this is the master plate which can be acquired only by way of assignment of copy rights and therefore since the amount paid for procuring the raw material to ensure its smooth and legal supply, the expenditure incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assettes of a film are manufactured and marketed, the master plates are rendered useless as very quickly new music and songs of more recent movies replace the old items of music. The master plate of one movie cannot be used for another and for every movie a new and different master plate is required; indicating that the master plate is nothing more than raw material. From the factual matrix of the case on hand, we find that the master plate of a movie is only a new material from which copies are produced on cassettes for that movie only and being material to the evaluation of the gross profit derived from the manufacture and sale of copies / cassettes, would, in our considered view, be construed as Revenue expenditure. 5.2.5 On a careful ..... X X X X Extracts X X X X X X X X Extracts X X X X
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