9911796707
TMI Blog2008 (5) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessment year 1992-93, the assessee claimed the benefit of carry forward of Rs.39,43,830/- as amortization expenses. The Assessing Officer allowed the claim of amortization. On appeal, the Commissioner of Income Tax, in exercise of his jurisdiction under Section 263 of the Act, set aside the assessment and directed the Assessing Officer to withdraw the benefit of carry forward granted to the Assessee on the ground that, as the provisions of Section 80 of the Act are applicable, the benefit of carry forward of the expenses was not admissible to the assessee as the assessee had failed to file the income tax return in accordance with Section 139(3) of the Act. Appeal filed against the aforesaid order before the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be subject to the provisions of Sections 139(3) and 80 of the Act. In other words, it was held that in respect of old films if there was loss, the same would be eligible for carrying forward only if the return of income was filed within the statutory period. In regard to the second film, it was held that the amortization allowance for the next year was not subject to the provisions of Section 80 and Section 139(3) of the Act. It was the finding of the appellate authority that the amortization expenses relating to the second year would have to be allowed separately while computing the income for the next year and not at the time of computation of the income for the current year. Being aggrieved against the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in this Chapter, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A." 7. Section 80 at the relevant time provided that no loss which has not been determined in pursuance of a return filed under sub-section (3) of Section 139, can be carried forward and set off under sub-section (1) of Section 72 or sub-section (2) of section 73 or sub-section (1) or sub-section (3) of Section 74 or sub-section (3) of Section 74A. 8. Evidently, Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputing the total income of the assessee for any assessment year. (2) Where a feature film is certified for release by the Board of Film Censors in any previous year and in such previous year,-- (a) the film producer sells all rights of exhibition of the film, the entire cost of production of the film shall be allowed as a deduction in computing the profits and gains of such previous year; or (b) the film producer- (i) himself exhibits the film on a commercial basis in all or some of the areas; or (ii) sells the rights of exhibition of the film in respect of some of the areas; or (iii) himself exhibits the film on a commercial basis in certain areas and sells the rights of exhibition of the film in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us year and allowed as a deduction in that year. (4) .." 10. Counsel for the parties have been heard. 11. It is not disputed before us that a film is a capital asset in the hands of a film producer and the subsidy given by the State Government to a film producer is a capital receipt. Section 80 falls under Chapter VI, which deals with aggregation of income and set off or carry forward of loss. 12. Rule 9A provides for deduction of expenditure incurred on production of feature films. Rule 9A would appropriately be applicable to the present case, as the respondent is doing the business of producing feature films. The deduction for expenditure incurred on production of feature films is appropriately go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance cost of production will be amortized under Rule 9A(2) and then that will be allowed as deduction for the next year. It is not a business loss. That if a film is not released for exhibition on a commercial basis at least 180 days before the end of such previous year, the cost of production of the film insofar as it does not exceed the amount realized by the film producer by exhibiting the film on a commercial basis, is to be allowed as a deduction in computing the profits and gains of such previous year and the balance, if any, is to be carried forward to the next following previous year and allowed as a deduction in that year. Admittedly, in the present case, as stated above, second film "Santhwanam" was n ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
