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TMI Blog2016 (8) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income of the assessee at Rs. 2. 75Crores. The solitary ground raised by the AO, is as to whether the cost of production of an abandoned film can be treated as a revenue expenditure. 2. During the assessment proceedings, it was found by the AO that the assessee had written off a sum of Rs. 42, 23, 405/- on account of cost of production of incomplete/abandoned film. He held that the cost could not be written off as an expense in view of the provisions of Rule 9A of the Income tax Rules, 1962(Rules). Referring to the judgment of Hon'ble Bombay High Court in the case of Sadiccha Chitra (90CTR135), he held that cost of film was a capital asset in the hands of the producer and the expenditure incurred on abandoning the film would be ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pictures (I) Pvt. Ltd (supra), the Tribunal has decided the issue in favour of the assessee, that the Tribunal had deleted the penalty levied by the AO and confirmed by the FAA. The relevant portion of the order (supra) reads as under: "3. 3. 1 We have heard the rival contention and have perused and carefully considered the material on record, including the judicial decisions, etc. cited. The issue for consideration and adjudication before us is whether, in the facts and circumstances of the case and in the light of judicial pronouncements in this regard, the write off of expenditure of Rs. 1, 89, 49, 920/- incurred on account of advance for purchase of a film script for production of an abandoned film was allowable as revenue expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilm Censors in a previous year is provided in Rule 9A of Income Tax Rules, 1962. 2. In the case of abandoned films, however, since certificate of Board of Film Censors is not received, in some cases no deduction was allowed by applying Rule 9A of the Rules or by treating the expenditure as capital expenditure. 3. The matter has been examined in light of judicial decisions on this subject. The order of the Hon. Bombay High Court dated 28. 1. 15 in ITA 310 of 2013 in the case of Venus Records and Tapes Pvt. Ltd. on this issue has been accepted and the aforesaid disputed issue has not been further contested. Consequently, it is clarified that Rule 9 A does not apply to abandoned feature films and that the expenditure incurred on such aba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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