9911796707
TMI Blog2017 (2) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of running a television channel ‘Hungama’ – an entertainment channel for children for broadcasting entertainment programmes; which it procured by payment of licence fees to various channels and production houses. The cost of such licence fees was amortised by the assessee over the period of the licence. It is seen that the dubbing cost was incurred for translating the foreign language entertainment programmes into Indian languages; without incurring of which, such foreign language programmes could not have been broadcast on the assessee’s channels since the viewers, mostly children, could not have understood or appreciated them. In this factual matrix of the case, we are of the considered view that without the incurring of dubbing cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein the assessee's income under the normal provisions of the Act was determined at ₹ 10,74,94,593/- in view of the following additions/disallowances: - (i) Disallowance under section 40A(2)(b) ₹ 3,56,00,000/- (ii) Non reconciliation of ITS details ₹ 25,81,822/- (iii) Proportionate dubbing cost (4/5) ₹ 2,57,53,334/- Book profits under section 115JB of the Act were accepted as computed at ₹ 2,54,16,069/-. 2.2 Aggrieved by the order of assessment dated 31.01.2013 for A.Y. 2010- 11, the assessee preferred an appeal before the CIT(A)-14, Mumbai. The learned CIT(A) disposed of the appeal vide the impugned order dated 19.12.2014 allowing the assessee partial relief; by, inter alia, allowing the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, we proceed to dispose off this appeal with the assistance of the learned D.R. for Revenue and the material on record. 5. Ground Nos. (i) to 3 - Treatment of Dubbing Costs 5.1 In the grounds raised by Revenue, the sole issue that has been raised for the consideration of the Bench is whether or not the dubbing cost incurred on translating the foreign language entertainment programmes into Indian languages for making them ready for use/broadcast on the assessee's T.V. Channel 'Hungama' should have formed part and parcel of the licence fee for use of the foreign language entertainment programme and amortised along with the cost of such licences. The learned D.R. was heard in support of the grounds raised and he vehemently assailed the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e context i.e. programmes, films, etc. rights acquired under licence and therefore the treatment of dubbing cost should be treated the same as inventory and therefore should form part of the cost of acquisition for such rights, as part of licence fees, etc. and amortized over the years depending of the tenure of the licence. In this view of the matter, the AO disallowed the assessee's claim in respect of dubbing cost being revenue expenditure. On appeal, the learned CIT(A) following the decision of the Coordinate Bench of the Tribunal in Ajay Singh Deol (supra) held them to be revenue in nature. 5.2.2 We have perused the impugned order of the learned CIT(A) wherein he has allowed the assessee's claim at para 5.2 thereof holding as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, could not have understood or appreciated them. In this factual matrix of the case, we are of the considered view that without the incurring of dubbing costs, the asset, i.e. the licence could not be utilised for earning revenue. In our view, all expenditure incurred for setting up the asset, for making it ready for use, would amount to and be in the nature of capital expenditure and therefore the dubbing cost incurred by the assessee should form part and parcel of the cost of acquisition of such rights as part of licence, i.e. the foreign language entertainment programme and should be amortised alongwith the cost of the licence. We hold and direct accordingly and consequently reverse the order of the learned CIT(A) and restore the order/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
