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TMI Blog2018 (6) TMI 1518X X X X Extracts X X X X X X X X Extracts X X X X ..... ibiting the film in the profit and loss account. Hence the deduction is permissible under Rule 9B only if the film has been commercially exploited and an income received. Sub-rule (4) of Rule 9B only permits carrying forward of the cost of acquisition to the next year for the purpose of claiming deduction, which can be claimed only if there is income generated by the film and the same is credited to the books of accounts as provided in the overriding sub-rule at Rule 9B(5). There can be no deduction permissible on the cost of acquisition without generation of income credited in the books of account. The subject films were never commercially exploited and generated absolutely no income. It is an admitted case that the feature films we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hts of feature films, in cases where there was no exhibition of the film on a commercial basis or a sale of the rights for exhibition of the film, either during the previous year in which the feature film was acquired, or in the next following previous year, the deduction has to be granted to the assessee in the previous year next following the previous year during which the feature film was acquired by the film distributor ? 3. Whether the Hon ble Tribunal was right in law and on facts in upholding the orders of the lower authorities, which held that the provisions of rule 9B(5) have an overriding effect over the provisions of Rule 9B(4), especially when the two provisions operated in separate fields and did not contain any provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year of acquisition. It is pointed out that the reasoning of the lower authority that the non-obstante clause contained in Rule 9B(5) qualifies all the previous clauses of Rule 9B and hence the assessee was not entitled to claim deduction during a previous year, when no amount was realised by exhibition of the film, is contrary to the express provisions in the Rules and hence not legally sustainable. It is urged that the lower authority ought to have found that the impact of the non-obstante clause contained in Rule 9B(5) could only be in such situation and circumstances, as were expressly contemplated by the said clause. Rule 9B(5) deals exclusively with cases where there has been an exhibition of the feature film or sale of rights of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of acquisition to the next year for the purpose of claiming deduction, which can be claimed only if there is income generated by the film and the same is credited to the books of accounts as provided in the overriding sub-rule at Rule 9B(5). There can be no deduction permissible on the cost of acquisition without generation of income credited in the books of account. The subject films were never commercially exploited and generated absolutely no income. 6. The High Court of Bombay in Commissioner of Income Tax v. Prakash Pictures, [2003] 260 ITR 456 (BOM) held thus:- Having come to the conclusion that the modified agreement dated March 28, 1978, stood covered by rule 9B, the main question which we have required to decide in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tization. Briefly, it contemplates admissibility of deduction proportionate to the income earned/collections made during the year in which deduction is sought, failing which, the true profits may get distorted as in the present case. We respectfully agree with the above declaration. 7. It is an admitted case that the feature films were never exhibited and there was no amount credited in the profit and loss account as amount received on exhibition of films. The finding of the Appellate Authority as well as the Tribunal is therefore, to be upheld and we find no reason to interfere and the claim of the assessee fails. We answer the questions of law in favour of the Revenue and against the assessee. Hence, the Appeal is dismissed. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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