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TMI Blog2022 (2) TMI 1454X X X X Extracts X X X X X X X X Extracts X X X X ..... ials. The revenue derived from exhibition of tele serials is offered as income from operations, but may be in one or two or three years, however, except cost of production of feature films, the assessee does not have any other major expenses. Therefore, in case where assessee involved in production and exhibition of tele serials, expenditure incurred for production of tele serials cannot be considered as capital in nature, because it does not give enduring benefit to the assessee or it does not lead to creation of any asset. Therefore, expenditure incurred for production of feature films of an assessee involved production and exhibition of tele serials is definitely revenue in nature, which cannot be considered as capital expenditure. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income Tax (Appeals)-14, Chennai, dated 26.02.2019 and pertains to assessment year 2009-10. 2. The Revenue has raised following grounds of appeal:- 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts ofthe case and in law. 2. The Id. CIT(A) erred in directing the Assessing Officer to delete the addition of Rs. 2,33,58,021/- on expenditure occurred on cost of production of tele serials. 3. The Id CIT(A) failed to note that the disallowance of Rs. 2,33,58,021/- towards expenditure in respect of cost of production of teleserial was made by the AO since, the expenditure incurred in this regard was capital in nature. 4. The Id.CIT(A) failed to note that the assessee itself has differed the said tele-seri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase has been, subsequently reopened u/s.147 of the Income Tax Act, 1961, for the reasons recorded, as per which income chargeable to tax had been escaped assessment. The case has been taken up for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed deduction towards production expenses of tele serials at Rs. 3,11,44,028/- as revenue expenditure. Therefore, after considering relevant explanation of the assessee, the Assessing Officer opined that production expenses of tele serials is in the nature of capital expenditure which cannot be allowed as revenue expenditure and thus, disallowed expenses claimed by the assessee and has allowed depreciation at 25% on total expenditure. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue is whether teleserial production cost is revenue expenses or capital expenses. The Assessing Officer did not allow the expenses claimed on the ground that expenses incurred results in enduring benefit as TV serials can be re-telecast. The AR of the appellant submitted that the same issue came up for the A.Y. 2008-09 and the Assessing Officer disallowed the teleserial production expenses which was deleted by CIT(A) holding the same as revenue expenses. The decision of the CIT(A) was said to be accepted by the department. 15. The AR of the appellant also relied upon the decision of ITAT, Delhi in the case of Guruji Entertainment Network Ltd cited supra wherein it was held that the expenses incurred in connection with the production, mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT Circular No.16/2015 dated 06. 10.2015 wherein it was stated that the cost of production of an abandoned future film is to be treated as revenue expenditure and allowed as per the provisions of Section 37 of the Income Tax Act. Among the decisions cited above, the ITAT Delhi in the case of Guruji Entertainment Network Ltd., cited supra, clearly held that production expenses of teleserials is revenue in nature. The other decisions cited above of tele serials must be allowed as revenue expenses. In view of the above, the expenses incurred for the production of teleserials are held to be revenue in nature and accordingly the addition made is hereby deleted. 6. The learned DR submitted that the learned CIT(A) has erred in not appreciating f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Rules, 1962. Therefore, this issue needs to be considered without going into rules prescribed for allowing deduction for expenditure incurred for production of feature films. Admittedly, major expenditure of the assessee involved in production and exhibition of tele serials is cost of production of tele serials. The revenue derived from exhibition of tele serials is offered as income from operations, but may be in one or two or three years, however, except cost of production of feature films, the assessee does not have any other major expenses. Therefore, in case where assessee involved in production and exhibition of tele serials, expenditure incurred for production of tele serials cannot be considered as capital in nature, because it d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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