TaxTMI 
TaxTMI 
2008 (8) TMI 600
X X X X Extracts X X X X
X X X X Extracts X X X X
..... CIT(A) also confirmed the same. Aggrieved by this, the assessee is in appeal before us. 5. The learned Counsel contended that the assessee-company was engaged in film production and it was having six cars which were utilized by the Directors and employees of the assessee company for business purposes, hence, no disallowance was warranted. The learned Counsel, thereafter, contended that in a case of a Company, being of an independent legal entity, no disallowance could be made for personal use. In this regard, he placed reliance on the decision of the Tribunal in the case of Dy. CIT v. Haryana Oxygen Ltd. [2001] 76 ITD 32 (Delhi) and also on the decision of the Hon'ble Gujarat High Court in the case of Sayaji Iron & Engg. Co. v. CIT [2002] 253 ITR 749^1 . 6. The ld. Departmental Representative, on the other hand, placed strong reliance on the Orders of the ld. CIT(A). 7. We have considered the submissions made by both the parties, material on record and orders of the authorities below. Admittedly, the assessee company is a Corporate entity and the various Benches of the Tribunal have taken a consistent view that in case of a legal entity no disallowance could be made on a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee is aggrieved by the decision of the ld. CIT(A) in confirming the disallowance of loss of Rs. 99,91,212 claimed by the assessee in respect of film "Ashique". 14. The facts, in brief, are that during the year under consideration the assessee company claimed to have released two films, produced by the assessee company viz., Ghulam and Ashique. In respect of film "Ashique" the assessee had shown a loss of Rs. 99,91,212 which was incurred due to realisation being less than the cost of production. The Assessing Officer noted that the cost of production of this film was Rs. 2,24,91,212 whereas the realisation was at Rs. 1,25,00,000, hence, the Assessing Officer required the assessee to submit evidences relating to release of the film during the previous year. However, despite multiple opportunities neither the Certificate of the Censor Board nor the Date of Theatrical Release or the Statement of the Film Distributors, was submitted. Subsequently, the assessee claimed that this film was intended to be sold to TV Channels only and not for the theatrical release, hence, Rule 9A was not applicable, and consequently, the impugned loss was allowable to the assessee. The assessee, in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....forwarded by the ld. CIT(A) for comments of the Assessing Officer who submitted that as far as the question whether the film was a feature film or a TV serial was concerned, the same could be ascertained in the format of the Memo in which the film was shot and also the material and technique used in the production of the film. It was also reported that whether the assessee wanted to release the same on TV or in theatre, it was discretion of the assessee, however, that fact by-itself could not result into non-compliance of Rule 9A of the Income-tax Rules, 1962. The ld. CIT(A) also noted that the loss, disallowed by the Assessing Officer for the year under consideration, had been allowed by the Assessing Officer in the next assessment year i.e., assessment year 2000-01 as against the total set off claimed by the assessee during the year under consideration. The ld. CIT(A), thereafter, analyzed the provisions of Rule 9A and held that in the wordings of Rule 9A there was no reference to mode of release of film and, therefore, the contention of the assessee that only feature films, which were produced for theatrical release only fell within the ambit of Rule 9A was not tenable. The ld. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....these films, the assessee company also produced two other films for TV which were not released in theatres and the very fact that the assessee signed self theatrical right was never to prove that the film was the TV Film and in such cases, the assessee company claimed expenses in the year of sale of telecast rights, hence, the said loss was allowable to the assessee as per the Method of Accounting. The learned Counsel also placed reliance on the Written Submissions filed before the ld. CIT(A). 16. The ld. Departmental Representative, on the other hand, contended that the ld. CIT(A) had examined the issue in detail and took into consideration all aspects of the matter while rejecting the claim of the assessee, hence, the same was liable to be sustained. 17. We have considered the submissions made by both the parties, material on record and orders of the authorities below. It is noted that the assessee has claimed that the film "Ashique" was produced for telecast exclusively on TV. It has also been claimed that mode and technology of producing films for TV is different from film produced for theatrical exhibition. However, we find that the assessee has taken a Certificate from ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was applicable because of the fact that Form 52A had been filed by the assessee and at no point of time the assessee claimed or furnished information regarding the fact that this film was being produced only for TV. The Assessing Officer has also held that if it was released on TV, it was one of the modes of exhibition and for the reason also that Rule 9A was applicable. We find that Rule 9A has been specifically provided by the Legislature to compute the Profits and Gains of Business of production of feature films. As per Rule 9A(2), the film producer is entitled for deduction of cost of production of the film on selling of rights of exhibition of the film in the year in which the film is certified for release by the Censor Board and if the film is released in such year on commercial basis at least for 90 days before the end of such year. It is also provided that the film producer may himself exhibit the film on commercial basis in all or some of the areas or may sell the right of exhibition of the film on commercial basis in respect of some of the areas or may exhibit the film on commercial basis in certain areas and may sell the right of exhibition of the film in respect of all ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rule 9A was not practicable in the present situation. We also find that the Assessing Officer, having regard to the fact that the film was released for exhibition for less than 90 days, has reduced the cost of production by the amount realized by the assessee and has carried forward the balance to the next year and wherein it has been allowed as deduction, hence, in our opinion, such action of the Assessing Officer is perfectly justified. In this regard, we consider it pertinent to mention here that the assessee claimed to have produced two other films for the TV which were not released in theatres. The assessee, however, has not brought any material on record to show that it claimed the cost of production of the said films in the year of assignment of telecast rights of these films and also what was the star cast, the cost of production and for how much amount the telecast rights were sold or whether the assessee obtained the Certificate from the Censor Board or not and in the absence of such details, the claim of the assessee for deducting the total cost of production in the year of assignment of telecast rights is not proved that the assessee was following such practice in a con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....submitted that the assessee did not satisfy the conditions of section 80-IA, hence, the assessee was not eligible for deduction hereunder. The ld. CIT(A) examined the claim of the assessee and rejected the claim of the assessee. Concluding findings of the ld. CIT(A) are as under : "8.11 From the totality of discussion above, it is held that an industrial undertaking eligible for deduction under section 80-IA of the Act has necessarily to be formed by the way of investment of capital in plant and machinery not previously used for any purpose. Since the appellant has neither any specific location for the production of cinematographic films nor does it have any plant and machinery (except some lighting equipment) and the production is carried out only periodically almost wholly or at least substantially using temporarily hired plant and machinery, no industrial undertaking could be said to have come in the existence which would be eligible for deduction under section 80-IA of the Act. Even if such industrial undertaking could be said to have come into existence, it has been found by using only hired plant and machinery, which has been previously used and therefore the case of the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....contended that if Ground No. 4 of this appeal was accepted then these expenses were also to be considered as allowable or otherwise suitable direction could be given to the Assessing Officer to allow the same in the next assessment year if the assessee's claim, in this respect, was not accepted. 28. The ld. Departmental Representative, on the other hand, strongly relied on the Order of the ld. CIT(A). 29. We have considered the submissions made by both the parties, material on record and orders of the authorities below. In view of our discussions on Ground No. 4, direct the Assessing Officer to allow these expenses as a part of the cost of production in the next year after due consideration. Thus, this ground of the assessee is accepted. 30. In the result, the appeal, filed by the assessee stands partly allowed. 31. Now, we shall take up the assessee's Appeal in ITA No. 5570/Mum./2004. 32. The issue raised in Ground No. 1 is identical to the issue raised in Ground No. 1 of ITA No. 5569/Mum./2004, hence, decided in favour of the assessee following the same reasonings. 33. Ground No. 2 relating to disallowance of depreciation on certain assets was not pressed, hence....