TaxTMI 
TaxTMI 
2010 (10) TMI 563
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....) and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground raised by the assessee is accordingly allowed for statistical purpose. 4. Grounds of appeal no.2 by the assessee reads as under: "The CIT(A) erred on facts and in law in confirming that the Assessing Officer was justified in adopting a view that the lump sum consideration paid for music rights is not entirely revenue in nature without appreciating the facts submitted that the sound tracks referred therein does not have shelf life beyond 6 to 7 months. In doing so, the CIT(A) has not appreciated the various submissions presented to him which demonstrates the nature of expenditure and the fact that these albums had short shelf life." 4.1 Facts of the case, in brief, are that the assessee is engaged in the business of manufacturing and trading of pre-recorded music in cassettes and compact disc. etc. The Assessing Officer, during the course of assessment proceedings observed that the assessee has debited OST royalty payments amounting to Rs.20,91,53,976/- to the following parties: Sl.No. Name Amount....
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....h such order of the CIT(A) the assessee is in appeal before us. 5. After hearing both the parties, we find the Assessing Officer, following his order in the preceding year, in the case of the assessee, has disallowed the claim of expenditure of Rs.20,91,53,976/-. We find, the CIT(A), following his order for the preceding assessment year directed the Assessing Officer to amortise the expenditure over a period of 5 years. We find, similar issue had come up before the Tribunal in assessee's own case vide ITA No.194/Mum/2007 for Assessment Year 2001-02 and the Tribunal in paras 13 to 17 of the order has discussed the issue and allowed the claim of the assessee by holding as under: "13. We have heard the rival submissions. The ld DR relied on the orders of revenue author8tes. The ld counsel for the assessee relied on certain judicial pronouncements with which we deal with at appropriate juncture. 14. As far as Ground no.3 is concerned, the Hon'ble Mumbai Bench of the ITAT in the case of Tips Cassettes and Records Co vs ACIT 82 ID 641 (Mum) had an occasion to deal with an identical issue of an assessee engaged in similar line of business as that of the asses....
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....lated to an assessment prior to 1.4.99. According to him, in the light of the aforesaid amendment, the assessee should be allowed depreciation at the appropriate rate and the entire expenditure cannot be allowed as revenue expenditure. 17. We find that by the Finance Act (No.2) 1998 w.e.f 1.4.99section32(1) has been amended and the amended provisions provide that in respect of copyright owned and used by the assessee for the purpose of business, the assessee would e entitled to claim depreciation. One cannot loose sight of the fact that the nature of business carried on by the assessee was also important to decide the issue. As far as the assessee is concerned, they are engaged in the business of manufacturing CDs and cassettes. It was important to have assignment of copyright so that it can make a legal copy of the music and sell the same. In such line of business, acquisition of copy right has to be considered as on revenue account and not capital expenditure. We are therefore of the view that the claim of the assessee for deduction deserves to be accepted." 6. Respectfully following the decision of the Tribunal in assessee's own case and in absence of any con....
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.... 7.3 However, the CIT(A) was not satisfied with the explanations given by the assessee and upheld the action of the Assessing Officer by holding as under: 19. I have considered the rival submissions and the materials on record. In the written submissions, it has been stated that the loan was not utilized for the purpose of which it was taken. We have stated about the relevant contention of the appellant here in under. In the written submissions, there is also an alternative plea that only a part of the total loan taken was utilized for purchase of capital asset. Hence, proportionate amount of loss of Rs.10,56,000/- lakhs on foreign exchange was attributable to such capital expenditure and should have been treated as capital loss and disallowed u/s 43A. Depreciation should also have been allowed. The claim of the appellant, therefore, was not free from doubt. In the said written submission, a breakup of capital goods has been furnished. It is seen from the assessment order that the Assessing Officer had asked for a breakup of loan for working capital and loan other than for working capital. No details in this regard were furnished. It is not claimed by the appellant that ....