2011 (4) TMI 794

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.... 2. In the return the assessee showed loss of Rs. 18,76,552 from M/s Deepak Arts. In support of the return the assessee furnished all the relevant details. From the perusal of the Profit and Loss Account of M/s Deepak Arts, the Assessing Officer found that the loss arose on account of the write off of the cost of production of Rs. 31,98,892 in respect of the TV serial titled "Raja Bhartuhari". The assessee was asked to substantiate the write off. The assessee stated in response that the production of the TV serial was started in the year 1995 and expenses were incurred in respect of the same. After the production was completed the assessee approached several TV channels including Doordarshan for telecasting the same but did not meet with an....

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...., the assessee submitted detailed statement of facts before the CIT(A) and also relied on the judgment of the Madras High Court in the case of B. Nagi Reddy v. CIT [1993] 199 ITR 451 and that of the Delhi High Court in CIT v. Hotline Teletube & Components Ltd. [2008] 175 Taxman 286. The attention of the CIT(A) was also drawn to the order of the Cochin Bench of the Tribunal in the case of ITO v. Excel Productions [1992] 44 TTJ 201. The CIT(A) accepted the assessee's contention based on the aforesaid decisions and directed the Assessing Officer to allow the loss as a deduction. 5. It is against the aforesaid decision of the CIT(A) that the revenue has come in appeal before us. The contention of the learned DR was that the amount was not allo....

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....the Rule is applicable, then what is applicable is only clause (b) of sub-rule (6) which says that if the Assessing Officer is of opinion that having regard to the facts and circumstances of any case, it is not practicable to apply the provisions of the Rule to the case, he may allow deduction in respect of the cost of production of the film in such other manner as he may deem suitable. It is contended that having regard to this specific provision, there is no bar to allowing the loss under general principles of commercial expediency. 7. We have carefully considered the rival contentions. The assessee has incurred the cost of production of Rs. 31,98,892 in the following manner :-- F.Y. A.Y.   1994-95 1995-96 Rs. 6,56,467.50 199....

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.... strong reasons to take a contrary view, because the businessman is the best person to decide as to whether he can exploit his stock or not. The reliance placed by the Assessing Officer on Rule 9A seems to us to be misplaced because the various sub-rules speak of the procedure for amortization of the cost of production against the receipts arising out of commercial exploitation of the film. We are assuming that the said Rule also applies to a TV serial because it covers feature films, an expression which is not defined. Be that as it may, the Rule is not applicable to the present case because the assessee was unable to commercially exploit the serial. Further, as rightly pointed out on behalf of the assessee, there may be a case where it is....