2017 (2) TMI 986

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....he normal provisions of the Act and 'book profits' under section 115JB of the Income Tax Act, 1961 (in short 'the Act') at Rs. 2,54,16,069/-. The case was taken up for scrutiny and the assessment was completed under section 143(3) of the Act vide order dated 31.01.2013 wherein the assessee's income under the normal provisions of the Act was determined at Rs. 10,74,94,593/- in view of the following additions/disallowances: - (i) Disallowance under section 40A(2)(b) Rs. 3,56,00,000/- (ii) Non reconciliation of ITS details Rs. 25,81,822/- (iii) Proportionate dubbing cost (4/5) Rs. 2,57,53,334/-   Book profits under section 115JB of the Act were accepted as computed at Rs. 2,54,16,069/-. 2.2 Aggrieved by the order of as....

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....r the assessee nor was any adjournment sought on its behalf. On 20.12.2016 also when the case was called for hearing, none was present for the assessee but the learned D.R. was present and ready to present the case on behalf of Revenue. In these circumstances, we proceed to dispose off this appeal with the assistance of the learned D.R. for Revenue and the material on record. 5. Ground Nos. (i) to 3 - Treatment of Dubbing Costs 5.1 In the grounds raised by Revenue, the sole issue that has been raised for the consideration of the Bench is whether or not the dubbing cost incurred on translating the foreign language entertainment programmes into Indian languages for making them ready for use/broadcast on the assessee's T.V. Channel 'Hungama....

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....tted before the AO that dubbing costs represent revenue expenditure and should be allowed entirely in the year in which it is incurred. The assessee's claim did not find favour with the AO, who was of the view that dubbing cost is incurred in relation to the context i.e. programmes, films, etc. rights acquired under licence and therefore the treatment of dubbing cost should be treated the same as inventory and therefore should form part of the cost of acquisition for such rights, as part of licence fees, etc. and amortized over the years depending of the tenure of the licence. In this view of the matter, the AO disallowed the assessee's claim in respect of dubbing cost being revenue expenditure. On appeal, the learned CIT(A) following the d....

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....was incurred for translating the foreign language entertainment programmes into Indian languages; without incurring of which, such foreign language programmes could not have been broadcast on the assessee's channels since the viewers, mostly children, could not have understood or appreciated them. In this factual matrix of the case, we are of the considered view that without the incurring of dubbing costs, the asset, i.e. the licence could not be utilised for earning revenue. In our view, all expenditure incurred for setting up the asset, for making it ready for use, would amount to and be in the nature of capital expenditure and therefore the dubbing cost incurred by the assessee should form part and parcel of the cost of acquisition of su....