TaxTMI 
TaxTMI 
2018 (4) TMI 928
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....gnoring the fact that Revenue's appeal on identical issue in the assessee's own case for A.Y. 2011-12 is pending adjudication by the Hon'ble High Court. 5. Any other ground that may be urged at the time of hearing. 2. As regards ground Nos. 1 & 2 regarding disallowance of cost of production on TV Serials and programs of Rs. 50,03,09,683, the AO observed that the assessee company debited an amount of Rs. 66,70,79,577/- towards cost of production of TV serials and programs and this expenditure relates to the year under consideration. Further, he observed that instead of claiming depreciation, the entire expenditure was claimed as revenue expenditure and debited to P&L a/c. The cost of production of TV serials and programs was not covered under Rule 9A or Rule 9B. In view of the observations, AO considered the programs as intangible assets of the company and allowed the depreciation @ 25% on the said expenditure. 3. Aggrieved, the assessee preferred an appeal before the CIT(A). The CIT(A) after considering the submissions of the assessee, which were extracted at page 5 of his order, allowed the assessee's ground by following the decision of ITAT in assessee'....
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....lso generates revenue from broadcasting serials through satellite channels. The assessee gets revenue from production and broadcasting serials on the lines of feature films, the rights of broadcasting such serials are also treated as stock in trade till the time they are aired and the expenses are debited to the Profit & Loss account. The assessee treats the films and the serials at par and applied the provisions of Rule 9A and 98 of the Income Tax Rules, as are applicable in case of films on serials as well. On the other hand, the contention of the Revenue is that the film and serial broadcasting rights acquired by assessee are perpetual in nature. After first telecast, the assessee does not discard the films but carefully store the same in digital library for airing the same again. Therefore, the assessee gets enduring benefit from the rights acquired in films and serials and they do not expire on the date of first telecast as contemplated by the assessee. The rights are intangible assets within the meaning of Explanation (iii) to Section 32 and do not fall within the purview of Section 37(1). The assessee is entitled to claim depreciation on same. 9. The issue ....
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.... items purchased by the assessee and debited to the P and L account, we find it is in the common knowledge of every citizen that the news items do not have enduring benefit. Normally, the news items/non fictional items purchased by the assessee lose its value once they are telecast. Therefore, such items do not have repeat telecast value in terms of the revenue generation by way of advertisement from the sponsors. As such, it is a settled issue at the level of Hon'ble Delhi High Court in the case of Television Eighteen India Ltd (supra) that the claims of the assessee relating to news/non-fictional items are allowable. Even otherwise, even if some income generated, that is not criterion for describing the items as 'intangible assets' for the purpose of invoking the provisions of section 32(ii) of the Act. We rely on the above referred Delhi High Court's Judgment in the case of Television Eighteen India Ltd (supra). Further, we find that the assessee has a declared method of accounting relating to accounting of these transactions. He has been consistently following the same without any change. In fact, the Revenue has consistently allowed the claim in the past. This ....
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....uced as under : "The revenue has preferred this appeal claiming to be aggrieved by an order of the Income Tax Appellant Tribunal (ITAT) dated 17.03.2006. The question of law framed in this case is:- (i) Whether the Income Tax Appellate Tribunal was right in holding that the entire expenditure incurred by the assessee on production of programmes which became part of news archives should be allowed as a revenue expense under Section 37 of the Income Tax Act, 1961 and should not be treated as incurred for creating a capital asset? The assessee, at the relevant time, was in the business of television programme production. The assessee reflected Rs. 88,83,128/- being 10% of the total expenditure incurred by it as value of "news archives" under the head of fixed assets. In the return filed by the assessee for the Assessment Year 1997, the said amount was claimed as revenue expenditure. According to the assessee this expenditure was allocated for the creation of "news achieves", which comprised of its published or telecasted programmes. The AO capitalised this amount holding that the expenditure led to creation of an asset of enduring advantage. The CIT (Appeals....
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....iscussions, this Court is of the opinion that the question of law framed is answered in favour of the assessee and against the revenue. The appeal is dismissed." 9.3. Thus, it is seen that the issue is fairly covered in favour of the assessee by the above decision and the A.O. is directed to treat the expenditure incurred by the assessee on cost of production of TV programmes as revenue expenditure. This ground of appeal of the assessee is accordingly allowed. Following the said decision, we uphold the decision of the CIT(A) and dismiss the grounds raised by the revenue on this issue. 6. As regards ground Nos. 3 & 4, the facts are, the business activity of the assessee company is satellite television broadcasting and claimed depreciation of Rs. 19,52,90,820/- on opening WDV (Rs. 78,11,63,278) of Film Software Library @ 25% stating the same as intangible asset. Whereas the AO followed various case law and allowed the depreciation @ 15% on the ground that business of satellite television broad casting and the film software library forms an important apparatus of its business which squarely fall within the definition of 'Plant & Machinery' and hence, depreciati....