TaxTMI 
TaxTMI 
2020 (4) TMI 718
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....ee, an individual, engaged in the business of film production, real estates and is the managing director of Allu Entertainments Pvt Ltd. While making the assessment for assessment year 2012-13, the Assessing Officer, inter alia, denied assessee's claim of indexation in respect of two pieces of land and interest expenditure towards cost of acquisition for indexation. Further, he disallowed cost of purchase of film rights at Rs. 6,57,16,337/- u/s. 40A(2) holding, inter alia, that the assessee booked huge loss which would offset the capital gain made by the assessee in the property transaction as a device to avoid tax payment on the capital gain by setting off the loss etc. 3. The Ld. DR submitted that the AO found that the assessee purchas....
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....rms, he disallowed Rs. 6,57,16,337/-. On appeal, the Ld. CIT(A) held that since all the lands were acquired in 1992-93, the cost of indexation should be awarded from that year and allowed the capitalisation of interest and deleted the AO's disallowance holding that the Assessing Officer's conclusion is unsustainable and directed to allow the assessee's claim. Aggrieved against that order, the Revenue filed this appeal with the following grounds of appeal: "1. The order of the learned CIT(A) is contrary to facts and circumstances of the Case. 2.1 The learned CIT(A) erred in deleting the addition towards cost of purchase of film rights u/s 40A(2) of Rs. 6,57,16,337/- 2.2 The learned CIT(A) ought to have appreciat....
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....IT(A) submitting that he followed the decision of Bombay High Court in the case of CIT vs Manjula J Shah, 2011 16 Taxmann.com 42. With reference to the issue on disallowance of cost of purchase of film rights, the Ld AR took us through the order of the Ld. CIT(A) and submitted that the AO held that the assessee purchased lease rights from AEPL and sold the distribution rights to AEPL again, whereas, the correct position is that the assessee purchased lease rights of the film from the producer AEPL. Now having acquired the rights, the assessee has to exploit the film and hence the assessee has entered into an agreement with AEPL engaging AEPL's distribution division for doing the distribution of the film on certain commercial terms. The AO h....
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.... for the areas of Nizam, East and West Godavari districts, combined state of AP was at Rs. 13.5 crores. The reasonableness of this consideration can be evaluated from the following aspects vis., based on the population, based on the theatres as the medium though the film has to be exhibited. Inviting our attention to the district population/theatre approach, the Ld. AR submitted that the areas bought by the assessee in terms of population constitutes 52.38%, in terms of no. Of theatres it constitutes 45.74% averaging these two parameters the area of lease rights constitutes 49.06%. Thus, any rational approach to evaluate whether the consideration paid by the assessee, whether the same is excessive or unreasonable has to confirm that the ....
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....-93 for the purpose of computing cost of indexation and therefore, we do not find any reason to interfere with the order of the Ld. CIT(A). 7. With regard to the claim of interest capitalisation towards cost of acquisition, for the purpose of indexation the assessee has submitted before the ld. CIT(A) that the land was purchased during 1999-2000 relating to assessment year 2000-01. The interest paid was in connection with the acquisition which happened almost 15 to 20 years back. The relevant papers were not able to be produced since the details of capitalisation happened about 20 years back. Since, the assessee has been subject to tax audit in the relevant assessment year and the books of account are duly audited and certified by the CA....