Tax authorities to scrutinize entertainment pre-operative expenses under section 35D, enforce Form 52A, Rules 9A and 9B

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Full Text of the Document

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....A government communication addresses findings from a performance audit and Public Accounts Committee report highlighting inconsistent treatment of pre-operative expenses in income tax assessments of entertainment sector assessees. It instructs tax authorities to examine expenses segment-wise (e.g., TV, film, events, sports) on a case-by-case basis. Pre-operative expenses must be scrutinized under section 35D of the Income-tax Act. Producers of feature films must file Form 52A with specified details, with possible penalties under section 272A for non-compliance. Expenditure on production and distribution of feature films must be allowed strictly in accordance with Rules 9A and 9B of the Income-tax Rules.....