ACIT Non Corporate Circle 20(1), CHENNAI V. Vijay Television P Ltd., CHENNAI

ITA 2231/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7772 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 26-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DIVESH CHAWLA ADVOCAT
• Keywords: Capital asset; Depreciation; Cost of acquisition; Revenue expenditure
• Section: 143(3); 2

Judgement Text

, , IN THE INCOM E TAX APPELLATE TRIBUNAL , C BENCH, CHENNAI , . , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO S . 223 0 & 223 1 / CHNY /201 8 ( / ASSE SSMENT YEAR S : 2005 - 06 & 2006 - 07 ) THE ASST. COMMISSIONER OF INCOME TAX, NON - CO RPORATE CIRCLE 20(1), CHENNAI. VS M/S. ASIANET STAR COMMUNICATIONS PVT. LTD., ( FORMERLY KNOWN AS VIJAY TELEVISION P. LTD., ) PLOT NO.SP22, TS NO.25, BLOCK NO.5,7,8,9, 10 TH FLOOR, KOCHAR JADE, THIRU VI KA INDUSTRIAL ESTATE, GUINDY, CHENNAI 600 032. PAN: AA ACV4918P ( / APPELLANT) ( / RESPONDENT ) / APPELLANT S BY : SHRI CLEMENT RAMESH KUMAR, ADDL. CIT / RESPONDENT BY : SHRI PORUSKAKA, SR. ADVOCATE & SHRI DIVESH CHAWLA, ADVOCATE / DATE OF HEARING : 31.01 . 201 9 / DATE OF PRONOUNCEMENT : 11 . 04 .2019 / O R D E R PER A. MOHAN ALANKAMONY, AM: - TH ESE APPEAL S BY THE REVENUE ARE DIRECTED AGAINST THE O RDER S PASSED BY THE LEARNED COMMI SSIONER OF INCOME TAX(APPEALS ) - 1 4 , CHENNAI , BOTH DATED 27.0 4 .2018 IN ITA NO.2/CIT(A) - 14/2008 - 09 AND ITA NO. 19/CIT(A) - 14/2009 - 10 PASSED U/S. 250(6) R.W.S. 143(3) AND 250(6) R.W.S. 143(3) & 144C OF THE ACT , FOR THE ASSESSMENT YEAR S 2005 - 06 AND 2006 - 07 RESPECTIVELY. 2 I TA NO S . 2 230 & 2231 /CHNY /2018 2 . THE REVENUE HA S RAISED THREE IDENTICAL GROUNDS IN ITS APPEAL S HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT( A) HAS ERRED IN DELETING THE ADDITION MADE BY THE LD.AO WITH RESPECT TO DISALLOWANCE OF EXPENDITURE INCURRED TOWARDS FILM BROADCAST ING RIGHTS AMOUNTING TO RS .1,30,77,389 / - AND RS.74,88,900 / - FOR THE ASSESSMENT YEARS 2005 - 06 & 2006 - 07 RESPECTIVELY . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF SALE OF TIME SLOTS AND IN - HOUSE PRODUCTION OF TELEVISION PROGRAMS & EVENTS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005 - 06 & 2006 - 07 ON 30.10.2005 & 29.11.2006 ADMITTING LOSS OF RS.27,33,16,825 / - & RS.8,78,40,827 RESPECTIVELY. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 29.08.2007 & 26.10.2007 FOR THE ASSESSMENT YEARS 2005 - 06 & 2006 - 07 RESPECTIVELY. FINALLY ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2005 - 06 WAS PASSED U/S.143(3) OF THE ACT ON 30.12.2008 AND FOR THE ASSESSMENT YEAR 2006 - 07 WAS PASSED U/S.143(3) R.W.S. 144C OF THE ACT ON 18.02.2010 WHEREI N AMONGST CERTAIN ADDITIONS, THE LD.AO FURTHER DISALLOWED AMORTIZATION OF THE COST OF THE ACQUISITION OF THE FILM BROADCASTING RIGHTS OVER A PERIOD OF FIVE YEARS WHICH WAS DEBITED TO 3 I TA NO S . 2 230 & 2231 /CHNY /2018 THE P&L ACCOUNT, HOWEVER THE COST OF ACQUISITION OF THE FILM BROADCASTING RIGHTS WAS TREATED AS INTANGIBLE ASSET AND DEPRECIATION @ 25% WAS GRANTED AS PER THE PROVISIONS OF THE ACT AND IN ACCORDANCE WITH AS - 26 FOR BOTH THE RELEVANT ASSESSMENT YEARS. 4. ON APPEAL, THE LD.CIT(A) FOLLOWING THE DECISION OF THE CHENNAI BENCH OF T HE TRIBUNAL IN THE CASE OF M/S. SUN TV NETWORK LTD., IN ITA NO.1515 TO 1520/MDS/2013 VIDE ORDER DATED 31.10.2013 AND M/S. MAVIS SATCOM LTD., IN ITA NO.1659 TO 1663/MDS/2013 VIDE ORDER DATED 18.03.2014, HELD THAT THE ASSESSEE IS ENTITLED TO AMORTIZE THE COS T OF ACQUISITION OF THE MOVIE RIGHTS OVER A PERIOD OF FIVE YEARS BY PASSING IDENTICAL ORDER FOR BOTH THE RELEVANT ASSESSMENT YEARS. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREIN FOR REFERENCE: - 5.3.1 I HAVE CAREFULLY CONSIDERED THE AO'S OBSERVAT ION MENTIONED ABOVE UNDER PARA 5 .1 AND THE APPELLANT'S SUBMISSION BEFORE THE CIT(A) MENTIONED ABOVE UNDER PARA 5 .2. 5.3.2 THE AO TREATED THE PURCHASE OF MOVIE RIGHTS AS AN INTANGIBLE CAPITAL ASSET AND ALLOWED DEPRECIATION @ 25%. THE APPELLANT HAS CONTENDED BY REFERRING TO THE DECISION OF HON'BLE IT AT IN THE CASES OF ACIT V. M/ S SUN TV NETWORKS LTD AND M/ S MAVIS SATCOM LTD IN WHICH IT HAS BEEN HELD THAT PURCHASE OF MOVIE RIGHT IS TO BE ALLOWED AS REVENUE EXPENDITURE. HOWEVER, THE APPELLANT HAS BEE N CONSISTENTLY CLAIMING 1/ 5TH OF AMORTIZED AMOUNT FROM AY 1999 - 4 I TA NO S . 2 230 & 2231 /CHNY /2018 2000 AS PER THE AO'S STAND OF SPREADING THE PURCHASE OF MOVIE RIGHTS FOR 5 AYS. 5.3.3 I HAVE PERUSED THE DECISIONS RELIED ON BY THE APPELLANT IN WHICH THE HON'BLE ITAT CHENNAI HAS TREATED TH E PURCHASE OF MOVIE RIGHTS AS REVENUE EXPENDITURE. IN THIS CASE, THE APPELLANT HAS NOT EVEN CLAIMED FULL DEDUCTION BY TREATING IT AS REVENUE EXPENDITURE BUT HAS ONLY AMORTIZED. AFTER THE AO'S STAND WITH REGARD TO THIS ISSUE, THE APPELLANT HAS BEEN AMORTIZI NG THE PURCHASE OF MOVIE RIGHTS FOR 5 AYS STARTING FROM AY 99 - 2000. IN VIEW OF THE ABOVE DECISIONS AND THE REMARKS, THE AO IS DIRECTED TO ACCEPT THE APPELLANT'S CLAIM OF AMORTIZATION OF PURCHASE OF MOVIE RIGHTS @ 1/ 5TH FOR EACH ASSESSMENT YEAR. FOR THE AB OVE REASONS, THE APPELLANT'S GROUND IS ALLOWED. 5. THE LD.DR ARGUED IN SUPPORT OF THE ORDER OF THE LD.AO WHILE AS THE LD.AR PLACED RELIANCE IN THE ORDER OF THE LD.CIT(A) AND FURTHER RELIED ON THE DECISIONS CITED IN THE ORDER OF THE LD.CIT(A). 6 . AT THE OUTSET WE FIND THE ISSUE TO BE COVERED BY THE DECISION OF THE CHENNAI BENCHES OF THE TRIBUNAL IN THE CASE OF M/S. SUN TV NETWORK LTD., IN ITA NO.1515 TO 1520/MDS/2013 VIDE ORDER DATED 31.10.2013 AND M/S. MAVIS SATCOM LTD., IN ITA NO.1659 TO 1663/MDS/2013 V IDE ORDER DATED 18.03.2014, CITED SUPRA . FOLLOWING THE DECISIONS OF THE TRIBUNAL, THE LD.CIT(A) HAS ALLOWED AMORTIZATION OF THE COST OF ACQUISITION OF THE MOVIE RIGHTS OVER A PERIOD OF FIVE 5 I TA NO S . 2 230 & 2231 /CHNY /2018 YEARS. THEREFORE WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. 7 . IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THE 11 TH APRIL , 2019 AT CHENNAI. SD/ - SD/ - / CHENNAI, / DATED 11 TH APRIL , 2019 RSR / COPY TO: 1. / APPELLANT 2. /RESPONDENT 3. ( ) / CIT(A) 4. / CIT 5. / DR 6. / GF ( ) (GEORGE MATHAN) / JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) /ACCOUNTANT MEMBER