DCIT, New Delhi V. Smt Achla Sabharwal, Delhi

ITA 4417/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74046 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS KUMAR
• Keywords: Depreciation; Cost of acquisition
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .4417/DEL/2013 4417/DEL/2013 4417/DEL/2013 4417/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2010 2010 2010 2010- -- -11 1111 11 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -29(1), 29(1), 29(1), 29(1), NE NENE NEW DELHI. W DELHI. W DELHI. W DELHI. VS. VS. VS. VS. SMT. ACHLA SABHARWAL, SMT. ACHLA SABHARWAL, SMT. ACHLA SABHARWAL, SMT. ACHLA SABHARWAL, PROP. M/S MEDIA INTERNATIONAL, PROP. M/S MEDIA INTERNATIONAL, PROP. M/S MEDIA INTERNATIONAL, PROP. M/S MEDIA INTERNATIONAL, 1596, DIWAN HALL, 1596, DIWAN HALL, 1596, DIWAN HALL, 1596, DIWAN HALL, BHAGIRATH PALACE, BHAGIRATH PALACE, BHAGIRATH PALACE, BHAGIRATH PALACE, CHANDNI CHOWK, CHANDNI CHOWK, CHANDNI CHOWK, CHANDNI CHOWK, DELHI DELHI DELHI DELHI 110 006. 110 006. 110 006. 110 006. PAN : PAN : PAN : PAN : ABBPS7047D. ABBPS7047D. ABBPS7047D. ABBPS7047D. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B. SRINIVAS KUMAR, SR.DR. RESPONDENT BY : NONE. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXV, NEW DELHI DATED 21 ST MAY, 2013 FOR THE AY 2010- 11. 2. THE ONLY GROUND RAISED BY THE REVENUE READS AS U NDER:- THE LD.CIT(A) HAS ERRED ON FACTS AND IN LAW IN DEL ETING A SUM OF RS.90,00,000/- MADE BY THE AO ON ACCOUNT OF DEPRECIATION. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL WHO DERIVES INCOME FROM SUPPLY AND DISTRIBUTION OF FILM S AND SONGS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED DEDUCTION OF ` 1,20,00,000/- AS DEPRECIATION ON FILMS CINEMATOGRAP H. THE ASSESSING OFFICER ALLOWED THE DEPRECIATION UNDER SECTION 32 O F THE INCOME-TAX ACT, 1961 AT THE RATE OF 25% I.E. ` 30 LAKHS. ACCORDINGLY, HE DISALLOWED ITA-4417/DEL/2013 2 THE SUM OF ` 90 LAKHS. BEFORE THE LEARNED CIT(A), IT WAS CLAIME D BY THE ASSESSEE THAT UNDER RULE 9B(2)(A), THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION/DEDUCTION AT THE RATE OF 100% ON THE P URCHASE OF FILMS. THE CIT(A), AFTER CONSIDERING RULE 9B(2), HELD THAT THE ASSESSEE IS ELIGIBLE FOR FULL DEDUCTION. THE RELEVANT FINDING OF THE LEARNED CIT(A) READS AS UNDER:- 4.2 THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE AO AND IT IS SUBMITTED THAT THE AO IS NOT JUSTIFIED TO DISALLOW THE DEPRECIATION/DEDUCTION OF RS.90,00,000/- WITHOU T ANY VALID REASONS. IT IS SUBMITTED THAT THE ASSESSEE I S ELIGIBLE FOR DEPRECIATION/DEDUCTION @ 100% UNDER RULE 9B(2)( A). IT IS SUBMITTED THAT THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION OF THE ENTIRE COST OF ACQUISITION OF THE ENTIRE AMO UNT OF RS.1,20,00,000/-. IT IS SUBMITTED THAT WHEN THE PU RCHASE OF THE FILMS IS MADE AND THE SAME IS SOLD IN THE SAME YEAR THE ASSESSEE IS ELIGIBLE FOR DEDUCTION OF THE WHOLE AMOUNT @ 100% OF PURCHASE AS PROVIDED UNDER RULE 9B(2). 4.3 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE SUBMISSION OF THE ASSESSEE THAT IN THE CASE OF PURCHASE AND SALE OF CINEMATOGRAPHIC FILMS AND SONG S ETC. THE PROVISIONS OF RULE 9B IS APPLICABLE AND THE ASS ESSEE IS ELIGIBLE TO CLAIM THE DEDUCTION OF THE ENTIRE COST OF PURCHASE IF THE FILMS ARE SOLD IN THE SAME YEAR. I N THE PRESENT CASE, THE ASSESSEE HAD MADE THE PURCHASE OF RS.1,20,00,000/- AND THE ENTIRE FILMS HAS BEEN SOLD AS DISCUSSED ABOVE AND AS SUCH THE ASSESSEE IS ELIGIBL E FOR FULL DEDUCTION @ 100% AS PROVIDED UNDER RULE 9B(2). AFTER CONSIDERING ALL THE CASE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THERE IS NO MERIT IN TH E ADDITION MADE BY THE AO AND AS SUCH THE ADDITION MADE BY THE AO ARE WITHOUT ANY JUSTIFICATION AND ACCORDINGLY, THE SAME ARE DELETED. THE REVENUE, AGGRIEVED WITH THE ORDER OF THE LEARNE D CIT(A), IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING BEFORE US, LEARNED DR HEA VILY RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND HE STATED TH AT SINCE THE ASSESSEE CLAIMED DEPRECIATION ON THE FILMS, THE ASS ESSING OFFICER ITA-4417/DEL/2013 3 RIGHTLY ALLOWED THE DEPRECIATION AT THE RATE OF 25% . HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) SHOU LD BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF TH E LEARNED DR AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE LEGISLATURE HAS INTRODUCED RULE 9B FOR THE PURPOSE OF ALLOWING DEDUCTION IN RESPECT OF EXPENDITURE ON ACQUISITION OF DISTRIBUTION RIGHTS OF FEATURE FILMS. RULE 9B(2) READS AS UNDER:- (2) WHERE A FEATURE FILM IS ACQUIRED BY THE FILM DISTRIBUTOR IN ANY PREVIOUS YEAR AND IN SUCH PREVIO US YEAR (A) THE FILM DISTRIBUTOR SELLS ALL RIGHTS OF EXHIBI TION OF THE FILM, THE ENTIRE COST OF ACQUISITION OF THE FILM SH ALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE PROFITS AND GAINS OF SUCH PREVIOUS YEAR; OR (B) THE FILM DISTRIBUTOR, - (I) HIMSELF EXHIBITS THE FILM ON A COMMERCIAL BASIS IN ALL OR SOME OF THE AREAS; OR (II) SELLS THE RIGHTS OF EXHIBITION OF THE FILM IN RESPECT OF SOME OF THE AREAS; OR (III) HIMSELF EXHIBITS THE FILM ON A COMMERCIAL BAS IS IN CERTAIN AREAS AND SELLS THE RIGHTS OF EXHIBITION OF THE FILM IN RESPECT OF ALL OR SOME OF THE REMAINING AREAS, AND THE FILM IS RELEASED FOR EXHIBITION ON A COMMER CIAL BASIS AT LEAST [NINETY] DAYS BEFORE THE END OF SUCH PREVIOUS YEAR, THE ENTIRE COST OF ACQUISITION OF THE FILM SH ALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE PROFITS AND GAINS OF SUCH PREVIOUS YEAR. 6. IT IS NOT IN DISPUTE THAT DURING THE PREVIOUS YE AR, THE ASSESSEE HAD ACQUIRED THE FEATURE FILM FOR A SUM OF ` 1,20,00,000/- AND THE ASSESSEE HAS SOLD THE RIGHTS OF EXHIBITION OF THE F ILM. WE ALSO FIND THAT BEFORE THE ASSESSING OFFICER ALSO, THE ASSESSEE, IN ITS REPLY DATED 15.3.2013, HAS SUBMITTED THAT 100% DEDUCTION IN RES PECT OF COST OF ITA-4417/DEL/2013 4 PURCHASE OF FEATURE FILM IS ALLOWABLE UNDER RULE 9B . THE RELEVANT PORTION OF THE ASSESSEES REPLY READS THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE BASIS OF PROVISION OF RULE 9B O F THE ACT AS IT HAS SOLD RIGHTS PURCHASE DURING THE PREVIOUS YEAR RELEV ANT TO CURRENT AY. THE ABOVE FACTUAL STATEMENT MADE BY THE ASSESSEE BE FORE THE ASSESSING OFFICER HAS NOT BEEN CONTROVERTED BY THE REVENUE. IN VIEW OF THE ABOVE, IN OUR OPINION, RULE 9B(2) WAS APPLIC ABLE TO THE FACTS OF THE CASE AND LEARNED CIT(A) RIGHTLY ALLOWED THE REL IEF FOLLOWING RULE 9B(2) OF THE INCOME-TAX RULES, 1962. WE, THEREFORE , FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF LEARNE D CIT(A). THE SAME IS SUSTAINED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2014. SD/- SD/- ( (( (CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG CHANDRA MOHAN GARG) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 24.01.2014 VK. COPY FORWARDED TO: - 1. APPELLANT : DEPUTY COMMISSIONER OF INCOME TA X, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -29(1), NEW DELHI. 29(1), NEW DELHI. 29(1), NEW DELHI. 29(1), NEW DELHI. 2. RESPONDENT : SMT. ACHLA SABHARWAL, SMT. ACHLA SABHARWAL, SMT. ACHLA SABHARWAL, SMT. ACHLA SABHARWAL, PROP. M/S MEDIA INTERNATIONAL, PROP. M/S MEDIA INTERNATIONAL, PROP. M/S MEDIA INTERNATIONAL, PROP. M/S MEDIA INTERNATIONAL, 1596, DIWAN HALL, BHAGIRATH PALACE, 1596, DIWAN HALL, BHAGIRATH PALACE, 1596, DIWAN HALL, BHAGIRATH PALACE, 1596, DIWAN HALL, BHAGIRATH PALACE, CHANDNI CHOWK, DELHI CHANDNI CHOWK, DELHI CHANDNI CHOWK, DELHI CHANDNI CHOWK, DELHI 110 006. 110 006. 110 006. 110 006. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR