AI Insights
The case revolves around the financial transactions related to the film 'Aarakshan', where M/s Nadiadwala Entertainment & Technologies Ltd. invested Rs. 8.90 crores for purchasing distribution rights. The film was never produced, leading to a dispute and a partial recovery of Rs. 3 crores. The assessee claimed the remaining Rs. 5.90 crores as a business loss in their tax returns, which was disallowed by the Assessing Officer (AO) as prior period expenses. The Ld. CIT(A) later recharacterized this loss as a short term capital loss. Both the Revenue and the assessee appealed against this characterization, leading to the current Tribunal decision.
Appeal Details
Counselvise Citation
[2022] 140 COUNSELVISE.COM (IT) 123184 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-11-2022
Appeal Filed By
Department
Order Result
DismissedDismissed
Bench Allotted
B
Next Hearing Date
23-11-2022
Assessment Year
2013-2014
Appeal Filed On
29-03-2024
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 5663/MUM/2019 Assessment Year: 2013-14 ACIT, Circle-16(1), Room No. 439, 4 th floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. M/s Nadiadwala Entertainment & Technologies Ltd., Barkat, Plot No. 20, Gulmohar Cross Road, No. 5, JVPD Scheme, Juhu Scheme, Vile Parle-West, Mumbai-400049. PAN No. AACCN 0187 E Appellant Respondent CO. No. 23/MUM/2021 (ITA No. 5663/MUM/2019) Assessment Year: 2013-14 M/s Nadiadwala Entertainment & Technologies Ltd., Barkat, Plot No. 20, Gulmohar Cross Road, No. 5, JVPD Scheme, Juhu Scheme, Vile Parle-West, Mumbai-400049. Vs. ACIT, Circle-16(1), Room No. 439, 4 th floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN No. AACCN 0187 E Appellant Respondent Assessee by : Mr. Anant A. Pai, AR Revenue by : Mr. Chetan M. Kacha, DR Date of Hearing : 24/11/2022 Date of pronouncement : 30/11/2022 PER OM PRAKASH KANT, AM This appeal by the Revenue and assessee are directed against order dated 27.06.2019 passed by the Ld. Commissioner of Income short ‘the Ld. CIT(A)’] for assessment year 2013 2. The grounds raised by the Revenue in its appeal in ITA No. 5663/M/2019 are reproduced as under: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to treat the Rs.5,90,00,000/ advanced for production of feature film "Aarakshan" as Short Term Capital Loss', without appreciating the fact that the assessee had never acquired any rights over such film 2. The appellant prays tha grounds be set restored. 3. The grounds raised by the assessee in the cross are reproduced as under: 1. Ld. CIT (A) erred in allowing the loss of Rs. 5,90,00,000/ as loss under the head " short term capital gains" instead under the head " profits & gains from business" as claimed by the Respondent M/s Nadiadwala Entertainment ITA No. 5663/M/2019 & CO NO. 23/M/2021 ORDER PER OM PRAKASH KANT, AM by the Revenue and Cross-objection by the assessee are directed against order dated 27.06.2019 passed by the Ld. Commissioner of Income-tax (Appeals)-4, Mumbai [in CIT(A)’] for assessment year 2013-14. The grounds raised by the Revenue in its appeal in ITA No. 5663/M/2019 are reproduced as under: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to treat the Rs.5,90,00,000/-on account of write-off of amounts advanced for production of feature film "Aarakshan" as Short Term Capital Loss', without appreciating the fact that the assessee had never acquired any rights over such film The appellant prays that the order of Ld.CIT(A) on the above grounds be set-aside and that of the assessing officer be restored. The grounds raised by the assessee in the cross are reproduced as under: Ld. CIT (A) erred in allowing the loss of Rs. 5,90,00,000/ as loss under the head " short term capital gains" instead under the head " profits & gains from business" as claimed by the Respondent M/s Nadiadwala Entertainment & Technologies ITA No. 5663/M/2019 & CO NO. 23/M/2021 2 objection by the assessee are directed against order dated 27.06.2019 passed by 4, Mumbai [in The grounds raised by the Revenue in its appeal in ITA No. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to treat the loss of off of amounts advanced for production of feature film "Aarakshan" as Short Term Capital Loss', without appreciating the fact that the assessee had never acquired any rights over such film t the order of Ld.CIT(A) on the above aside and that of the assessing officer be The grounds raised by the assessee in the cross-objection Ld. CIT (A) erred in allowing the loss of Rs. 5,90,00,000/- as loss under the head " short term capital gains" instead under the head " profits & gains from business" as claimed 4. Briefly stated, facts of the case are that the assessee filed its return of income for the year under consideration o declaring total income at Rs. Nil. The return of income was processed u/s 143(1) of the Income Act’). Thereafter, the case was selected for scrutiny and wherein the total income was determined at a loss of Rs.52,19 u/s 143(3) dated 23.03.2016. 4.1 In the assessment completed, the Assessing Officer disallowed the loss on account of operating expenses of Rs.5.90 crores holding that same being in the nature of prior period expenses and hence not allowable consideration. On further appeal, the Ld. CIT(A) however characterized the loss as short term capital loss being loss on purchase of distribution rights. 5. Aggrieved, the Revenue is in appeal for allowing claim as short term capital los treating the same as business loss. 6. The assessee filed a Paperbook containing paged 1 to 68. M/s Nadiadwala Entertainment ITA No. 5663/M/2019 & CO NO. 23/M/2021 Briefly stated, facts of the case are that the assessee filed its return of income for the year under consideration o declaring total income at Rs. Nil. The return of income was processed u/s 143(1) of the Income-tax Act, 1961 (in short ‘the Act’). Thereafter, the case was selected for scrutiny and wherein the total income was determined at a loss of Rs.52,19 u/s 143(3) dated 23.03.2016. In the assessment completed, the Assessing Officer disallowed the loss on account of operating expenses of Rs.5.90 crores holding that same being in the nature of prior period expenses and hence not allowable in the year under consideration. On further appeal, the Ld. CIT(A) however characterized the loss as short term capital loss being loss on purchase of distribution rights. Aggrieved, the Revenue is in appeal for allowing claim as short term capital loss whereas the assessee is aggrieved for not treating the same as business loss. The assessee filed a Paperbook containing paged 1 to 68. M/s Nadiadwala Entertainment & Technologies ITA No. 5663/M/2019 & CO NO. 23/M/2021 3 Briefly stated, facts of the case are that the assessee filed its return of income for the year under consideration on 25.09.2013 declaring total income at Rs. Nil. The return of income was tax Act, 1961 (in short ‘the Act’). Thereafter, the case was selected for scrutiny and wherein the total income was determined at a loss of Rs.52,199/- in order In the assessment completed, the Assessing Officer disallowed the loss on account of operating expenses of Rs.5.90 crores holding that same being in the nature of prior period in the year under consideration. On further appeal, the Ld. CIT(A) however characterized the loss as short term capital loss being loss on Aggrieved, the Revenue is in appeal for allowing claim as s whereas the assessee is aggrieved for not The assessee filed a Paperbook containing paged 1 to 68. 7. We have heard rival submission of the parties on the issue in-dispute and perused the relevant material on reco in brief qua, the issue a sum of Rs.8.9 crores to a feature film “Arakshan”. said investment was made for purchase of dis the film but the assessee could not fulfil its obligation of financing the further amount for production of the film dispute arose between the parties acquired funds from some other parties and assessee w with a refund of Rs.3 crores. The balance amount was claimed by the assessee in return of off. The Ld. Assessing Officer disallowed the claim holding that written off of the loss was in the nature of prior pe and therefore not allowable. The relevant finding of the Assessing Officer is reproduced as under: “4.2 had funded a amount of Rs.8,90,00,000/ account of a Feature Film "Aarakshan". contract did not fructify and the film was never produced by the assessee. The matter went in to dispute and the assessee could recover only Rs.3,00,00,000/ M/s Nadiadwala Entertainment ITA No. 5663/M/2019 & CO NO. 23/M/2021 We have heard rival submission of the parties on the issue dispute and perused the relevant material on reco in brief qua, the issue-in-dispute are that the assessee advanced a sum of Rs.8.9 crores to “Prakash Jha Production” feature film “Arakshan”. It was claimed by the assessee that t said investment was made for purchase of distribution rights of the assessee could not fulfil its obligation of financing the further amount for production of the film dispute arose between the parties. The Prakash Jha Production from some other parties and assessee w a refund of Rs.3 crores. The balance amount was claimed by return of income as operating expenses . The Ld. Assessing Officer disallowed the claim holding that loss was in the nature of prior period expenses and therefore not allowable. The relevant finding of the Assessing Officer is reproduced as under: As explained by the assessee above, the assessee had funded a amount of Rs.8,90,00,000/- account of a Feature Film "Aarakshan". This particular contract did not fructify and the film was never produced by the assessee. The matter went in to dispute and the assessee could recover only Rs.3,00,00,000/- M/s Nadiadwala Entertainment & Technologies ITA No. 5663/M/2019 & CO NO. 23/M/2021 4 We have heard rival submission of the parties on the issue- dispute and perused the relevant material on record. The facts dispute are that the assessee advanced on account of It was claimed by the assessee that the tribution rights of the assessee could not fulfil its obligation of financing the further amount for production of the film and he Prakash Jha Production from some other parties and assessee was settled a refund of Rs.3 crores. The balance amount was claimed by operating expenses written . The Ld. Assessing Officer disallowed the claim holding that riod expenses and therefore not allowable. The relevant finding of the Assessing As explained by the assessee above, the assessee to PJP on This particular contract did not fructify and the film was never produced by the assessee. The matter went in to dispute and the - against the film funding of Rs.8,90,00,000/ Rs.5,90,00,00 which is written off and claimed as an expenses 4.3 The contention putforth by the authorised representative of the assessee has been duly considered but not found acceptable in view of the following reasons: As explained by the assessee above, the film was released on 12.08.2011 and the assessee had signed a settlement agreement dated 11th November, 2011. As seen from the subject of settlement. agreement, it is amply clear that both parties i.e. assessee and Prak reached final settlement. Assessee had received the final settlement amount from Prakash Jha production from November 2011 to February 2012; also assessee has not given any document or evidence to justify that assessee was trying to of movie Aarakshan, which is disputed. Therefore, it is clear that said amount cannot be written off in F.Y. 2012 Without prejudice to the above, rule 9A of Income 1962 is not applicable to asse movie. covered by rule 9B too of Income 4.4 Admittedly the expenses being of a prior period and not pertaining to the year under consideration cannot be allowed the decisions of the Hon’ble Mumbai Tribunal in the case of Tipco Industries Ltd. V. The ACIT 1961 No.5708/Mum/2009 date of pronouncement: 03.08.2012 is relevant at para 15 which is self M/s Nadiadwala Entertainment ITA No. 5663/M/2019 & CO NO. 23/M/2021 film funding of Rs.8,90,00,000/-. The balance amount of Rs.5,90,00,000/- was never recovered. It is that amount which is written off and claimed as an expenses 4.3 The contention putforth by the authorised representative of the assessee has been duly considered but not found acceptable in view of the following reasons: explained by the assessee above, the film was released on 12.08.2011 and the assessee had signed a settlement agreement dated 11th November, 2011. As seen from the subject of settlement. agreement, it is amply clear that both parties i.e. assessee and Prakash Jha production has reached final settlement. Assessee had received the final settlement amount from Prakash Jha production from November 2011 to February 2012; also assessee has not given any document or evidence to justify that assessee was trying to claim additional revenue from film realization of movie Aarakshan, which is disputed. Therefore, it is clear that said amount cannot be written off in F.Y. 2012 Without prejudice to the above, rule 9A of Income 1962 is not applicable to assessee since it has not produced Further, assessee has made submission that it is not covered by rule 9B too of Income-tax Rules, 1962. 4.4 Admittedly the expenses being of a prior period and not pertaining to the year under consideration cannot be lowed the decisions of the Hon’ble Mumbai Tribunal in the case of Tipco Industries Ltd. V. The ACIT Income 1961 No.5708/Mum/2009 - Assessment year date of pronouncement: 03.08.2012 is relevant at para 15 which is self-explanatory is reproduced below: 15. We have considered the rival submission and perused the brders of lower authorities. It is settled that the deduction can be permitted in respect of only M/s Nadiadwala Entertainment & Technologies ITA No. 5663/M/2019 & CO NO. 23/M/2021 5 . The balance amount of was never recovered. It is that amount which is written off and claimed as an expenses 4.3 The contention putforth by the authorised representative of the assessee has been duly considered but not found explained by the assessee above, the film was released on 12.08.2011 and the assessee had signed a settlement agreement dated 11th November, 2011. As seen from the subject of settlement. agreement, it is amply clear that both ash Jha production has reached final settlement. Assessee had received the final settlement amount from Prakash Jha production from November 2011 to February 2012; also assessee has not given any document or evidence to justify that assessee claim additional revenue from film realization of movie Aarakshan, which is disputed. Therefore, it is clear that said amount cannot be written off in F.Y. 2012-13: Without prejudice to the above, rule 9A of Income-täx Rules, ssee since it has not produced Further, assessee has made submission that it is not tax Rules, 1962. 4.4 Admittedly the expenses being of a prior period and not pertaining to the year under consideration cannot be lowed the decisions of the Hon’ble Mumbai Tribunal in the Income-tax Act, Assessment year-2004-05, date of pronouncement: 03.08.2012 is relevant at para 15 15. We have considered the rival submission and perused the brders of lower authorities. It is settled that the deduction can be permitted in respect of only 4.5 In the lights of the above findings that the said expenses are prior period expenses herce not allowable W/s. 370) of the Income Tax Act, 1961, the prior period expenses are not allowable expenses. Hence, Written off loss - Rs.5,90,00,000/ the total income of the assessee. Penalty proceedings u/s. 271(1)(c) of the Income for furnishing inaccurate pa 7.1 On further appeal, the Ld. CIT(A) has characterized the loss as short term capital loss as against claim of the assessee as business loss. The relevant finding of the Ld. CIT(A) is reproduced as under : “6. I have carefully submissions made by the AR in support of his arguments. After taking into consideration the AO's findings and order sheet notings, as well as the facts of the case, decision on the ground raised by assessee is made here 6.1 Only effective ground raised by the appellant is against disallowance of a sum or 35.90.00.000/ as loss by the appellant by the Ld. AO by treating the same M/s Nadiadwala Entertainment ITA No. 5663/M/2019 & CO NO. 23/M/2021 those expenses which are incurred in the relevant accounting year for the purpose of computing yearly profits and gains. We find that the claim of the assessee of expenses pertaining to prior period cannot be accepted as nothing has been brought on record to substantiate its claim neither before the lower authorities nor before us. Ground accordingly dismissed. 4.5 In the lights of the above findings that the said expenses are prior period expenses herce not allowable W/s. 370) of the Income Tax Act, 1961, the prior period expenses are not allowable expenses. Hence, Written off being in the nature of prior period expenses of Rs.5,90,00,000/- is hereby disallowed and added back to the total income of the assessee. Penalty proceedings u/s. 271(1)(c) of the Income-tax Act, 1261 is initiated separately for furnishing inaccurate particulars of income.” On further appeal, the Ld. CIT(A) has characterized the loss as short term capital loss as against claim of the assessee as business loss. The relevant finding of the Ld. CIT(A) is reproduced I have carefully perused the order of the AO and the submissions made by the AR in support of his arguments. After taking into consideration the AO's findings and order sheet notings, as well as the facts of the case, decision on the ground raised by assessee is made here under: Only effective ground raised by the appellant is against disallowance of a sum or 35.90.00.000/- being written off as loss by the appellant by the Ld. AO by treating the same M/s Nadiadwala Entertainment & Technologies ITA No. 5663/M/2019 & CO NO. 23/M/2021 6 those expenses which are incurred in the relevant computing yearly profits and gains. We find that the claim of the assessee of expenses pertaining to prior period cannot be accepted as nothing has been brought on record to substantiate its claim neither before the Ground No:3 is 4.5 In the lights of the above findings that the said expenses are prior period expenses herce not allowable W/s. 370) of the Income Tax Act, 1961, the prior period expenses are not allowable expenses. Hence, Written off being in the nature of prior period expenses of is hereby disallowed and added back to the total income of the assessee. Penalty proceedings u/s. tax Act, 1261 is initiated separately ” On further appeal, the Ld. CIT(A) has characterized the loss as short term capital loss as against claim of the assessee as business loss. The relevant finding of the Ld. CIT(A) is reproduced perused the order of the AO and the submissions made by the AR in support of his arguments. After taking into consideration the AO's findings and order sheet notings, as well as the facts of the case, decision on under:- Only effective ground raised by the appellant is against being written off as loss by the appellant by the Ld. AO by treating the same as prior period expenses. In para 4 of the assessment order. Ld. AO h debited a sum of 25.90.00,000/ account as cost of operating expenses. During the course of assessment proceedings, Ld. AO asked the appellant to explain the allowability of the expense claime According to the Ld. AO. the expenses claimed by the appellant pertained to prior period and not the year under consideration. Therefore, he disallowed the claim of the appellant and added the same to the total taxable income of the assessee Durin written submission was filed which find place in para 5 of this order. The appellant submitted that it's a closely held Company incorporated with an object to undertake production, distribution and funding of films. further submitted that one of the major share director of the Appellant Company. Mr. Firoz Nadiadwala also a proprietor of Base Industries Group (BIG) and Prakash Jha Production (PJP) jointly produced film "Aarakshan" for which apa had been contributed through Appellant as it was to get distribution rights of the film. The appellant mentioned that he could recover only Rs. 3.00 Crs as against the film funding of Rs.8.90 Crs and had written off the lo amounting Rs.5.90 Crs us 28(i) of the Income 1961(Act) to the Profit & Loss A/c. The appellant further submitted that the LAO disallowed the loss written off amounting Rs. 5.90 Crs. treating the same as prior period expense giving reason that t 12.08.2011 and the Appellant had signed a settlement agreement dated 11th November, 2011. It was further submitted that the Appellant had received the final settlement amount from PJP from November 2011 to February 2012. Appellant f M/s Nadiadwala Entertainment ITA No. 5663/M/2019 & CO NO. 23/M/2021 as prior period expenses. In para 4 of the assessment order. Ld. AO had mentioned that the assessee company had debited a sum of 25.90.00,000/- in the Profit & Loss account as cost of operating expenses. During the course of assessment proceedings, Ld. AO asked the appellant to explain the allowability of the expense claime According to the Ld. AO. the expenses claimed by the appellant pertained to prior period and not the year under consideration. Therefore, he disallowed the claim of the appellant and added the same to the total taxable income of the assessee During the course of appellate proceeding, a written submission was filed which find place in para 5 of this order. The appellant submitted that it's a closely held Company incorporated with an object to undertake production, distribution and funding of films. The appellant further submitted that one of the major share director of the Appellant Company. Mr. Firoz Nadiadwala also a proprietor of Base Industries Group (BIG) and Prakash Jha Production (PJP) jointly produced film "Aarakshan" for which apart from BIG's contribution, funds had been contributed through Appellant as it was to get distribution rights of the film. The appellant mentioned that he could recover only Rs. 3.00 Crs as against the film funding of Rs.8.90 Crs and had written off the lo amounting Rs.5.90 Crs us 28(i) of the Income 1961(Act) to the Profit & Loss A/c. The appellant further submitted that the LAO disallowed the loss written off amounting Rs. 5.90 Crs. treating the same as prior period expense giving reason that the film was released on 12.08.2011 and the Appellant had signed a settlement agreement dated 11th November, 2011. It was further submitted that the Appellant had received the final settlement amount from PJP from November 2011 to February 2012. Appellant further argued that although M/s Nadiadwala Entertainment & Technologies ITA No. 5663/M/2019 & CO NO. 23/M/2021 7 as prior period expenses. In para 4 of the assessment order. ad mentioned that the assessee company had in the Profit & Loss account as cost of operating expenses. During the course of assessment proceedings, Ld. AO asked the appellant to explain the allowability of the expense claimed by it. According to the Ld. AO. the expenses claimed by the appellant pertained to prior period and not the year under consideration. Therefore, he disallowed the claim of the appellant and added the same to the total taxable income of g the course of appellate proceeding, a written submission was filed which find place in para 5 of this order. The appellant submitted that it's a closely held Company incorporated with an object to undertake The appellant further submitted that one of the major share-holder and director of the Appellant Company. Mr. Firoz Nadiadwala also a proprietor of Base Industries Group (BIG) and Prakash Jha Production (PJP) jointly produced film rt from BIG's contribution, funds had been contributed through Appellant as it was to get distribution rights of the film. The appellant mentioned that he could recover only Rs. 3.00 Crs as against the film funding of Rs.8.90 Crs and had written off the loss amounting Rs.5.90 Crs us 28(i) of the Income-tax Act, 1961(Act) to the Profit & Loss A/c. The appellant further submitted that the LAO disallowed the loss written off amounting Rs. 5.90 Crs. treating the same as prior period he film was released on 12.08.2011 and the Appellant had signed a settlement agreement dated 11th November, 2011. It was further submitted that the Appellant had received the final settlement amount from PJP from November 2011 to urther argued that although payments were recovered but issue was not settled finally. Therefore, appellant further claimed that the said amount could not be written off in F. Y.2012 6.1.1 From perusal of the submission of the appellant it is evident t the film Aarakshan. Film was jointly produced by Mr. Firoz Nadiadwala, Proprietor of Base Industries Group (BIG) and Prakash Jha Production and the assessee company. Since the production of the film entities and not the assessee company, therefore, it the business expenditure of the assessee, rather the assessee made an investment of R8.90 crores for purchasing the distribution rights of the film. rights was for purchasing an intangible asset which was a capital asset. Film was released on 12.08.2011, therefore, on date of release of film distribution rights were came in existence and for determining the appellant signed settlement agreement dated 11.11.2011 and appellant received the final settlement amount from November, 2012 to February, 2012, but still some negotiations were going on between the assessee company and produ during the year under consideration. Therefore, the capital loss will be allowed only in the year under consideration. Since the loss was incurred for purchasing capital asset, therefore, claim of the appe business loss is not accepted rather AO is directed to treat the loss on purchase of distribution rights as a short term capital loss and not the business loss. 7.2 We find that the assessee has not incurred expenses for production of the film whereas, the assessee claim M/s Nadiadwala Entertainment ITA No. 5663/M/2019 & CO NO. 23/M/2021 payments were recovered but issue was not settled finally. Therefore, appellant further claimed that the said amount could not be written off in F. Y.2012-13 From perusal of the submission of the appellant it is evident that the expenditure was incurred for production of the film Aarakshan. Film was jointly produced by Mr. Firoz Nadiadwala, Proprietor of Base Industries Group (BIG) and Prakash Jha Production and the assessee company. Since the production of the film was a joint work of above three entities and not the assessee company, therefore, it the business expenditure of the assessee, rather the assessee made an investment of R8.90 crores for purchasing the distribution rights of the film. rights are intangible asset, hence, investment of assessee was for purchasing an intangible asset which was a capital asset. Film was released on 12.08.2011, therefore, on date of release of film distribution rights were came in existence and for determining the purchase value of these rights appellant signed settlement agreement dated 11.11.2011 and appellant received the final settlement amount from November, 2012 to February, 2012, but still some negotiations were going on between the assessee company and producer of the film. The final amount was only settled during the year under consideration. Therefore, the capital loss will be allowed only in the year under consideration. Since the loss was incurred for purchasing capital asset, therefore, claim of the appellant regarding allowability of business loss is not accepted rather AO is directed to treat the loss on purchase of distribution rights as a short term capital loss and not the business loss.” We find that the assessee has not incurred expenses for oduction of the film whereas, the assessee claim M/s Nadiadwala Entertainment & Technologies ITA No. 5663/M/2019 & CO NO. 23/M/2021 8 payments were recovered but issue was not settled finally. Therefore, appellant further claimed that the said amount From perusal of the submission of the appellant it is hat the expenditure was incurred for production of the film Aarakshan. Film was jointly produced by Mr. Firoz Nadiadwala, Proprietor of Base Industries Group (BIG) and Prakash Jha Production and the assessee company. Since of above three entities and not the assessee company, therefore, it was not the business expenditure of the assessee, rather the assessee made an investment of R8.90 crores for Distribution are intangible asset, hence, investment of assessee was for purchasing an intangible asset which was a capital asset. Film was released on 12.08.2011, therefore, on date of release of film distribution rights were came in existence purchase value of these rights appellant signed settlement agreement dated 11.11.2011 and appellant received the final settlement amount from November, 2012 to February, 2012, but still some negotiations were going on between the assessee company cer of the film. The final amount was only settled during the year under consideration. Therefore, the capital loss will be allowed only in the year under consideration. Since the loss was incurred for purchasing capital asset, llant regarding allowability of business loss is not accepted rather AO is directed to treat the loss on purchase of distribution rights as a short term We find that the assessee has not incurred expenses for oduction of the film whereas, the assessee claimed that said investment was made film which are in the nature of intangible assets and therefore investment was for purchase of capital asset and loss incurred on the same is in the nature on opinion, finding of the Ld. CIT(A) on the issue reasoned and no interference is required in the same. We accordingly uphold the finding of the Ld. CIT(A) on the issue dispute. The ground raised by the Revenue as well as by the assessee in cross-objection are accordingly dismissed. 8. In the result, the appeal filed by the Revenue as well as cross-objection of the assessee are dismissed. Order pronounced under Rule 34(4) of 1963 on 30/11/2022. Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 30/11/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai M/s Nadiadwala Entertainment ITA No. 5663/M/2019 & CO NO. 23/M/2021 was made for purchase of distribution right of the film which are in the nature of intangible assets and therefore investment was for purchase of capital asset and loss incurred on e same is in the nature on ‘short term capital loss opinion, finding of the Ld. CIT(A) on the issue-in-dispute is well reasoned and no interference is required in the same. We accordingly uphold the finding of the Ld. CIT(A) on the issue e. The ground raised by the Revenue as well as by the objection are accordingly dismissed. In the result, the appeal filed by the Revenue as well as objection of the assessee are dismissed. Order pronounced under Rule 34(4) of the ITAT Rules, /2022. Sd/- SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : M/s Nadiadwala Entertainment & Technologies ITA No. 5663/M/2019 & CO NO. 23/M/2021 9 distribution right of the film which are in the nature of intangible assets and therefore, investment was for purchase of capital asset and loss incurred on short term capital loss’. In our dispute is well reasoned and no interference is required in the same. We accordingly uphold the finding of the Ld. CIT(A) on the issue-in- e. The ground raised by the Revenue as well as by the objection are accordingly dismissed. In the result, the appeal filed by the Revenue as well as the ITAT Rules, - OM PRAKASH KANT) ACCOUNTANT MEMBER 6. Guard file. //True Copy// M/s Nadiadwala Entertainment ITA No. 5663/M/2019 & CO NO. 23/M/2021 BY ORDER, (Sr. Private Secretary) ITAT, Mumbai M/s Nadiadwala Entertainment & Technologies ITA No. 5663/M/2019 & CO NO. 23/M/2021 10 BY ORDER, (Sr. Private Secretary) ITAT, Mumbai
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