ITO Vs. M/s Universal Arts Ltd
I.T.A. No.1288 & 1289/Mum/2012,
Date : 15-9-2015
In terms of sub rule 2 to Rule 9B, if the film is released at least 90 days before the end of previous year, entire cost of acquisition is to be allowed in that year.
In terms of sub rule 3 to Rule 9B if the film purchased is not released least 90 days before the end of previous year but amount realized on sale of rights during previous year, is less than cost price, the amount realized would be allowed as reduction and the balance cost of acquisition is to be carried forward to next year.
In terms of sub rule 4 to Rule 9B if the film purchased is not released or sold during previous year, entire cost of acquisition is to be carried forward allowed in next year.
In terms of sub rule 5 to Rule 9B the amount realized on sale during previous year, should be credited in the books of account.
From above, it is clear that the cost to be allowed during the year depends upon the closing stock of the previous year, purchases during the year and the valuation of the closing stock would be dictated by sub Rule 2 & 3. From the assessment order, it appears that the Assessing Officer has misconstrued the provisions of Rule 9B and has not applied sub Rule 2,3 properly. In fact ignored sub Rule 4 completely and did not allow the closing stock of the previous year of unsold films which is to be allowed as deduction irrespective of sale or not
Judgement :-ITO Vs. M/s Universal Arts Ltd