Income Tax - Abandoned Feature Films -Non-applicability of Rule 9A
DEDUCTION in respect of the cost of production of a feature film certified for release by the Board of Film Censors in a previous year is provided in Rule 9A of Income Tax Rules, 1962.
In the case of abandoned films, however, since certificate of Board of Film Censors is not received, in some cases no deduction was allowed by applying Rule 9A of the Rules or by treating the expenditure as capital expenditure.
In the case of Venus Records and Tapes Pvt. Ltd . - , the Bombay High Court upheld the order of the ITAT that the Tribunal was justified in holding that the cost of the abandoned film written off was a revenue expenditure.
The Revenue accepted this judgement and it has not been further contested.
Now, CBDT clarifies that Rule 9A does not apply to abandoned feature films and that the expenditure incurred on such abandoned feature films is not to be treated as a capital expenditure. The cost of production of an abandoned feature film, is to be treated as revenue expenditure and allowed as per the provisions of Section 37 of the Income-tax Act.
CBDT further graciously directs that being a settled issue, no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this issue before various Courts/Tribunals may be withdrawn/not pressed upon.
CBDT Circular No.16/2015., Dated: October 06, 2015