Principal Commissioner vs. M/s.Radaan Media Works (I) Ltd

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TCA/203/2022HC Madras22 July 2022Bench: HON`BLE MR. JUSTICE R. MAHADEVAN and HON`BLE MR. JUSTICE MOHAMMED SHAFFIQ5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court, following a coordinate bench's decision in T.C.A.No.905 of 2008 dated 04.04.2018, held that the issue of whether the cost of production of a teleserial/feature film should be treated as revenue or capital expenditure is to be decided as per CBDT's Circular No.16/2015. This circular states that the cost of production of an abandoned feature film is to be treated as revenue expenditure and allowed under Section 37 of the Income Tax Act. The Court found no distinction between a teleserial and a feature film in this context, and therefore, the circular has full application. Consequently, the substantial questions of law were answered in favour of the assessee and against the Revenue. The appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue, Principal Commissioner of Income Tax, Chennai, filed an appeal before the High Court of Judicature at Madras against an order of the Income Tax Appellate Tribunal (ITAT), Chennai. The ITAT's order, dated 23.02.2022, was in relation to ITA No.1908/CHNY/2019 for Assessment Year 2009-10. The appeal challenges the ITAT's decision to uphold the Commissioner of Income Tax (Appeals) order, which allowed the assessee's claim for expenditure on the production of a teleserial as revenue expenditure. The Revenue also contested the deletion of an addition of Rs.2.33 crores made towards the production of the teleserial, after admissible depreciation.

What were the issues?

1. Whether on the facts and circumstances of the case, the Honourable Income Tax Appellate Tribunal was justified in law in upholding the order of CIT(A) allowing the assessee's claim of expenditure on production of teleserial as revenue expenditure without considering the fact that such expenses give enduring benefit to the assessee and revenue from exhibition of teleserial spread over more than a year? (Question of law) 2. Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was justified in law in deleting the addition made towards production of teleserial amounting to Rs.2.33 crores after admissible depreciation based on CBDT's Circular No.16/2015 dated 06.10.2015 which is dealt with abandoned feature film, without considering the fact that the instant case involves live existing serials? (Question of law) Assessee's Contention: Not recorded. Revenue's Contention: The expenses incurred on the production of the teleserial provide an enduring benefit and the revenue from its exhibition extends beyond a year, thus it should be capital expenditure. Furthermore, CBDT's Circular No.16/2015, relied upon by the ITAT, pertains to abandoned feature films and not live existing serials.

Which sections of the Income-tax Act were involved?

Section 37

AI-generated summary — verify with the full judgment below

Tax Case Appeal No.203 of 2022 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :22.07.2022 CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVAN AND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ Tax Case Appeal No.203 of 2022 Principal Commissioner of Income Tax, Chennai

... Appellant Vs.

M/s.Radaan Media Works (I) Ltd., 10, (Old No.3), Paul Appasamy Street, T.Nagar, Chennai 600 017. ... Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, 'C' Bench, Chennai dated 23.02.2022 in I.T.A.No.1908/CHNY/2019 for the Assessment Year 2009-10. For Appellant : Mr. R. Karthik Standing Counsel For Respondent : Mr.A.S. Sriraman

Page 1/5 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.203 of 2022 J U D G M E N T (Judgment was delivered by R. MAHADEVAN, J.) This Tax Case Appeal has been filed by the appellant / Revenue challenging the order dated 23.02.2022 passed by the Income Tax Appellate Tribunal, 'C' Bench, Chennai in I.T.A.No.1908/CHNY/2019 for the Assessment Years 2009-10 raising the following substantial questions of law. “1. Whether on the facts and circumstances of the case, the Honourable Income Tax Appellate Tribunal was justified in law in upholding the order of CIT(A) allowing the assessee's claim of expenditure on production of teleserial as revenue expenditure without considering the fact that such expenses give enduring benefit to the assessee and revenue from exhibition of teleserial spread over more than a year? 2. Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was justified in law in deleting the addition made towards production of teleserial amounting to Rs.2.33 crores after admissible depreciation based on CBDT's Circular No.16/2015 dated 06.10.2015 which is dealt with abandoned feature film, Page 2/5 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.203 of 2022 without considering the fact that the instant case involves live existing serials? ” 2. Heard the learned counsel for the both sides, who submitted that the issues involved herein are covered by a decision of the Co-ordinate Bench of this Court dated 4.4.2018 in T.C.A.No.905 of 2008, wherein, it was held as follows:- “4. The issue as to whether the cost of production of a abandoned teleserial/feature film shall be treated as Revenue expenditure or capital expenditure has to be decided as per the Circular issued by the Central Board of Direct Taxes in Circular No.16/2015 dated 06.10.2015, wherein it is stated that 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. This circular was taken note of by the Division Bench of this Court in Tiruvengadam Investments Pvt. Ltd., Vs. Assistant Commissioner of Income Tax reported in (2016) 95 CCH 0024 ChenHC. Though the circular pertains to a feature film, we find that there cannot be any distinction between tele-serial and feature film as the circular deals with the aspect regarding to the cost of production of a film. Hence, Page 3/5 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.203 of 2022 Circular No.16/2015 dated 06.10.2015 has full application to the facts of the present case. Thus, for the above reasons, appeal filed by the Revenue is dismissed and the substantial question of law as framed is answered in favour of the assessee and against the Revenue. No costs.” 3. Following the above decision, which is squarely applicable to the facts of the present case, the questions of law involved herein are answered in favour of the assessee and against the Revenue. Accordingly, this Tax Case Appeal is dismissed. No costs. [R.M.D,J.] [M.S.Q, J.] 22.07.2022 msr

Internet : Yes

Index : Yes / No Page 4/5 https://www.mhc.tn.gov.in/judis Tax Case Appeal No.203 of 2022 R. MAHADEVAN, J. and MOHAMMED SHAFFIQ, J. msr To Income Tax Appellate Tribunal, 'C' Bench, Chennai Tax Case Appeal No.203 of 2022 22.07.2022 Page 5/5 https://www.mhc.tn.gov.in/judis

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