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Exp. incurred by Dharma Productions on publicity of film after getting censor board certification allowed u/s 37.

Assessee-Dharma Productions (P.) Ltd was engaged in production and distribution of feature films. It claimed expenditure incurred for positive prints of feature film and further expenditure on account of advertisement.
Assessing Officer (AO) noticed that those expenditures were incurred by the assessee after issuance of certificate of Censor Board. He disallowed the claim holding that such expenditure was not allowable deduction in terms of rule 9A and rule 9B.
The Bombay High Court held that rule 9A of the Income-tax Rules provides that in computing the profits and gains of the business of production of feature film, the 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 would be allowed.
However, if a certain expenditure is claimed by the assessee by way of business expenditure, which does not form part of cost of production of a feature film, rule 9A would have no applicability. In such a situation, the assessee’s claim of expenditure would be governed by the provisions of the Act. If the assessee satisfies the requirements of section 37, there is no reason why such expenditure should not be allowed as business expenditure.

Prakhar Kalaniauthor

Prakhar Kalani (B.Com, ACA, DISA), Partner at Kalani Gattani & Co. Prakhar Kalani is a Qualified Chartered Accountant . contact him @ pkalani@kgcmail.com

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