Brief of the case:
The ITAT Mumbai in the case of Dharma Productions Pvt. Ltd. held that the advertisement expenditure incurred after the censor board film certification would be a post-production expenditure not allowable under Rule 9A or 9B of the IT Rules, 1962. But the same are otherwise allowable under Sec 37 as business expenditure incurred exclusively for the business purposes (exhibition of film) more so because the same are not otherwise disallowed under any other provisions of the Act.
Facts of the case:
- The assessee is engaged in the business of Hindi film production and distribution of films. During the year under consideration, the assessee produced a film named ―Dostana‖ and sold the distribution rights to M/s Yashraj Films P Ltd. after getting certificate from Censor Board.
- The assessee incurred advertisement expenditure of Rs.4,44,49,789/- and claimed the same as deduction. The AO noticed that the assessee has incurred the advertisement expenditure after the issue of certificate by the Censor Board. Accordingly , the AO disallowed the said expenditure taking view that the same not allowable in view of the provisions of Rule 9A and 9B of I.T Rules.
- Such disallowance was also confirmed by CIT(A) , aggrieved assessee in appeal before ITAT.
Contention of the Assessee:
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