Mumbai ITAT allows
deduction u/s. 37 to Zee Entertainment (‘assessee’) with respect
to write off of advance given to BCCI, rejects Revenue's stand that it
represents a capital loss as it is in relation to acquisition of media
rights (which is a capital asset); Assessee acquired media rights from
BCCI on payment of US $ 17.5 million, out of which US$ 10 million was adjusted
against two matches played and the balance was kept as deposit (to be adjusted
against last series), however, owing to dispute, the contract was terminated
and the deposit was forfeited by BCCI during relevant AY 2008-09; ITAT holds
that the agreement with BCCI for acquiring the media rights was pursuant to
assessee’s normal business activity (of broadcasting and distribution of
TV programmes) and US$ 10 million which was adjusted in earlier year was
offered to tax by assessee; Further rejects Revenue’s stand that since the
assessee filed a legal case for recovery and also initiated arbitration
proceedings, it could not be said that the loss had actually crystallized
during relevant AY, similarly, rejects Revenue’s submission that write-off was
premature as assessee did not fully explore the possibility of its recovery;
ITAT remarks that “it is the judgement of the assessee as a businessman.”,
notes that despite arbitration proceedings, as assessee did not visualize any
sign of recovery, it wrote-off the forfeited amount and claimed deduction:ITAT
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