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Amitabh's 18 crs. Tax
Rerun
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The Bombay High Court
has admitted an appeal filed by the IT authorities challenging an order
of Income Tax Appellate Tribunal which had held that Rs 17.74 crore paid
by Amitabh Bachchan Corporation Ltd (ABCL) to the actor and his wife Jaya
in 1995 for their services was revenue expenditure and hence not taxable.
The I-T counsel told a division bench of justice DY Chandrachud and justice
MS Sanklecha that the company had acquired a brand by making this payment.
“It is a new means of access to income. This payment is hence capital expenditure,”
the appeal states. The appeal added that by acquiring the brand, the company
enabled the management to conduct business while leaving fixed income untouched.HC
has recently admitted the petition.
According to the appeal
filed by the Income Tax Commissioner, the amount paid to the actors was
a capital expenditure and hence taxable. |
The court would now have
to decide whether the money paid to the superstar and his wife was capital
or revenue expenditure. The matter would be heard in due course.
ABCL had filed returns
in 1995 showing a loss of Rs 17.74 crore on the ground that the amount
paid to the actors was an expense following an agreement entered into by
the company with Bachchans. The amount, ABCL said, was deductible from
income as the company was in entertainment business.
In return for the payment,
the Bachchans had allowed the company to use their names for diverse purposes
and had also agreed to make themselves available to the company for 120
days a year, spanning ten years.
However, the assessment
officer held that by making this payment, ABCL had acquired a brand. "It
is a tool of the company and a new means of access for earning income.
A new source acquisition is payment of capital nature," the appeal contended.
.
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