Tax relief for filmmakers with abandoned movie projects
In the most recent news, it has been declared that the film makers who could not complete their movies or had to abandon them while working on the same, can now have some relief as the Income Tax department has decided to do away with a provision of claiming tax for such movie projects.
“It is clarified that Rule 9A does not apply to abandoned feature films and that the expenditure incurred on such films is not to be treated as a capital expenditure,” a recent office order of the Central Board of Direct Taxes (CBDT) said. 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,” it said.
“Revenue” expenditure implies a work that led to loss in the business. “No appeals may henceforth be filed on this ground by the officers of the department and appeals already filed, if any, on this issue before various courts or tribunals may be withdrawn or not pressed upon,” the order said.
Rule 9A allows for deduction of tax relief on taxable income in respect of the cost of production of a feature film certified by the censor board.