New Delhi, Oct 20 (IANS) Filmmakers unable to complete their movies or who had to abandon them before completing will now be eligible for relief following the latest directive of the Income Tax department doing away with a provision of claiming tax on abandoned 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officers of the department and appeals already filed, if any, on this issue before various courts or tribunals may be withdrawn or not pressed upon," the order said.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.
A senior official told reporters here on the sidelines of the CII Big Picture Summit on Tuesday that the latest order came after earlier court rulings in favour of filmmakers seeking that expenditure made on an abandoned film be treated as revenue, rather than capital expenditure.
The CBDT order raises the issue of films completed that have, however, not had a commercial release for some reason.
An example is the Anurag Kashyap produced "Michael", starring Naseeruddin Shah and Mahie Gill, which had only an initial release at the Toronto International Film Festival in 2011, but has not officially hit the screens.
Meanwhile, actor-producer Ajay Devgn was felicitated for his valuable contribution to Indian cinema at the Confederation of Indian Industry's Big Picture Summit that concluded on Tuesday.
"The two-time National Award-winning film actor is today among Bollywood's most bankable box office stars," CII said in a statement.