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Issues involved: Interpretation of circular issued by Central Board of Direct Taxes for amortisation of film prints purchased by assessee for business deduction in assessment year 1972-73.
Summary: The High Court of Kerala considered a reference by the Income-tax Appellate Tribunal regarding the applicability of a circular issued by the Central Board of Direct Taxes for the assessment year 1972-73. The assessee, engaged in film distribution, purchased prints of two films during the year and claimed deduction for the total cost incurred. Initially, the Income Tax Officer allowed the deduction, but upon revision under section 263 of the Income Tax Act, the Commissioner of Income-tax set aside the order, limiting the amortisation to 50% due to the films being released in the latter half of the accounting year. The Tribunal, however, allowed the appeal, citing a recent judgment in favor of the assessee. Consequently, the High Court ruled in favor of the assessee, following the precedent set by the earlier judgment. The Court's decision was based on the interpretation of the circular issued by the Central Board of Direct Taxes and the application of relevant provisions of the Income Tax Act. The judgment highlighted the importance of consistency in applying tax laws and circulars to ensure fairness in assessments. The Court's ruling favored the assessee, emphasizing the need to consider all relevant factors in determining the allowable deductions for business expenses related to film distribution. The decision provided clarity on the issue at hand and set a precedent for similar cases involving the interpretation of tax laws and circulars for business deductions.
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