2008 (11) TMI 354 - HC - Income Tax

Film production-Deduction under Rule 9A- The assessee produced a Bhojpuri feature film at a cost of Rs. 11,50,000/-. The assessee had not maintained the books of account in the year the film was released as he had received only a sum of Rs. 10,000 against the total production cost of Rs. 11,50,000. The assessee claimed deduction in respect of expenditure on production of the feature film in accordance with Rule 9A. The Assessing officer disallowed the claim as the assessee had not maintained the books of account. On appeal the assessee contended that the bank account constituted the books of account and the Commissioner (Appeals) accepted the contention and allowed the deduction. The Tribunal, however, upheld the view of the Assessing officer. On appeal by the assessee, held that-dismissing the appeal, that the pass book was not books of account maintaining by the film producer and the number of credits made in the passbook would be of no consequences. To claim deduction under Rule 9A(5), the film producer had to maintain books of account. The pass book maintained by the bank could not be stated as the books of account maintained by the assessee.

Summary

Issues:
1. Interpretation of whether a bank account can be considered as books of account for claiming deduction under rule 9A of the Income-tax Rules, 1962.
2. Determining whether the maintenance of books of account is mandatory for claiming deduction under rule 9A of the Rules.

Issue 1:
The case involved the question of whether a bank account could be equated with books of account for claiming deductions under rule 9A of the Income-tax Rules, 1962. The assessee, who produced a film, argued that the entry in the passbook maintained by the bank should be considered as books of account. The Commissioner of Income-tax (Appeals) supported this view, but the Income-tax Appellate Tribunal disagreed, stating that a bank account cannot be deemed as books of account. The High Court analyzed rule 9A(5) of the Rules, which specifies that the deduction shall not be allowed unless the amount realized by exhibiting the film is credited in the books of account maintained by the film producer. The Court held that a passbook is not equivalent to books of account maintained by the film producer. Therefore, the Tribunal's decision was upheld, concluding that the passbook maintained by the bank is not considered as books of account.

Issue 2:
The second issue revolved around the mandatory nature of maintaining books of account for claiming deductions under rule 9A of the Rules. The assessee contended that the passbook maintained by the bank should fulfill the requirement of maintaining books of account. However, the High Court rejected this argument, emphasizing that the rule explicitly states the necessity of maintaining books of account by the film producer. The Court reiterated that the passbook is not the books of account maintained by the assessee. Consequently, the Court affirmed that the maintenance of books of account under rule 9A(5) of the Rules is mandatory for seeking deductions. Therefore, the Tribunal's decision was upheld, stating that the maintenance of books of account is obligatory for claiming deductions under the specified rule.

In conclusion, the High Court dismissed the appeal, ruling in favor of the Revenue and upholding the Tribunal's decision. The Court held that a bank account, specifically a passbook, cannot be considered as books of account for claiming deductions under rule 9A of the Income-tax Rules, 1962. Additionally, the Court reiterated that the maintenance of books of account is mandatory for seeking deductions under the mentioned rule.