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TMI Blog1983 (9) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... he second and the only other common objection pertains to the determination of the income from the business of distribution of films. The question concerns the amortisation of the cost of films. The assessee's method of accounting all along has been to write off the entire cost of distribution rights in the year of acquisition itself and valuing the closing stock at nil. It is also seen that the method adopted by the assessee as stated above has the blessing of the Madras High Court in the assessee's own case in CIT v. K. Sankarapandia Asari Sons [1981] 130 ITR 541. The assessments in the assessee's case have all along been made up to the assessment year 1976-77 also on that basis. For the relevant years under appeal, however, the income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along in the past including by a decision of the Madras High Court and not the determination of the amortisation under rule 9B. It is not necessary for us to advert to the figures for other years and we have referred to the figures for the year 1977-78 only for the purpose of illustration. The point that arises, therefore, for our decision is whether the amortisation of the cost of films should be on the basis of the accounting method employed by the assessee and which has been hitherto accepted by the department, or it should be according to rule 9B. Rule 9B was inserted by the Income-tax (Seventh Amendment) Rules, 1976. According to this rule, inter alia, amortisation for the cost of film is provided in the case of a film distributor who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the power to frame rules is vested in the Government under section 295(2)(a) of the Act, which provides for framing rules for the ascertainment and determination of any class of income. In this connection reliance is placed on the decision of the Supreme Court in Karimtharuvi Tea Estate Ltd. v. State of Kerala [1963] 48 ITR 83 and on the observations at page 91 where the contention that for the purpose of definition of 'agricultural income' one has to look only to its definition in the Indian Income-tax Act, 1922 ('the 1922 Act') and not to the rules made thereunder, was rejected and it was observed that rule 24 of the Rules has been made under the powers conferred under section 59 of the 1922 Act and has effect as if enacte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be computed in accordance with the method of accounting regularly employed by the assessee. There are only two exceptions contemplated to it and they are circumstances stated in the proviso to section 145(1) and in sub-section (2). Therefore, prima facie, the income has to be determined in the case of an assessee maintaining accounts for the sources of income indicated in section 145 according to the method of accounting regularly employed. That, in the assessee's case, the method of accounting adopted by it is regularly employed and is a recognised one is not in dispute. The only question then that arises for consideration is as to whether rule 9B can override the provisions of section 145 so as to affect or alter the determination of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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