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TMI Blog1984 (5) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Patnavasam'. After producing the film the firm was dissolved with effect from 28-2-1978. The assessee acquired the exploitation rights of the film as per dissolution deed dated 1-3-1978. During the accounting year ending on 31-3-1979 the assessee exploited the film through Sree Films, Vijayawada. The assessee claimed publicity expenses of Rs. 1,81,862. Applying the provisions of section 37(3A), the ITO disallowed Rs. 27,279. On appeal, the AAC was of the view that the assessee's business was an industrial undertaking for the manufacture or production of articles and, therefore, the provisions of section 37(3D) applied and, consequently, the disallowance under section 37(3A) was not called for. In this regard he has relied on the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to us for perusal and appreciation of the facts of the case. On the face of the record it is an admitted fact that the assessee has obtained only the exploitation rights of the film, 'Patnavasam' from the defunct firm, Padmalaya Pictures, Bangalore, and he has exploited the picture through Sree Films, Vijayawada. Therefore, it is clear to us that the film was produced by the defunct firm, the exploitation rights were acquired by the assessee and the film was exhibited through Sree Films, Vijayawada. Therefore, the assessee stands in the capacity of a distributor though he acquired the film by virtue of dissolution deed dated 1-3-1978. In this connection, it is to be pointed out that the assessee has acquired the rights of the expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not known whether the assessee has subsequently produced any picture of his own and incurred any expenditure by way of publicity. In this connection we have to observe that the AAC has merely relied on the decision of the Commissioner (Appeals) in the case of Dhakshayani Combines without giving any finding of fact in this regard. The relevant portion of the order of the Commissioner (Appeals) reads as under: "I have carefully considered the above submissions. I am not in agreement with the learned representive in his claim that there should be no expenditure on advertisement, publicity or sales promotion so far as feature films are concerned. In fact such expenditure in feature films start right from the muhurat day and continue till the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure in the capacity of a producer in the year of manufacture. Consequently, we are of the considered opinion that the provisions of section 37(3D) were not applicable and consequently the limitation of expenditure contained in sub-section (3A) of section 37 was rightly attracted. In this case there is no dispute regarding the quantum of disallowance but the dispute is with regard to the applicability of section 37(3A) and section 37(3D). For the reasons stated by us, we have no hesitation in setting aside the order of the AAC as it is not justified in law and in the circumstances of the case and upholding the order of the ITO which is in accordance with law.
5. In the result, the appeal of the revenue is allowed. X X X X Extracts X X X X X X X X Extracts X X X X
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