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TMI Blog2005 (9) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... an Ashiq . In the trading account of the pictures the assessee had shown profit of Rs. 77,896.51 and loss of Rs. 9,12,574.24 respectively. In view of the Assessing Officer as per rule 9B of the Income-tax Rules, the correct amount of such carried forward loss should be Nil with reference to film Insaniyat Ka Devta and Rs. 4,65,364 for film Shreeman Ashiq . Therefore, for the film Insaniyat Ka Devta the profit of the assessee comes to Rs. 10,03,584 whereas the assessee has shown profit of Rs. 77,896 only. Similarly, for the film Shreeman Ashiq the assessee claimed excess loss of Rs. 2,66,050. According to the Assessing Officer the method adopted by the assessee and calculation made as per rule 9B which is dealt in detail during the assessment year 1993-94, he was of the view that the assessee had claimed excess loss of Rs. 2,66,050 for the film Shreeman Ashiq has understated profit by Rs. 9,25,687.91 for the film Insaniyat Ka Devta . 5. In appeal before the CIT(A) it was pleaded that on the similar facts for the assessment years 1992-93 and 1993-94, similar additions made by the Assessing Officer were deleted by the CIT(A). It was stated that for the purposes of comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the assessee firm, while calculating the unamortized cost of minimum guarantee royalty to be carried forward in the case of the pictures which have run less than 180 days in the accounting year, the cost of positive print and advertisement has to be deducted from the gross collection and only the net loss has to be set off against the minimum guarantee royalty to be carried forward. As per the Assessing Officer s point of view who has relied on the provision of rule 9B, it is only the gross collection which is to be set off against the MG Royalty disregarding the cost of positive print and advertisement charges. Thus as per the assessee s system of accounting the total carry forward will be unamortized MG Royalty but as per the Assessing Officer s stand a part of the carry forward will be unamortized royalty and the balance will be a business loss. 8. He further observed that the assessee has been following this system of accounting consistently year after year and the same was being accepted by the Department. It was only for the first time in assessment year 1992-93 that the system of accounting followed by the assessee has been denied by the Department. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributor to the producer is allowed to be carried forward to the next year in which the film completes commercial run of 180 days. The expenses incurred by the distributor for the preparation of printing and publicity of the films have been kept outside the ambit of rule 9B. The assessee has not contested this interpretation of rule 9B and agreed with the same. Rule 9B speaks only with regard to minimum guarantee royalty paid by the distributor to the producer. It has nothing to do with the amount spent for the preparation of prints and for publicity of the film by the distributor. Expenses incurred on preparation of film prints are outside the ambit of rule 9B i.e. , they have no connection with rule 9B and have not to be carried forward for amortization purposes at all. The decision in the case of CIT v. Modern Theatres Ltd. [1963] 50 ITR 548 (Mad.) was relied upon which stated that the principle of amortization does not apply to positive printing of films. Hence, it was his submission that the order of the Assessing Officer should be upheld and that of the CIT(A) should be set aside. On other hand, the ld. Authorised Representative of the assessee fully supported the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so relied on the decision of the Hon ble Andhra Pradesh High Court in the case of CED v. Estate of Late Smt. K. Narasamma [1980] 125 ITR 196 wherein it was held that since the entire matter was under consideration by virtue of appeal preferred by the Department it was open to the Appellate Tribunal to give relief on the entire value of the property notwithstanding that no cross objections were filed by the accountable person. He also relied on the decision of the Hon ble Madras High Court in the case of CIT v. Smt. S. Vijayalakshmi [2000] 242 ITR 46 wherein it was held that the absence of an appeal by the assessee against the order of the Commissioner who had remanded the matter to the ITO did not, in any case, preclude the Tribunal from holding that the capital gain in the instant case was long-term capital gain since such a relief, in fact, had been sought by the assessee before the assessing authority. Hence, he submitted that even though no cross objection was filed by the assessee, the assessee can support the order of the CIT(A) on other grounds. On the other hand, it was the submission of the ld. Departmental Representative as the assessee is not in appeal and had no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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