9911796707
TMI Blog2006 (6) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... rights in respect of the said film to M/s. Poorna Financiers and as per the agreement dated December 1, 1984, the consideration was Rs. 4,00,000. This amount had to be paid immediately on execution of the agreement. The agreement stated that the said amount of Rs. 4,00,000 shall be adjusted in five years i.e., Rs. 1,00,000 in the first year. Rs. 90,000 in the second year, Rs. 80,000 in the third year, Rs. 70,000 in the fourth year and Rs. 60,000 in the fifth year. The entire amount of Rs. 4,00,000 had been paid to the assessee in the year under consideration but the assessee had shown only Rs. 1,00,000 as income for that year and Rs. 3,00,000 as a deposit. The Income-tax Officer came to the conclusion that the assessee was following the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder appeal, as- already said, only inter se agreement cannot change the character of right and determination of taxability. The order of the learned Commissioner of Income-tax (Appeals) is therefore indefensible and reversed." In these circumstances, a request for reference was made and the following questions have been referred to this court, "1. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the lease amount received in advance by the assessee for leasing out the film for 5 years and to be adjusted towards the yearly lease amount for the next four years is taxable in the year of receipt, i.e, the previous year ending on March 31, 1986, when the assessee was maintaining the acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 ITR 525 is not applicable to the present case as in the case before the Supreme Court the assessee had become entitled to a commission of Rs. 2,26,850. On March 30, 1942, the assessee wrote to the company requesting that a certain debt, which the assessee owed to the company for a long time past, should be written off. The directors, by their resolution, passed on the same date refused to write off the amount without consulting the general body of shareholders and pending the settlement of the dispute, resolved to keep the sum of Rs. 2,26,850, in suspense without paying it. The High Court came to the conclusion that there was no material for the Tribunal's finding that the assessee was being assessed on cash basis in previous years but he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his that the commission will be quantified only after certain deductions had been made and not that the commission will not accrue until the profits have been ascertained. The quantification of the commission is not a condition precedent to its accrual. If the profits of the company are said to have accrued on the March 31, upon a parity of reasoning, it must be conceded that the commission also accrued on the same date. The date has as much to do with the accrual of the commission as it has to do with the accrual of the profits." If we apply tile principles laid down in this judgment, we come to a clear conclusion that the amounts received could not be spread over for five years. Learned counsel for the respondent has also referred to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise. According to this judgment, income would be taxable after the right to income accrues or arises and in the case of an agreement which makes profits receivable at or on the happening of a contingency, the fact that the profits are the result of transactions spread over a period which covers a period preceding the happening of that contingency would not make the receipt liable to be paid to persons other than those who are entitled to receive it on the date on which it is actually received or became receivable. In the present case in accordance with the agreement between the assessee and the lessee, the amount of Rs. 4,00,000 became due on the execution of the agreement. There was no mechanism laid down in the agreement by which this ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
