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TMI Blog2003 (1) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... (3D) ?" - we answer question No. 1 in the negative, i.e., in favour of the Department and against the assessee. Question No. 2 is answered in the affirmative, i.e., in favour of the assessee and against the Department. - - - - - Dated:- 22-1-2003 - Judge(s) : S. H. KAPADIA., J. P. DEVADHAR. JUDGMENT S. H. Kapadia J. - At the behest of the Department, the Tribunal has referred the matter under section 256(1) of the Income-tax Act, 1961, to this court for opinion on the following questions of law: "(i) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the Income-tax Officer was wrong in valuing closing stock in respect of the film 'Anpadh' applying the provisions of sub-rules (3) and (11) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply the table given in rule 9A. The Tribunal took the view that there could be many reasons why distribution rights could not be sold in the above territories and, therefore, the assessee was not bound to write off the cost as per the table contemplated by rule 9A. The Tribunal, therefore, allowed the appeal. Consequently, the Tribunal has directed the value of the closing stock to be taken at Rs. 1.45 lakhs and not at Rs. 4,48,279 (wrongly typed in the order of assessment as Rs. 4,88,279). Being aggrieved, the Department has come by way of reference to this court. Findings: Rule 9A has been framed by the Central Board of Direct Taxes (CBDT) under section 295 of the Income-tax Act. Rule 9A deals with deduction in respect of expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the above rule 9A shows, firstly, that cost of production is allowable as a deduction only if the movie is exhibited or sold. If the movie is not sold or exhibited, the producer is not entitled to claim deduction. Secondly, rule 9A shows that the producer would not be entitled to deduction unless he has credited the sale proceeds in the profit and loss account. Thirdly, rule 9A shows that cost of production shall be written off as per the table given in rule 9A, which table refers to the territory for which the movie is sold and also the sums to be taken into account for determining the cost of production to be allowed as a deduction, In the present case, the order of the Assessing Officer indicates that the assessee-producer declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation declared by the assessee was less than the cost of production of the movie, then the table may not be strictly applicable. However, in the present case, the total realisation was Rs. 32,90,962 and, therefore, it was possible for the Income-tax Officer to value the closing stock as per the table given in rule 9A. Therefore, in the present case, sub-rule (9)(c) of rule 9A was not applicable. Conclusion: For the above reasons, we answer question No. 1 in the negative, i.e., in favour of the Department and against the assessee. Question No. 2 is answered in the affirmative, i.e., in favour of the assessee and against the Department. This is in view of the judgment of this court in Income-tax Appeal No. 624 of 1987 in the case of Filmy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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