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TMI Blog2006 (10) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... r, on the facts and circumstances of the case, the Tribunal was correct in law in confirming the addition of Rs. 1.25 crores despite the fact that the appellant having received only Rs. 95 lakhs towards the contract price?" The facts leading to the above questions of law are as under: The assessee is a partnership firm and it is engaged in production of feature films. The relevant assessment year is 1996-97. The assessee filed its return on October 25, 2000, admitting a loss of Rs. 27,37,593. During the assessment year, the assessee had produced and released a film called "Love Birds". The assessee entered into an agreement for the dubbing rights of the said picture in Hindi language on February 2, 1995. The agreed consideration was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days from the date of release of the Tamil film or on the day of Hindi or any other language release, whichever is earlier. According to learned counsel, the Tamil version of the film was released on January 10, 1996, and hence the final settlement has to be made only on or before April 10, 1996, which is beyond the previous year and hence it is assessable for the subsequent assessment year. It is further submitted that Rs. 30,00,000 was also offered for assessment, for the subsequent assessment year. It was pointed out by learned counsel that even though the wording in the schedule of payment states" on or before 90 days from the date of Tamil release or on the day of Hindi or any other languages release, whichever is earlier", it should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 90 days. In other words, the payment has to be made on January 10, 1996 or 90 days before January 10, 1996. Since the Tamil version of the film was released on January 10, 1996, the assessee has a right to receive the balance consideration as per the agreement. Hence, the mere non-payment or non-receipt of money within the financial year cannot be a ground to delete the abovesaid amount from the total income of the assessee. Learned counsel for the Revenue further submitted that, as per the agreement, the assessee had performed his part of the obligation and hence the income had accrued at the hands of the assessee. It is further submitted that the assessee is following the mercantile system of accounting and hence, irrespective of the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only) on 5th April 1995. 3. Rs. 10,00,000 (rupees ten lakhs only) on 15th June 1995. 4. Rs. 5,00,000 (rupees five lakhs only) on 15th July 1995 and 5. Rs. 30,00,000 (rupees thirty lakhs only) on or before 90 days from the date of Tamil release or on the day of Hindi or any other languages release, whichever is earlier. The payment schedule of the aforesaid is the essence of this agreement." Subsequently, the parties have agreed to increase the amount of Rs. 1.25 crores by a subsequent letter of arrangement dated December 1, 1995, which reads as follows: "December 1, 1995 M/s. Shradha Entertainers Pvt. Ltd. 385-387 Shah Nahar Industrial Estate A-2 Building, 3rd Floor Dhanraj Mills Compound Bombay - 400 013 Fax No. 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to receive the money only on or before April 10, 1996. The said due date falls outside the accounting year. Hence the same is assessable only for the subsequent assessment year. We also agree with learned counsel that the wording "on or before" should be read as "on or after", in the context of the agreement and circumstances of the case and also the intention of both the parties. Learned standing counsel appearing for the Revenue relied on the Andhra Pradesh High Court judgment reported in [2006] 285 ITR 501 in the case of P. L. Ganapathi Rao v. CIT. In that case, the assessee-firm carried on business in distribution of feature films, acquired rights over a film during the year 1974 from its producers, and during the assessment year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has no right to claim from the other party. If the other party refuses to pay before the due date, the assessee cannot enforce the same. The due date is very relevant which gives right to the assessee to receive the amount. Taking into consideration all the facts, we are of the view that only Rs. 95 lakhs alone is assessable for the assessment year 1996-97 and hence the Tribunal is right in taxing the same during the relevant assessment year. In respect of the balance amount of Rs. 30 lakhs, it is not taxable during the assessment year as it accrues only for the subsequent assessment year and also it is seen from the records that the said amount of Rs. 30 lakhs was not at all received till now. Under these circumstances, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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