9911796707
TMI Blog1962 (8) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... tures. On the 5th January, 1953, the assessee entered into an agreement with Messrs. Tarachand Pictures. This agreement was in connection with the sum of ₹ 40,000 which was already advanced, and a further sum of ₹ 60,000 which was to be advanced in respect of distribution, exploitation and exhibition of certain motion pictures. Under the terms of this agreement, it was agreed between the parties that by way of interest on the initial advance of ₹ 40,000 up to the date of the agreement a lump sum of ₹ 1,750 was to be paid in five monthly instalments. That interest was to cease to run on the said initial advance of ₹ 40,000 thenceforth, and no further interest was to be paid on the said sum as also on the further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's previous year was the calendar year 1955, the assessee claimed a loss of ₹ 80,759 which he had written off, as a deduction. In the original return filed by him, he had claimed it as a deduction under section 12, but in a subsequent revised return submitted by him, he claimed it under section 10. The claim under section 10 was made alternatively under section 10(1) or under section 10(2)(xi). The claim was disallowed by the Income-tax Officer, who took the view that the moneys advanced under the agreement by the assessee to Messrs. Tarachand Pictures could not be regarded as a dealing in the course of his financing business, but the true nature of the transaction evidenced by the said agreement was a venture in the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction, according to the Tribunal, was an investment of capital for a return in the shape of share of profits. The loss suffered by the assessee, therefore, was a loss of the capital which he had invested, and not a revenue loss. According to the Tribunal, therefore, it was unnecessary to discuss further whether the said loss would fall under section 10(2)(xi) or section 10(1). The assessee applied to the Tribunal under section 66(1) and asked for three questions to be referred to this court. On the said application, although the Tribunal did not raise the questions as suggested by the assessee, it raised the following question, which it thought, arose out of its decision and order, viz.: Whether the aforesaid loss of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, therefore, has taken up a notice of motion, praying that the Tribunal should be called upon to make a supplementary statement incorporating the said three questions, or that this court should record the said three questions as incorporated in the statement already made by the Tribunal, and read them as a part thereof. We have heard Mr. Mehta, learned counsel for the assessee, on the notice of motion, and, in our opinion, the motion must be disallowed. It is argued by Mr. Mehta that the Tribunal not having agreed with the Income-tax Officer and the Appellate Assistant Commissioner that the assessee's transaction was in the nature of a joint venture or a partnership transaction with Messrs. Tarachand Pictures, the Tribunal was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was loss of capital, and not a revenue loss. The same was also the decision of the Appellate Assistant Commissioner in appeal. The question agitated before the Tribunal was the same, as to whether it was a capital loss as held by the department or a revenue loss as contended by the assessee. The Tribunal agreed with the department that it was a capital loss. In coming to that conclusion, the Tribunal also proceeded to determine the real nature of the transaction on the construction of the agreement, and its conclusion on the construction of the agreement was that the transaction represented an investment by the assessee in the business of Messrs. Tarachand Pictures with a view to obtain a share in the profits. It pointed out, however, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, because in answering the said question, we will have to consider whether the Tribunal's construction of the agreement in question is correct or not. As to the third question, that is undoubtedly involved in the question. In our opinion, therefore, the notice of motion taken out by the assessee must be disallowed. We accordingly disallow it with costs. Coming now to the question on merits, there can be no doubt whatever that the transaction entered into by the assessee with Messrs. Tarachand Pictures under the agreement dated 5th January, 1953, was neither a money-lending transaction or a transaction of the kind of a financing deal usually entered into by the assessee for financing film producers and distributors. Under clause ..... X X X X Extracts X X X X X X X X Extracts X X X X
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