9911796707
TMI Blog1974 (7) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... 956-57 ?" The facts leading to this question may briefly be stated: The question relates to the assessment year 1956-57, the previous year of which was the financial year ending 31st of March, 1956. The assessee is a private limited company carrying on business of processing and printing movie films. In August, 1955, it purchased the processing and printing laboratory known as "Film Centre" from M/s. Patel India Ltd. Three months later, by an agreement dated 1st of November, 1955, the assessee-company purchased the film "Pomposh" from M/s. Patel India Ltd. for a sum of Rs. 60,000 the value of which was shown in the account books of the year at Rs. 72,000 by the vendor. It appears that the first gevacolour film "Pomposh" was purchased in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able it to exhibit the same for inducing confidence in the other producers. It was pointed out that even the very production of this picture by M/s. Patel India Ltd. did not have distribution or exhibition as its primary purpose, but a secondary one, while the primary purpose was to show that such pictures could be produced and processed in the Film Centre laboratory so that more and more producers could be forthcoming to indent on the services of the laboratory for their gevacolour processing. The Appellate Assistant Commissioner rejected these contentions of the assessee-company and opined that the acquisition of the picture "Pomposh" was not a commercial transaction at all. He observed that admittedly the picture was not acquired so much ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rve as a model colour film and for the purpose of showing to its customers the way in which colour processing was done and that the picture, though not exhibited by the assessee-company as a film exhibitor, was exhibited to its customers who had come to it for colour processing and as such the expenses incurred for acquiring the said film should be allowed as business expenditure. This alternative claim was opposed on behalf of the revenue by contending that if the assessee-company really wanted to exhibit a colour film for the purpose of attracting more customers intending to do colour processing, it would have shown one of its own colour films, that is to say, a colour film produced by it and not other's work as a piece of its own adverti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Film Centre laboratory was purchased by the assessee-company from M/s. Patel India Ltd., was an acquisition of a capital asset with the help of which the assessee-company desired to carry on its business by attracting future customers by exhibition of the said film to such customers and, therefore, the expenditure incurred could not be regarded as revenue expenditure but was capital expenditure. He did not dispute that the expenditure could be regarded as having been laid out wholly and exclusively for the purpose of the assessee-company's business. But all the same, before such expenditure could be claimed as a deduction under section 10(2)(xv) it is absolutely essential that such expenditure should not be in the nature of capital expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther contended that in fact no materials had been placed on record by either party which would have a bearing on the question as to whether any benefit of an enduring nature can be said to have been acquired by the assessee-company by purchasing the film in question and if that aspect of the matter had been gone into before the lower authorities, the assessee-company would have placed material on record to show that what they had acquired by spending a sum of Rs. 60,000 was not a benefit of an enduring nature for the film, "Pomposh", had already proved a flop and could not have lasted for more than a couple of years even for advertisement purposes for which the same had been acquired. In the circumstances, he contended, the expenditure inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ths after the acquisition of the Film Centre laboratory, by an agreement dated 1st November, 1955, the assessee-company had purchased the film, "Pomposh", from M/s. Patel India Ltd. for sum of Rs. 60,000. Admittedly, the film, "Pomposh", was not purchased by the assessee-company for doing any business of exhibiting that film in the sense in which exhibition of a film is normally understood. It was purchased by the assessee-company for the purpose of advertisement in order to attract future customers for its business of doing colour processing work at the Film Centre laboratory. In our view, it cannot be disputed that even for advertisement purpose assets can be acquired by incurring expenditure in that behalf and, in the instant case, the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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