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TMI Blog1992 (6) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee amounting to Rs. 4,74,655 in film distribution business on mere surmises and conjectures and the learned first appellate authority has confirmed the action of the Assessing Officer without properly appreciating the written submissions filed by the assessee during the course of appellate proceedings and also without appreciating the facts brought on record by the assessee during the course of assessment proceedings. It was submitted that the assessee-firm derives income from manufacture and sale/export of sports goods. It was submitted that during the previous year relevant to the assessment year 1984-85, the assessee-firm ventured into business of film distribution and claimed a loss of Rs. 4,74,655 in the distribution of 2 fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was submitted by Sh. N. K Sud, Advocate that the Assessing Officer in the beginning wanted to invoke the provisions of section 40A(3) also for disallowing payment of Rs. 4,75,000 (Rs. 2,50,000 + Rs. 2,25,000) made by the assessee to the two producers of Bombay as well as the claim of loss of Rs. 4,74,655 being bogus loss and for that purpose reference under section 144A was made to the IAC, Jalandhar, who while giving directions under section 144A directed the Assessing Officer to disallow the claim of loss and there were no directions to treat the payments by the assessee to the 2 producers of Bombay as being hit by the provisions of section 40A(3). In spite of this, it was submitted by Sh. N. K. Sud, learned representative of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. It was submitted that factually from a reading of the order passed by the Assessing Officer, it is clear that the Assessing Officer has not disputed the fact that the assessee had suffered a loss of Rs. 4,74,655 in the business of film exhibition/distributorship undertaken by it in the assessment year under consideration and yet the ITO, under instructions of the IAC, has rejected the claim for deduction of loss on the ground that the loss is not a genuine loss. It was submitted that the disallowance of loss has been made by the Assessing Officer on totally irrelevant consideration and surmises, which cannot be made the basis of assessment. It was submitted that the disallowance of loss has been made by the Assessing Officer and appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment and the money was remitted by drafts from Jalandhar to Bombay and was credited in the account of the assessee with New Bank of India, Bombay, from where it was withdrawn in cash and the payment was made to the 2 producers. It was submitted that disallowance of loss had not been made on this account as per the instructions of the IAC under section 144A. It was submitted that the observations of the Assessing Officer that the assessee has shown undue haste in purchase and release of these two pictures to secure benefit under Rule 9B is irrelevant to the issue and the assessee has not committed any offence in purchasing the picture and releasing them soon after the purchase and the assessee would have been liable to be taxed on the prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or indulging in the business of film distribution was only to reduce the profits which have increased substantially on account of receipt of cash compensatory support, Duty Draw back and subsidy by the assessee in the assessment year under consideration. Accordingly it was submitted that the loss claimed by the assessee was not genuine loss and the Assessing Officer as well as the learned first Appellate Authority were perfectly justified in disallowing the claim of loss amounting to Rs. 4,74,655 claimed to have been suffered by the assesee in the business of film exbition/distribution, 10. We have considered the rival submissions. The factual aspect of the case has been discussed in detail by the Assessing Officer in para 3 of the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is not disputed and the net receipts from the exhibition/distribution of films are also not doubted by the Assessing Officer, we are of the opinion that the Assessing Officer as well as the learned first appellate authority were not justified in disallowing the claim of loss suffered by the assessee in the business of film distribution/exhibition amounting to Rs. 4,74,655. Accordingly the order of the learned first Appellate Authority is reversed and the Assessing Officer is directed to allow the claim of loss to the assessee amounting to Rs. 4,74,655 in the film distribution business. 11. Ground of appeal No. 7 relates to the charging of interest under section 215. No specific arguments were advanced in support of this ground, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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