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TMI Blog2001 (3) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... ilms. The Schedule of Payments of M.G. amount of Rs. 15 lakhs also included a payment of Rs. 50,000 in respect of each of the two pictures against the supply of complete publicity materials. After excluding this amount on account of supply of publicity materials of Rs. 1 lakh for both the pictures the net amount of M.G. under the agreement was Rs. 14 lakhs. The Schedule of Payments no doubt referred to both the pictures 'Jaaneman' and 'the immediate next' picture. The immediate next picture was later on named as 'Bullet'. Under the agreement 'Jaaneman'was to be released by 30th June, 1976 and the picture later named as 'Bullet' by 30th October, 1976. There was some delay in handing over the picture 'Jaaneman', which eventually came to be released on 6th August, 1976 and, therefore, ran for a period of more than 90 days in the accounting year ended on 31-3-1977. It is not in dispute that the picture 'Jaaneman' did good business. The second picture 'Bullet' was very much delayed and due to the default in the delivery the assessee did ,not make payments as per the 'agreement and took up the dispute to Northern India Motion Pictures Association. The Association constituted a Tribunal f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a part of package deal and this picture had less known cast. On the basis of these facts, it was urged that the real picture taken by the assessee was 'Jaaneman' and the other picture did not have much market value and, therefore, the C.I.T. (Appeals) was justified in working out the M.G. of the two pictures by taking into account the actual receipts of the two pictures for a period of five years. We are not on the facts impressed with the plea of the assessee. When a written agreement is entered into, the most important thing to be considered are its terms. The agreement reasonably read does indicate the intention of the two parties, but, it is equally important to note that when the agreement was entered into nothing much could be said about the immediate next picture considered therein except that the second picture was to be directed by Vijay Anand and its cast is not given in the agreement. It appears that it is after the agreement that the cast become known and it was Praveen Boby and Rakesh Roshan who did not command as good a name at that time as the cast of 'Jaanenman'. Frankly in this State of affairs, it is not possible to accept that the assessee, could anticipate at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y us after two months of delivery of 'Jaaneman' i.e., 6th October, 1976 and before 6th of November, 1976 i.e., before the date of next instalments. We made the payments of this instalment of Rs. 1,00,000 (Rupees One lakh only) in October, 1976 as under :--- (a) Rs. 25,000 (Rs. twenty five thousand only) by T.T. through Vijaya Bank on 8-9-1976. (b) Rs. 25,000 (Rs. twenty five thousand only) by demand draft No. 083988 dated 25-9-1976 on New Bank of India Ltd. (c) Rs. 25,000 (Rs. twenty five thousand only)by T.T. through Vijaya Bank on 5-10-1976. (d) Rs. 25,000 (Rs. twenty five thousand only) by T.T. through Vijaya Bank on 11-10-1976. ----------------- Rs. 1,00,000 (Rs. one lakh only)." "It may not be out of place to mention here that we have not committed any breach of the terms of the agreement. It is only the Producers who have failed in their obligation in not supplying the prints of the above picture within the stipulated period i.e., before the 30th of October, 1976. We are justified in claiming back our amount paid to the producers which is as under :--- Rs. 1,95,000 Rs. One lakh and ninety five thousand only) towards advance against 'BULLET'. Rs. 35,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement was entered into with the producer and the matters cannot be allowed to wait till the two pictures, in fact, had run for a period of five years and their receipts become known. The yardstick applied in our view is quite erroneous. The C.I.T. (Appeals) had to gather the intention of the parties from the agreement only or the evidence, which became available when a dispute arose between parties and went up for arbitration. Further the working of the C.I.T. (Appeals) is wrong in so far as he did not exclude from the amount of Rs. 13 lakhs the amount of Rs. 1 lakh which is stipulated to be paid for supply of publicity materials for the two pictures. However, it will not be necessary to remove that mistake as we have not approved of the method adopted by the C.I.T. (Appeals). 7. In the result,, we consider the approach of the ITO to be quite fair in fixing the M.G. of picture 'Jaaneman' at Rs. 7 1/2 lakhs for the purposes of rule 9B and reverse the order of the C.I.T. (Appeals) and restore the order of the ITO. 8. The appeal of the Revenue gets allowed. Per Shri U.S. Dhusia, Judicial Member. - 9. I am in full agreement with learned Accountant Member that, "when a wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known box office hitting personalities in its cast. The other picture was described as immediate next, which was to be directed by Vijay Anand. The name of the picture and the cast of the picture was also not known at the time of the agreement. If the name of the Director could be any indication the name of Vijay Anand being the name of an obscure director, the picture could not raise the expectations regarding the cast as the first picture directed by Chetan Anand could. It is a well known fact that success or otherwise of a picture in many cases depends upon the cast of its stars and it is for this reason a particular maitnee idol demands fabulous amounts as the remuneration for acting in a picture. 11. Apart from this another fact which brought to mind is that consideration for the two pictures was placed at a composite sum of Rs. 17 lakhs. In view of what has been stated about the clause (1) above the assessee claims that the consideration for 'Jaaneman' should be placed at a higher sum than what is placed for the second picture. CIT found that in view of the aforesaid analysis of the expectations two pictures raised the claim of the assessee was fair and reasonable. He foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d rated prospect of Bullet to be bleak and because they had already secured the 8 prints of 'Jaaneman'. But they did not wriggle out because the contract was a composite contract, where the consideration for the two pictures was determined at a composite sum and not at separate sums aggregating to Rs. 17 lakhs, later on reduced to Rs. 15 lakhs. Support for this view comes from a perusal of clause (1) of the award by which the composite consideration of Rs. 17 lakhs was reduced to Rs. 15 lakhs. The clause (1) is reproduced as under :--- "1. That the collective minimum guarantee of both the pictures Jaaneman and Bullet has been reduced to Rs. 15 lakhs instead of Rs. 17 lakhs." 12. The same inference is arrived at by a perusal of subsequent clauses. In particular attention is drawn to clauses 4 and 5 where producers right to share in the receipts is defined when net realizations of both the pictures considered jointly exceed the sum of Rs. 17 lakhs. No attempt has been made by the arbitrators to entitle the producers to claim a share with reference to the receipts of the two pictures considered separately. As the consideration of the two pictures has been jointly fixed, it was nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that in the language of legislation the draughtsman generally uses the noun in singular number and not in plural number but that does not mean that singular number would necessarily indicate the singular number and not the plural number. It is to overcome the hardship of such situations, section 13 of the General Clauses Act provides as under :--- "13. Gender and Number :- In all Central Acts and Regulations unless there is anything repugnant in the subject or context. 2. Words in the singular so include the plural and vice versa" 15. If the ITO had home this provision of General Clauses Act in his mind, he would have felt no difficulty in correctly ascertaining the mandate of the I.T. Rule 9B and in applying the same in accordance with the terms of the agreement entered into by the assessee, the distributor and the producer. Instead of proceeding on the basis of an agreement made by him. 16. Therefore, in my view not only the finding of CIT(A) has to be vacated, finding of ITO is also liable to be vacated. ITO is to be directed to proceed to work out the minimum guarantee on the basis of the terms and stipulations of the agreement entered into by him and not on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding this amount on account of supply of publicity materials of Rs. 1 lakh for both the pictures the net amount of M.G. under the agreement was Rs. 14 lakhs. The schedule of payments no doubt referred to both the pictures 'Jaaneman' and 'the immediate next' picture. The immediate next picture was later on names as 'Bullet'. Under the agreement 'Jaaneman' was to be released by 30th June, 1976 and the picture later named as 'Bullet' by 30th October, 1976. There was some delay in handing over the picture 'Jaaneman' which eventually came to be released on 6th August, 1976 and, therefore, ran for a period of more than 90 days in the accounting year ended on 31-3-1977. It is not in dispute that the picture 'Jaaneman' did good business. The second picture 'Bullet' was very much delayed and due to the default in the delivery the assessee did not make payments as per the agreement and took up the dispute to Northern India Motion Pictures Association. The Association constituted a Tribunal for adjudication, which considering 'Bullet' to be a weak picture and the default committed in its delivery reduced the amount of minimum guarantee by Rs. 2 lakhs. 'Bullet' came to be released eventuall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reful reading of both the orders show that the order of the learned CIT(Appeals) was not sustainable. There is no difference of opinion on this point. On the other hand, the learned Accountant Member felt that the order of the Assessing Officer was to be upheld as the minimum guarantee of the picture 'Jaaneman' estimated by him at Rs. 7 1/2 lakhs for the purpose of Rule 9B of the Income-tax was reasonable. The learned Judicial Member, however, held that the Assessing Officer himself did not strictly interpret the terms and stipulations of agreement which is necessary for working out the minimum guarantee and directed that the same should be restored to his file. 6. In view of the limited difference of opinion, I am of the view that the learned Judicial Member was fully justified in restoring the matter back to the Assessing Officer so that the assessee will have full opportunity to substantiate its claim. Since the order of the CIT(A) stands reversed by both the Members, the only alternative is to allow the Assessing Officer to recompute the minimum guarantee on the basis of the terms and stipulations in the agreement and in doing so, reasonable opportunity should be given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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