9911796707
TMI Blog1981 (9) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission basis under an agreement dt. 31st Dec., 1972. The film was released for exhibition on 12th April, 1974. This will be in the earlier year because the relevant accounting year of the present assessment is from 1st July, 1974 to 30th June, 1975. During the relevant accounting year, the assessee earned a commission of Rs. 3,36,178 on this picture upto 31st Dec., 1974 and this has been duly credited in the Profits Loss Account. The dispute now relates to a new arrangement entered into by the assessee with the Producer of the film on 1st Jan., 1975. Under the same, the assessee took the picture on lease basis by paying a lease amount of Rs. 2,75,000. Thereafter, the collections during the relevant accounting year came to Rs. 1,51,676. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquisition of the film shall be allowed as a deduction in computing the profits and gains of such previous year." If the assessee satisfies the conditions of the rule as set above, he is clearly entitled to claim deduction of the entire cost of the firm. As already stated, the relevant accounting period is from 1st April, 1974 to 30th June, 1975. Even before the commencement of the accounting period, the assessee had acquired the rights over the film on commission basis under an earlier agreement. The agreement operated upto 31st Dec., 1974. The new arrangement, under which the film was taken on lease, into force from 1st Jan., 1975. It was in pursuance to this new lease that the assessee had paid a sum of Rs. 2,75,000. This new arrangem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier arrangement and the commencement of the new arrangement, it would be a case of the assessee acquiring the film again under a new arrangement. It appears to us that merely because there was no time gap between the two arrangements, the subsequent arrangement cannot be said to be a new one. The income of the assessee under the earlier arrangement has admittedly been brought into the Profit Loss Account. That arrangement terminated on 31st Dec., 1974. It, therefore, appears to us that the new arrangement will amount to a fresh acquisition of the film by the assessee for the purpose of r. 9B(2). 5. The next question for consideration is whether the assessee has satisfied the condition that the film should be released on commercial basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided against the Department. 6. The second ground taken by the Department is that the Commr. (Appeals) erred in allowing a deduction of Rs. 2,286 on account of the balance cost of the new film 'Hamraaz' when such a claim was not made by the assessee before the ITO and when the assessee himself had carried forward the amount to the next year. It is found from the assessment order that in the draft assessment order, it was proposed to add back Rs. 9,749, which represents the collection in respect of the film 'Hamraaz'. Before the finalisation of the assessment, the assessee claimed that he had incurred an expenditure of Rs. 12,035 for acquiring a new print of this film and that the collection of Rs. 9,749 should be adjusted against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the solicitors, apparently to avoid the issue of an injunction order. It is stated by the assessee that he received back only Rs. 55,000. He claimed the balance amount of Rs. 10,000 as a business loss. In support of the claim, the assessee produced before the ITO a letter from his solicitors wherein it was stated that the entire amount of Rs. 65,000 would be paid back to the assessee by way of settlement of the civil suit and that cheque was being drawn for the amount. But the assessee claims that the mention of Rs. 65,000 in the letter of the solicitor was a mistake and actually he received a cheque only for Rs. 55,000. No evidence was produced before the ITO to substantiate the claim. He therefore, disallowed the claim. Before, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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