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TMI Blog1982 (8) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... cent of the adjusted cost of production was disallowed u/r 9A of the IT Rules, by him. Accordingly, he considered it as closing stock. However, he asked for the objection u/s 144B of the IT Act, 1961 (hereinafter referred to as the Act) and the as made objection before the IAC stating that u/r 9A(c), the ITO can take a judicious view on the basis on the facts and circumstances and that in respect of the picture Balika Badhu there were actually losses in certain territories and the picture has not been released in some other territories even now and this fact may be considered; that in any case, the ITO cannot value this territory at 4% that presumable the ITO has taken 2-1/2% for Andhra and 1-1/2% i.e. half of 3% for Tamil Nadu; that it is contended that such a split is not permissible and that in respect of Tamil Nadu nothing should be valued by way of closing stock. The IAC did not accept the aforesaid contention of the assessee. Hence, he rejected it observing that the ITO has to allow that part of cost of production which pertains to the territories released; that if the entire cost is allowed now, the further loss in respect of Tamil Nadu and Andhra will stand allowed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rana further contended that the picture Balika Badhu was wholly based on a successful Bengali picture and primarily had the local background of Bengal and that experience showed that the South Picture with specific local back ground did not command any box office; that this picture being what could be called remake in Hindi, could not have what the South Indian box office required, viz. 'The Masala'. On hearing these arguments, the CIT(A) found that in some appeals in the case of producers, distributors and other film personalities and on the basis of the little general knowledge he had got, he saw merit in Mr. Khurana's submission. In meeting the other arguments of Shri Khurana, he observed as under: "10. Now bearing in mind the earlier instruction of the Board on the question of amortisation of films, the leading case of the Madras High Court, viz. Gemini Pictures and the two clauses of sub-rule (9), in my understanding, what follows is that Rule 9A is not a right rule incapable of any inflexibility but that the rule admits of a consideration of events after the accounting year as also the vents of the accounting year whereby the actuals show a credit variation from the norm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. He relies upon the order of the ITO as well as on r. 9A(6)(b) of the Rules. 4. We have heard the rival contentions and gone through the regard before us. The issue for determinations before us is whether the case of the assessee falls u/r 9A(6) (b) or u/r 9A(9)(a) or (c) ; because both the parties admit that the issue involved is to be determined according to the provisions of r. 9A of the Rules. Rules 9A (6)(b) says as under: 9A (6). " Whether a feature film (not regional language feature film) is certified for release by the Board of Film Censors in any previous year and in such previous year, the film producer- Sells the rights of exhibitions of the film in respect of some of the territories specified in the said Table; ............... the cost of productions of the film to be allowed as a deductions in computing the profits and gains of such previous year shall be an appropriate fraction if the entire cost of production of the film; and the balance, if any shall be carried forward to the next following previous year and allowed as a deduction in that year. Explanation .- For the purposes of this sub-rule 'appropriate fraction' means the fraction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhra Pradesh. Territory K consists of : (a) the whole of the states of Kerala and Tamil Nadu; (b) the whole of the Union territories of Pondicherry Laksha Dweep. Thus from sub-r. 9A(6)(b) r/w Explanation, it is more than manifest that if sale of rights of exhibition is not in respect of the territories specified in the said Table or in other words, the sale is there of the said rights merely in respect of some of the territories specified in the said Table; then the entire cost of production of a feature film shall not be allowed as a deduction in computing the profits and gains of such previous year. If at all, rather it is to be allowed in accordance with r.9(A)(9). Therefore, we also have to see the provisions of r. 9A(9) in view of the fact that Shri Khurana states that the case of the assessee falls u/r 9A(9) cl. (a), if not then cl. (c). Hence we reproduce r.9A(9) cls. (a) (c): "9A(9)—Where the Income-tax Officer is of opinion that— (a) the exhibition of the future film on a commercial basis by the film producer in, or the sale by the film producer in, or the sale by the film producer of the rights of exhibition of the feature film in respect of various territorie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these territories. Accordingly, we reject these contention of Shri Khurana. Apart from it, the order of the CIT (A) cannot be sustained in view of the fact of the CIT(A) has arrived at his conclusion on the basis of his little general knowledge and understanding which is not at all finding, rather it is his option. There opinion, at the most, can be taken as on an expertise of evidence and evidence is not at all the finding on the issue raised by the party. The issue raised by the party can be decided on understanding the contention of the party and thereto is either accepting or rejecting them assigning cogent and relevant reasons substantiated from the material on record or by the provisions of the law or decision either of the High Court or Supreme Court. The issues raised by the parties cannot be determined by the quasi-judiciary functionary on his general knowledge or understanding. Therefore, we hold that the contentions raised by Shri Chawla referred to above are well founded and as such the order of the CIT(A) is no order in the reference as the same is based on his personal knowledge and understanding. Hence we set aside it. 6. In view of our above discussions and for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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