9911796707
TMI Blog1977 (9) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... loss 86,486 The ITO was not satisfied about the collections shown in respect of the three pictures during the accounting year. He wrote to the various theatres, Panchayats etc. and found that the assessee should have shown receipts in respect of some more collections which were actually made during the accounting year 1972. Such additional collections as found by the ITO amounted to Rs. 1,88,752. He however, conceded that in respect of this additional collection the assessee had incurred an expenditure of Rs. 58,618 and so the addition to the return to be made was Rs. 1,30,134. He computed the income as follows: . Rs. Rs. Income including the addition noted and without allowance of amortisation. . 14,09,652 Less : Depreciation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Court's decision in India Sea Foods (1977) CTR (Ker) 156. 5. In order to understand the rival contentions, a few more facts have to be given. We are concerned with the production and distribution of three pictures (i) Aromalunni, (ii) Agnimriagam and (iii) Gandharvakshetram. Since the amount added in respect of the last firm is trifling it can for all purposes be ignored. The firm Aromalunni was ready for distribution in April, 1972. The distributor was the sister concern Excel Productions, a firm in which the managing director himself was sister concern Excel Productions, a firm in which the managing director himself was a partner along with family members. According to the terms of the contract, the distributor should send monthly con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thly statement dt. 15th Feb., 1973 also included collections of the year 1972. According to the assessee, these collections having been received in the accounting year 1973 were accounted only in 1973. It is these amounts which are being noted by the ITO and branded as concealment. 7. Similar is the position in respect of the other picture Agnimrigam. This picture was distributed through Thirumeni Pictures for north Kerala and Excel Productions for other areas. The ITO had found that the short collection amounted to Rs. 88,573. From a letter written by the ITO on 1st Feb., 1974 it is seen that the assessee's Chartered Accountant had produced before the ITO the realisation statements of Thirumenl Pictures for the period November and Decemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein. That is a simple fact admitted by the Department. The ITO had assumed that whatever collection was not shown in 1972 might have been omitted altogether and that is why he made enquiries in a number of places where the picture produced by the assessee were exhibited and got statements and replies from them which on collection was made out as omitted receipts. Instead of doing that he should have first of all asked the assessee to produce the books of accounts for 1973. The ITO had, we find from the records, requested the sister firm of Excel Productions to produce their books of accounts. These were produced in January, 1974 and apparently he was satisfied that the collections for the Calendar year 1972 were reflected therein. It may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heet would clearly show by the presence of sundry debtors and creditors etc. that mercantile system was being followed. It was, therefore, necessary that all receipts which had accrued should have been credited. In falling short of this there was certain amount of deliberateness. He pointed out that the assessee himself had shown a receipt which was not in the books, of Rs. 1.68 lakhs. It showed that the assessee himself was not satisfied that all the receipts had been recorded. That being so, they should have gone the whole hog and showed the full receipts. We accept Department's contention that the assessee is not following cash system. The journal entries to which a reference has been made earlier clearly shows that mercantile system was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the collections assessable in 1972-73. Yet following a method they had adopted it was included in the accounts for 1972 and included in this assessment year. 12. The next point taken up by the Department was that the assessee has already received these collections from their distributors and they have not taken it into account merely because the adjustment entries were not made. It is true that the monies have been received from the distributors. These had been credited to their respective ledger accounts. But monies received without the supporting collection statements cannot be treated as income accrued. The monies received are merely advance payments and the income embedded therein can be found only after the collection stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
