9911796707
TMI Blog1983 (2) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 154 dated 5-12-1975 which stands superseded by the introduction of rule 9B of the Income-tax Rules, 1962." 2. The respondent assessee is a resident-registered firm. The assessment year involved is 1977-78. The assessee-firm came into being on 19-12-1975 and accounting period observed for the assessment year under appeal ended on 31-10-1976. The business of the assessee-firm is exhibition and distribution of pictures. During the accounting period relevant to the assessment year under appeal, the assessee took on ' minimum guarantee basis ' an old film ' Muje Jeene Do '. The amount paid was Rs. 2,00,000 and the film was taken from Ajanta Arts, Bombay. The assessee released this picture on 21-5-1976 but claimed Rs. 1,00,000 as expenses. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rivilege on an assessee and subsequently such circular is withdrawn, the assessee can still claim those rights and privileges conferred by the circular for the period during which the circular was in force. The ITO did not agree with the contentions raised on behalf of the assessee. He held that Circular No. 154 of 1974 issued by the CBDT stands superseded on account of introduction of statutory rule 9B and, hence, the assessee cannot enjoy the privilege under the said circular. He also held that rule 9B(7)(a) provides for exercise of option in relation to assessment years commencing on 1-4-1973, 1-4-1974, 1-4-1975 and 1-4-1976, which once exercised has to be taken as final for those assessment years and subsequent assessment years and sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the assessee's case statutory rules 9A and 9B are not applicable since the picture ' Muje Jeeno Do ' is a re-issue and both the rules were applicable in the cases of new pictures where cost or production is involved. He also held that rules 9A and 9B were inserted on 30-12-1976 whereas the assessee firm closed its books of account on 31-10-1976 and during that accounting period Circular No. 154 of 1974 was prevalent. He directed the ITO to allow amortization expenses to the assessee on the basis of the circular. He also agreed with the contention raised on behalf of the assessee that in the case of re-issued pictures ' royalty ' was to be paid since there was no ' minimum guarantee '. He, accordingly,' directed the ITO to substitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be read with statutory rule 9A and statutory rule 9A speaks of new films, viz., films produced originally, since for the purposes of statutory rule 9A, under Explanation (ii) to sub-rule (1), the cost of production in relation to a feature film means the expenditure incurred on the production of the film, not being (a) the expenditure incurred for the preparation, of the positive prints of the film ; and (b) the expenditure incurred in connection with the advertisement of the film after it is certified for release by the Board of Film Censors. Under Explanation to sub-rule (1) of statutory rule 9B, for the purposes of rule 9B, ' cost of acquisition ' in relation to a feature film, means the amount paid by the film distributor to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o paragraph 6 of the said circular, the Board have decided that the cost of acquiring distribution rights should also be treated in the hands of the distributor in the same way as the cost of production is treated in the hands of the film producer and the rates of the allowance and manner of allowance has to be worked out in accordance with paragraphs 4 and 5 of the said circular, we are of the opinion, that this circular can be availed of, by the assessee, by the revenue, as also by us, as a guide and since according to this circular, the cost of acquiring distribution rights are allowable as has been claimed by the assessee at the assessment stage. That apart since the revenue is in appeal and since we have held that what is the subject-m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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