TMI Blog2000 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... by that firm from Vijaya Pictures in a sum of Rs. 2 lakhs for which the assessee has stood guarantee, was repaid from the earnings of the movie. The fact that the assessee had stood surety for the monies lent by Vijaya Pictures to Charan Chitra had come to light after a search in the assessee's premises on June 28, 1980. At that search certain diaries were also recovered, on the basis of which additions were made to the assessee's income. The assessee in his returns for the assessment years' with which we are concerned, 1975-76, 1976-77, 1977-78 and 1981-82, claimed that no addition to his income was warranted and also that the interest paid by him on the monies which he had borrowed for the purpose of paying Vijaya Pictures by reason of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outgoings which had not been accounted for by the assessee in the diaries furnished by him. The addition in the sum of Rs. 30,000 in the assessee's income for these years was therefore deleted by the Commissioner and that deletion was upheld by the Tribunal. The question as to whether the addition was warranted is primarily a question of fact. The Commissioner found that there was no material to justify such addition. The Tribunal after examining the record has affirmed that finding. We do not see any error in the finding of the Tribunal. As pointed out by the apex court in the case of CIT v. M. Ganapathi Mudaliar [1964] 53 ITR 623 the reference court is not an appellate court. What we are required to consider is whether there was any mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to receive 50 per cent. of the amount in excess of Rs. 2 lakhs from the exploitation of the film which was then under production. It was in consideration of that agreement that the assessee had stood guarantee to Vijaya Pictures as he had arranged the finance, and the financier had insisted upon the assessee standing guarantee for the loss. It is the case of the assessee, and the case which had been accepted by the Tribunal, that the assessee was desirous of making profit and since he had not the capital to become a film producer himself, he had thought of entering into an arrangement under which he would share in the profits of the film under production by helping the producer to secure the finance from persons known to the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the Revenue in CIT v. Coimbatore Pictures (P.) Ltd. [1973] 90 ITR 452 (Mad) wherein it was held that advances made by distributors to producers were not of trading nature but were investments of a capital nature does not advance the Revenue's case any further. In that case, there was no agreement to share the profit resulting from the production of the movie. What had been done by the distributor was to invest money with the producer of the film for distribution of which the distributor has acquired rights. Such investment, it was held by the court, was not necessary for the purpose of securing the distribution rights. We, therefore, answer the questions referred to us at the instance of the Revenue, in favour of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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