TMI Blog1978 (2) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... is film, the assessee had entered into an agreement with one Amar Das Mallick, a film producer, on 20th June, 1957. Under the agreement the assessee was to finance the production and to be the distributor of the film. The asscssee had to finance a sum not exceeding Rs. 1,12,500 including Rs. 10,000 for acquiring the story rights, Rs. 25,000 for the director, Debaki Kumar Bose, and Rs. 5,000 to the music director, Sri Rai Chand Boral. The film was to be completed in six months and the assessee was to be the absolute owner thereof. The film was produced. It secured the President's award. The assessee had financed the production. Disputes arose between the said Amar Das Mallick and the assessee as to who was the producer of the film. The matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of profits and all other benefits reserved to him by the agreement dated the 20th June, 1957, and/or under the award of the Bengal Motion Pictures Association dated the 19th of April, 1969. 2. It is declared that M/s. De Luxe Film Distributors Ltd. alone are the sole producers and owners of the said film and are entitled to the President's award and the medals declared by the Government of India in respect of the film " Sagar Sangame " and the said Messrs. De Luxe Film Distributors Ltd. or their authorised representatives shall receive the cash award of Rs. 20,000 as also the medals that may be awarded by the Ministry of Information and Broadcasting, Government of India, New Delhi, in respect of the said film. The said Sri Amar Das Mallic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1 of the agreement dated 17th May, 1960, it is found that the sum has been paid to Sri Amar Das Mallick so that he gives up all his rights as producer of the film, including 40% of the share of profits and all other benefits reserved to him under the agreement dated 20th August, 1957. Even the rights arising under the award of the Bengal Motion Pictures Association dated 18th April, 1959, has also been. given up. The payment of Rs. 20,101 is thus to enable the assessee to net all the receipts of profits except to those which are liable to go in favour of Debaki Kumar Bose. In the hands of a financier like the assessee, acquisition of such rights in motion picture has a revenue character. In the circumstances, we consider that the sum of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had resisted the suit in order to protect its business and not to safeguard its prospects to get a new lease and it did not initiate the proceeding ; it merely defended the claim made against it. The suit was launched against it because of one of its business activities and, therefore, the litigation expenses were revenue expenditure laid out wholly and exclusively for the purpose of the business. Where the litigation expenses were incurred by the assessee for the purpose of creating, curing or completing the assessee's title to any particular thing then the expenses incurred must be considered as capital expenditure. But if the litigation expenses were incurred to protect the business of the assessee then this must be considered a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights which the assessee enjoyed under the agreement and which, for a price, he conveyed to another person constituted the capital asset. On the other hand, our attention was drawn to a case of the Andhra Pradesh High Court in Commissioner of Income-tax v. S. Bhowrisankara Steam Ferry Co. [1973] 87 ITR 650. There, the assessee was a registered firm carrying on the business as ferry contractor plying launches across the river. The right to ferry was auctioned every year and the assessee was the highest bidder for the relevant year. The assessee paid a sum of Rs. 21,600 to some prospective bidders at the auction in order to prevent them from bidding with the assessee at the auction. The assessee claimed deduction of the amount thus paid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... De Luxe Film Distributors Ltd. are the joint producers of the film ' Sagar Sangame ' and whereas various other disputes cropped up between the parties and whereas the parties to avoid litigation and to maintain their friendly relation, decided to settle up all their disputes and differences amicably and have agreed to settle up all their disputes and differences on the basis of the Terms of Settlement hereunder recorded now it is hereby agreed as follows : In consideration of a sum of Rs. 20,000 to be paid by Messrs. De Luxe Film Distributors Ltd. to Sri Amar Das Mallick, the said Sri Amar Das Mallick gives up all his claims as producers of the film, ' Sagar Sangame ', including 40% shares of profits and all other benefits reserved to h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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