GEMINI PICTURES CIRCUIT LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question arising for consideration both in the reference under section 66(2) of the Indian Income-tax Act as well as in W.P. No. 925 of 1955 are identical and relate to the proper rule to be applied for determining the amortisation of films for computing the income, profits and gains of the assessee which is carrying on business as a film distributor. THE assessee in the Reference Case No. 27 of 1955 is the petitioner in the writ petition

(2.) IT would be convenient to deal first with the Reference Case No. 27 of 1955 before adverting to the points raised in the writ petition.

(3.) IT should however be carefully noted that the percentages mentioned in the standard formula are percentages to be allowed strictly on time-basis, for any other method may open the way for tax evasion. A person may purchase a film towards the end of the year and claim to be allowed 60 per cent. of the amount in that very year. With a view to safeguarding against such possibilities, the rates of 60 per cent., 25 per cent. and 15 per cent. should be treated as rates per annum. If, for example, the account year of the film producer is the year ended December 31, 1947, and a film produced during that year came to be exhibited on October 1, 1947, the allowance for amortisation should be as follows :