JUDGEMENT
U.T. Shah, Vice-President -
(1.)THESE two cross-appeals against the order of the Commissioner of Income-tax (Appeals) are disposed of together for the sake of convenience.
(2.)The assessee is a company and, as the name suggests, is engaged in the film industry. The assessment year is 1984-85 and the previous year is from 1-5-1982 to 30-4-1983.
First of all, we shall take up the assessee's appeal being I.T.A. No. 6193 (Bom.)/1987. The first five grounds taken up in the appeal pertain to disallowance made by the Income-tax authorities by invoking the provisions of sees. 37(3 A) and 40A(2)(a)of.theAct.
(3.)THE facts in brief are: the assessee had contemplated to produce a feature film titled "Prem Rog". For this nurnose the assessee, through its Managing Director, Shri Randhir Raj Kapoor, approached Shri Ranbir Raj Kapoor (popularly known as Raj Kapoor) for guidance in the matter of selection of story, cast, other technicians, etc. etc. Under an Agreement dated 15-1-1981, entered into between the assessee and Raj Kapoor, the latter had undertaken to direct and edit the film for a consideration of Rs. 50,00,000. It was agreed between the parties that Raj Kapoor would be entitled to get Rs. 50,00,000 "only after the film is produced and certified by the Censor Board". THE Censor Board had issued the certificate on 31-7-1982 and soon thereafter, the film was released on 30-8-1982. Meanwhile, the assessee had entered into Agency Agreement with nine distributors for the distribution, exhibition and exploitation of the film. THE total publicity expenses incurred on the film was Rs. 36,17,545.
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