SANJIB BANERJEE,J. - (1.) The appeal arises out of the refusal of an ad interim order by the vacation Bench on a challenge to a notice issued under Section 148 of the Income Tax Act, 1961 for reassessing the income of the writ petitioner assessee for the assessment year 2012-13 on the ground that income chargeable to tax had escaped assessment.
(2.) According to the assessee, it carries on business of, inter alia, producing sound recordings of music and, for such purpose, it obtains assignment of the copyright from the first owners against royalty paid or payable upon exploitation of such rights. The assessee claims that a substantial part of the assessee's business is of issuing licence for its sound recordings to be played all over the country. According to the assessee, while such licence fees are charged and permission granted for the music to be played, it is difficult to immediately ascertain the persons to whom royalty would be payable or the extent of such payment. The assessee says that these factors depend on the actual songs or musical items that are played and for which licence was obtained and the extent of entitlement of the original artists in such regard. The assessee says that its accounting in such regard is maintained on the mercantile basis and, since the ascertainment of personnel entitled to receive royalty and the extent of royalty takes time, a provision is made in its accounts at the end of each financial year whereby a certain sum is kept apart. Upon ascertainment of the particulars, the royalties would be paid to the original artists in the following year by deducting from the amount earmarked as the provisional amount in such regard.
(3.) It also appears that in course of the relevant assessment year the assessee had purchased some material upon payment of a sum in excess of Rs.7 crore. According to the assessee, the cost to the assessee included the cost of the material and the excise duty and tax payable thereon. It is possible that the actual receipt in the hands of the vendor was somewhat less because of the excise and tax components.;