Kerala H.C : Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the circular issued by the CBDT existing at the beginning of the assessment year will be applicable and the assessee would be entitled to 100per cent amortisation for the assessment and the subsequent modification of the circular will have no relevance ?

Counsel Appeared

P.K. Raveendranatha Menon, for the Revenue : K.S. Paripoornan & G. Sivarajan, for the Petitioner

GOPALAN NAMBIYAR, C.J. :

This is a reference by the Tribunal, Cochin Bench, at the instance of the Revenue. The question referred for our opinion is : “Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the circular issued by the CBDT existing at the beginning of the assessment year will be applicable and the assessee would be entitled to 100per cent amortisation for the assessment and the subsequent modification of the circular will have no relevance ?”

2. The assessment year is 1972-73. The assessee is doing business in the distribution of films. It had purchased prints of two films during the year along with the additional copies, for a total cost of Rs. 4.5 lakhs on the films and Rs. 1,23,002 on the additional prints. It claimed deduction for these amounts while computing the income from business. The deduction was allowed by the ITO. But on a revision under s. 263 of the IT Act, the CIT set aside the officer’s order. He pointed out that the two films concerned in the assessment were released on October 17, 1971, and December 1, 1971, respectively. As they were released in the latter half of the accounting year, the CIT held that the amortisation to be allowed should be restricted to 50per cent. To this extent he was of the opinion that the order of the ITO was prejudicial to the Revenue and required modification. The officer was directed to modify his order accordingly. On appeal by the assessee, the Tribunal allowed the appeal, reversed the order of the CIT and restored that of the ITO. It referred the question of law under s. 256(1) of the Act.

The question of law has been directly covered in favour of the assessee by the recent judgment in ITR No. 56 of 1976 [CIT vs. B. M. Edward, India Sea Foods, Cochin (1979) 12 CTR (Ker) 278 (FB) : (1979) 119 ITR 334 (Ker) (FB)]. Following the said judgment, we answer the question in the affirmative, i.e., in favour of the assessee and against the Revenue.

A copy of this judgment under the signature of the Registrar and the seal of the Court will be sent to the Tribunal, Cochin Bench, as required by law.

[Citation : 141 ITR 632]