COMMISSIONER OF INCOME TAX Vs. SETHU FILM DISTRIBUTORS

JUDGEMENT

(1.) THIS is a reference, at the instance of the Revenue, under section 256(2) of the Income-tax Act, 1961 (for short, "the I. T. Act"), requiring this court to decide the following questions of law :

(2.) THE respondent-assessee is a registered partnership firm, carrying on business in film distribution. As per the agreement entered into with Messrs. Visalakshi Films on September 30, 1964, the assessee advanced a sum of Rs. 80,000 and in consideration of the amount, the assessee was to get exhibition and exploitation rights of the picture "Karuppu Panam", for distribution in Madurai and Ramanathapuram Districts, for a period of ten years. THE assessee was also entitled to a commission of 15 per cent. up to a net realisation of Rs. 85,000 and 25 per cent. over and above the net realisation of Rs. 85,000. It was the assessee's case that as the advance was not fully recoverable, it had to writ off a sum of Rs. 15,630 and this should be allowed as "business loss".

(3.) MR. V. Ramachandran, learned senior counsel for the assessee, would however, repel such submissions and would try to justify the findings recorded by the Appellate Tribunal giving rise to the reference on the aforesaid two questions.