COMMISSIONER OF INCOME TAX Vs. R. RADIKAA

JUDGEMENT

(1.) These Tax Case (Appeals) have been filed by the Commissioner of Income Tax challenging orders of the Income Tax Appellate Tribunal in respect of assessment year 2001-02. Since the facts relating to both appeals are common, we deal with the same by way of a single order.

(2.) The Substantial questions of law that arise for consideration are as follows:

(3.) Ms. Radikaa, the assessee in TC(A) 1365/2007 is an artist and film director with a significant presence in the big as well as small screens. M/s. Radaan Pictures Private Limited, ('Radaan' in short), the assessee in TC(A) 1175/2007 had entered into an agreement with Ms. Radikaa dated 3.4.2000. The agreement, in recognition of her expertise and skill in the area of film making desired to utilise her services and intellectual capacity for the purpose of its business. Vide Clause 2 of the agreement, the Artist agreed to spend a minimum of four hours a day in providing her expertise in film making, tele serials and discussions to the company, Vide clause 3, she agreed that she would not compete with the business of the company in India or elsewhere and vide clause 5, she agreed to take the consent of the company prior to accepting an engagement as an actor by any other film director. She further agreed, vide clause 6, to remit 5% of her individual earnings to the company. The agreement, in force for a period of 5 years provided for consideration, at clause 4 thereof, of an amount of Rs. 75 lakhs by way of allotment of 75,000 equity shares of a nominal value of Rs. 100/- each.