COMMISSIONER OF INCOME TAX Vs. DHARTI FILMS

JUDGEMENT

(1.) THE Tribunal has referred to this Court under S. 256(1) of the IT Act, 1961, the following two questions as questions of law:

(2.) THE reference is at the instance of the Department. The assessee is a partnership firm. The assessment year involved is 1970 71 for which the previous year is from April 1, 1969, to March 31, 1970. There were two changes in the constitution of the assessee firm during the year. Initially, the firm was constituted under a deed of partnership dated January 14, 1969, with Shri N. N. Sippy, Balbir Kapoor, Roop K. Sakraney and Ramesh G. Sippy as partners. This constitution continued up to November 18, 1969, when Shri Balbir Kapoor retired. With effect from November 19, 1969, Shri Amarnath Kapoor came in as partner in place of Shri Balbir Kapoor. This partnership is evidenced by a deed of partnership dated November 27, 1969. The remaining partners continued as such. Shri N. N. Sippy retired from the firm on December 31, 1969, whereafter, i.e., on and from January 1, 1970, and up to the end of the year i.e., March 31, 1970, the assessee firm continued with the remaining three partners. As a result of the retirement of Shri N. N. Sippy who had 50 per cent. share, the shares of the remaining partners got increased in proportion to their shares.

(3.) AS between the assessee firm and Janata Film Distributors, there was initially an oral agreement which was subsequently reduced to writing on April 1, 1969. For arranging and looking after distribution and exhibition, etc., Janata Film Distributors was to deduct 5 per cent. of the gross receipts by way of commission. All expenses in connection therewith were to be incurred by Janata Film Distributors. The film was released in July, 1969.