COMMISSIONER OF INCOME TAX Vs. COLOUR FILM DISTRIBUTORS

JUDGEMENT

(1.) The Tribunal has referred the following question of law to this court for its opinion under Section 256(1) of the Income-tax Act, 1961 :

(2.) The case relates to the assessment year 1968-69 for which the relevant previous year ended on June 30, 1967. The dispute is with regard to computation of profit from the film "Phool aur Patthar".

(3.) The assessee is a distributor of films. It entered into an agreement with M/s. Ralhan Productions for distribution of the film "Phool aur Patthar" in what is known in the cinema circle as the Bengal Circuit for a period of ten years. The agreement was entered into on December 25, 1965, and the terms and conditions were, inter alia :