1999 PLP 3135 (PTD)

V.V. KAMAT, J.

In pursuance of the directions of this Court in the judgment, dated July 11, 1991, in O.P. No.4924 of 1987, on a reference by the Income-tax Appellate Tribunal, Cochin Bench, the answer to the following question which involves three independent aspects is expected from us: "Whether, on the facts and in, the circumstances of the case, and also on a consideration and interpretation of the agreements entered into between parties, the Tribunal is right in law and in fact in- (i) allowing the claim for amortisation made by the assessee (ii) holding that the assessee acquired the absolute rights of distribution, exhibition and exploitation of the picture for the period mentioned in the agreement, (iii) finding that a reading of the different clauses of both the agreements clearly shows that Shree Maheshwari Films did not acquire absolute right of distribution?" The facts take us to the film world of the producer in the name and style of R.C. Combines at Madras. The producer entered into an agreement, dated August 4, 1980, regarding the distribution, exhibition and exploitation rights of the film with a glamorous name Swargadevatha". This agreement .was for a period of five years from the date of its first release in the State of Kerala. This was on August 23, 1980. A little over a year thereafter, the present assessee Krishna Talkies, Quilon, entered into another agreement, to be precise on December 1, 1981, with the producer R.C. Combines. Both the documents are Annexures D and E to the paper book respectively. Shri Maheswari Films purchased distribution, exhibition and exploitation rights for a period of five years on and from August 23, 1980, for payment of Rs.4,10,000 to be paid in four instalments. The second agreement, dated December 1, 1981, owns and honours the first agreement and liabilities thereunder and in addition thereto, carries additional consideration of Rs.2,26,829.17 to be paid to the producer, R.C. Combine. A bare perusal of the said second agreement (Annexure E), dated December 1, 1981, not only in the preamble thereto, but also in clause (1) in regard thereto clarifies the situation. The first two clauses of. the preamble need reproduction in the context and they are as follows: "Whereas the lessors are producers and owners of absolute rights of a Malayalam talkies picture titled as 'Swargadevatha' in black and white 35 min featuring amongst others Sarada, Ummer, Vincent and Sankaradi, music by M.S. Viswanathan and directed by Sri Charles Ayyampilly hereinafter called as the said picture or picture which was released in Kerala on August 23, 1980, by the lessors' distributors Sree Maheswari Films Main Road, Quilon, as per an agreement, dated August 4, 1980. And whereas the lessees have approached the lessors to acquire the distribution, exhibition and exploitation rights of the said picture in the area of Kerala State for period ending on August 22, 1985, from this day hereinabove mentioned for a total consideration of Rs.2,26,829.17- (rupees two lakhs twenty-six thousand and eight hundred twenty-nine and paise seventeen only)." The preamble itself would make it clear that the life of the agreement commenced on August 23, 1980, when "Swargadevatha" was released in Kerala for a period of five years thereafter, up to August 22, 1985. The second agreement, dated December 1, 1981, covered the remaining period up to August 22, 1985, and apart from owning the rights and liabilities under the first agreement, an added consideration of Rs.2,26,829.17 is at the base, of the second agreement. In this situation, the present assessee with regard to the consideration amount of Rs.2,26,829.17 paid to the producers, R.C. Combines, claiming credit in regard thereto is obviously staring in the face of the record. It appears that the claim was disallowed by the Income-tax Officer whose decision was confirmed by the first appellate authority, Commissioner of Income-tax (Appeals). It is the Tribunal that took the view that the assessee fulfilled all the requirements necessary for claiming the benefit under Rule 9-B of the Income-tax Rules. In our judgment, the situation is plain, floating on the contents of the second agreement as spelt out here before. The second agreement, dated December 1, 1981, must enable the assessee-to base his claim on the basis thereof. For all the above reasons, the question is answered in the affirmative, against the Revenue and in favour of the assessee. M.B.A./3065/FC Reference answered.