1971 PLP 161 (PTD)

VEERASWAMI, J.‑The assessee claimed as deduction under section 10(2)(xv) of the Income‑tax Act, 1922, a sum of Rs. 13,376 as expenditure laid out wholly and exclusively for purposes of the business. The claim was disallowed by the Income‑tax Officer, who was of the view that the sum was not expended for commercial expediency. The Appellate Assistant Commissioner, however, agreed with the assessee, being of opinion that the expenditure was a normal feature and tended to bring a better market for the picture. The Tribunal reversed that order and that is how the reference arises under section 66(2). The question referred is : "Whether, on the facts and in the circumstances of the case, the disallowance of a sum of Rs. 13,376 out of the expenses incurred by the petitioner in connection with the Silver Jubilee run of picture `Kalyana Parisu' is permissible under the provi sions of section 10(2)(xv) of the Income‑tax Act?" The matter relates to the assessment year 1960‑

61. The assessee is a partnership firm carrying on business in distribution and exhibition of films. It had taken the picture `Kalyana Parisu' for exhibition, in the city of Madras from the producers, Trinity Pictures, on a minimum guarantee of Rs. 70,000 on which 15 % was payable. If the collections exceeded that figure, 50 % was agreed to be paid. It appears the picture ran for 25 weeks and that was the occasion for celebration of the Silver Jubilee. The expenditure sought to be deducted related to the celebration. The Tribunal thought that there was no causal connection between the expenditure and the taking of further leases of the picture or collections therefrom. It was aware that advertisement and publicity certainly help in attracting large crowds to pictures, but stated that when once the picture ran for 25 weeks, that was sufficient publicity and anything done in token of appreciation of the services of the theatres would not advance the further conduct of the assessee's business. We are unable to share that view of the Tribunal. The expenditure, in our opinion, was clearly within the scope of section 10(2)(xv). There is no controversy about the factum of the expenditure claimed as deduction. Nobody has suggested that it had been incurred otherwise than in the course of carrying on the business of exhibition of films. On the occasion of the celebration there was presentation of shields to the theatres, artistes and others. 25 weeks of exhibition from the point of view of the assessee was an important occasion in carrying on the business which required celebration. Evidently, the object of the celebra tion was publicity, and that publicity would only have been with a view to step up the collections, at a time when the collections might otherwise be dwindling. It has been pointed out by Courts repeatedly that the expediency of the expenditure is not for the revenue to consider. That is a matter entirely left to the judgment of the assessee concerned. In allowing or disallowing a deduction the revenue has, of course, to have regard to the requisites of section 10(2)(xv). The jurisdiction of the revenue under that section is, however, confined to deciding the reality of the expenditure, namely, whether the amount claimed as deduction was factually expended or laid out and whether it was wholly and exclusively for the purpose of the business. See Sanjeevi & Co. v. Commissioner of Income‑tax ((1966) 62 I T R 156). In that case this Court further pointed out that the reasonableness of the expenditure could only be gone into for the purpose of determining whether in fact the amount was spent. In this case, obviously, the expenditure was connected with the exhibition of the film and was laid out for the purpose of the business of exhibiting the films. It seems to us that no other view is possible. We accordingly answer the question in favour of the assessee with costs. Counsel's fee Rs.

250. Question answered in favour of the assessee.