Accepted accounting method for film receipts cannot be rejected unless it distorts real taxable income.

An assessee's consistently followed accounting method for taxing film receipts on release was accepted as a proper basis for computing income where it had been recognised in earlier and later years and no material showed distortion of taxable income. The Tribunal held that the method correctly reflected income attributable to completed pictures, and the Assessing Officer could not substitute a different basis merely because another view was preferred. The court upheld that approach and found no justification for rejecting an accepted accounting practice that enabled proper deduction of real taxable income.

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Issues: Whether the Tribunal was right in holding that, on the facts, the assessee's method of accounting correctly reflected the income attributable to completed pictures and that the Assessing Officer was not justified in substituting a different basis for determining taxable income.

Analysis: The assessee and the firm had consistently followed a method under which receipts relating to films were brought to tax in the year of release, and that method had been accepted in earlier and later years. The Tribunal found that the payments and receipts were properly accounted for under that method and that there was no material to show any loss of revenue or distortion of taxable income. The accepted accounting practice enabled the income to be properly deduced, and the Assessing Officer had no warrant to reject it merely because a different view was preferred for this year.

Conclusion: The Tribunal's view was upheld. The questions were answered against the Revenue and in favour of the assessee.

Final Conclusion: The assessee's accounting method was held to be a valid basis for computation of income, and the Revenue failed to justify substitution of another method.

Ratio Decidendi: Where an assessee has consistently followed an accepted method of accounting that enables proper deduction of income, the Assessing Officer cannot reject it and adopt a different basis unless it is shown that the method fails to reflect the real taxable income.

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