Tribunal rules in favor of assessee on film production costs & asset transfer in partition case

The Tribunal held that the circular in force during the assessment year should govern the case, granting 100% allowance for film production costs. Subsequent circulars do not apply to periods prior to their issuance. Regarding the determination of "transfer of asset" in a partition case, it was established that the partition of a Hindu undivided family did not constitute a transfer of asset under section 34(3)(b) as it did not meet the requirement of transfer by the assessee. Therefore, the claim for development rebate was upheld, and the question was answered in favor of the assessee.

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Issues involved:
1. Interpretation of circulars u/s 1969 and subsequent circulars for deduction of film production costs.
2. Determination of "transfer of asset" u/s 34(3)(b) in case of partition and subsequent partnership formation.

Interpretation of circulars for deduction of film production costs:
The assessee claimed deductions based on circular u/s 1969 allowing write-off of entire film production cost in the year of release. However, subsequent circulars were issued modifying the allowance based on cost of production. The Tribunal held that the circular in force during the assessment year should govern the case, granting 100% allowance. Referring to a Kerala High Court decision, it was held that subsequent circulars do not apply to periods prior to their issuance. Therefore, the first question was answered in favor of the assessee.

Determination of "transfer of asset" in case of partition:
The assessee, a Hindu undivided family, underwent partition post the assessment years under consideration. The issue was whether this constituted a "transfer of asset" u/s 34(3)(b). The section requires transfer by the assessee, and it was established that the partition did not amount to a transfer. The words "by the assessee" were deemed significant, and it was concluded that no transfer occurred as a result of the partition. The claim for development rebate was upheld, emphasizing that the section requires the asset to be transferred by the assessee. The question was answered in the negative, favoring the assessee.

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