Film sale contract and passing of title: later confirmation letter did not defer ownership, and collections were taxable.

A film-sale agreement was construed as a contract under which title passed only when the picture was completed and delivered for release. The parties' conduct, including payment of advances, completion and release of the film, and the assessee's right to retain collections without accounting to the producers, showed that the agreed sale terms had been implemented. A later confirmation letter was treated as evidence of an already completed sale, not as the instrument transferring title. On that basis, ownership was held to have passed by 7 March 1958 at the latest, and the collections were taxable in the assessee's hands for the relevant assessment year.

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Issues: Whether the assessee became the owner of the film by 7 March 1958 or only on 30 June 1958, and whether the collections of Rs. 43,881 were assessable in its hands for the assessment year 1959-60.

Analysis: The agreement of 3 June 1956 was construed as a contract for sale under which the property in the film was to pass when the picture was completed and delivered for release. The subsequent conduct of the parties showed implementation of the agreed terms: the advances were made, the picture was completed and released, and the assessee was entitled to retain the collections without accounting to the producers. The later letter of 30 June 1958 was treated as a confirmation of an already completed sale and not as the instrument that postponed passing of title. The Tribunal's view that the sale had become complete by 7 March 1958, at the latest, was upheld.

Conclusion: The assessee became the owner of the film by 7 March 1958 at the latest, and the sum of Rs. 43,881 was rightly brought to tax in the assessee's hands.

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