Court affirms assessee's accounting method for film distribution rights amortization

The Court upheld the Tribunal's decision, ruling in favor of the assessee and affirming the validity of their accounting method for film distribution rights amortization for the year 1970-71. The Court emphasized that the Income Tax Officer cannot impose a different method if the assessee's approach allows for proper deduction of income. This judgment clarifies the application of section 145 and highlights the authority of the Income Tax Officer in accepting an assessee's chosen accounting method.

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Issues involved: Assessment of film distribution rights amortization for the year 1970-71.

Summary:
For the assessment year 1970-71, the assessee claimed amortization for thirteen films. The Income Tax Officer (ITO) allowed full amortization for films released six months before the end of the accounting year and half rate for films released in the second half. The ITO disallowed amortization for unreleased films. The assessee wrote off distribution rights cost in the year of acquisition, claiming deduction for all films. The Appellate Authority accepted full amortization for released films but not for unreleased ones. Both parties appealed to the Tribunal. The Tribunal found the assessee's accounting method acceptable, allowing amortization for acquired but unreleased films. The Commissioner raised questions on amortization deduction and application of section 145. The Tribunal's findings showed the assessee's consistent method of writing off costs at acquisition, accepted by the department previously. The Court upheld the Tribunal's decision, stating the ITO cannot impose a different method if the assessee's method allows proper deduction of income. The Court ruled in favor of the assessee, affirming the validity of their accounting method and allowing the claimed deductions.

This judgment clarifies the application of section 145 and the authority of the Income Tax Officer in accepting an assessee's accounting method.

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